Fair Value Measurements
We categorize assets and liabilities recorded or disclosed at fair value on our consolidated balance sheets based upon the level of judgment associated with inputs used to measure their fair value. The categories are as follows:
•Level 1—Inputs are unadjusted quoted prices in active markets for identical assets or liabilities.
•Level 2—Inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the assets or liabilities, either directly or indirectly through market corroboration, for substantially the full term of the financial instruments.
•Level 3—Inputs are unobservable inputs based on our own assumptions used to measure assets and liabilities at fair value. The inputs require significant management judgment or estimation.
The following table presents the fair value of our financial assets and liabilities measured at fair value on a recurring basis using the above input categories as of December 31, 2021 (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | |
| Level 1 | | Level 2 | | Level 3 | | Total |
| Restricted cash: | | | | | | | |
| Restricted cash | $ | 10,823 | | | $ | — | | | $ | — | | | $ | 10,823 | |
| Total restricted cash | $ | 10,823 | | | $ | — | | | $ | — | | | $ | 10,823 | |
| | | | | | | |
| Cash equivalents: | | | | | | | |
| Money market funds | $ | 73,138 | | | $ | — | | | $ | — | | | $ | 73,138 | |
| | | | | | | |
| | | | | | | |
| Total cash equivalents | $ | 73,138 | | | $ | — | | | $ | — | | | $ | 73,138 | |
| | | | | | | |
| Marketable securities: | | | | | | | |
| Commercial paper | $ | — | | | $ | 59,792 | | | $ | — | | | $ | 59,792 | |
| Asset-backed securities | — | | | 40,942 | | | — | | | 40,942 | |
| Corporate bonds | — | | | 237,402 | | | — | | | 237,402 | |
| U.S. treasury securities | — | | | 272,300 | | | — | | | 272,300 | |
| Supranational bonds | — | | | 70,887 | | | — | | | 70,887 | |
| | | | | | | |
| Total marketable securities | $ | — | | | $ | 681,323 | | | $ | — | | | $ | 681,323 | |
The following table presents the fair value of our financial assets and liabilities measured at fair value on a recurring basis using the above input categories as of December 31, 2020 (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | |
| Level 1 | | Level 2 | | Level 3 | | Total |
| Restricted cash: | | | | | | | |
| Restricted cash | $ | 21,369 | | | $ | — | | | $ | — | | | 21,369 | |
| Total restricted cash | $ | 21,369 | | | $ | — | | | $ | — | | | $ | 21,369 | |
| | | | | | | |
| Cash equivalents: | | | | | | | |
| Money market funds | $ | 660,086 | | | $ | — | | | $ | — | | | $ | 660,086 | |
| Commercial paper | — | | | 75,726 | | | — | | | 75,726 | |
| Total cash equivalents | $ | 660,086 | | | $ | 75,726 | | | $ | — | | | $ | 735,812 | |
| | | | | | | |
| Marketable securities: | | | | | | | |
| Asset-backed securities | $ | — | | | $ | 49,965 | | | $ | — | | | $ | 49,965 | |
| Corporate bonds | — | | | 92,322 | | | — | | | 92,322 | |
| U.S. treasury securities | — | | | 327,050 | | | — | | | 327,050 | |
| Supranational bonds | — | | | 10,069 | | | — | | | 10,069 | |
| | | | | | | |
| Total marketable securities | $ | — | | | $ | 479,406 | | | $ | — | | | $ | 479,406 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.