Annual report pursuant to Section 13 and 15(d)

Fair Value Measurements and Short-Term Investments

v3.19.1
Fair Value Measurements and Short-Term Investments
12 Months Ended
Dec. 31, 2018
Fair Value Disclosures [Abstract]  
Fair Value Measurements and Short-Term Investments

3. Fair Value Measurements and Short-Term Investments

The following table sets forth the fair value of the Company’s financial assets and liabilities measured on a recurring basis by level within the fair value hierarchy:

 

 

 

December 31, 2018

 

 

 

Total

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

 

(in thousands)

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

116,202

 

 

$

116,202

 

 

$

-

 

 

$

-

 

Commercial paper

 

 

26,625

 

 

 

-

 

 

 

26,625

 

 

 

-

 

Corporate debt securities

 

 

11,774

 

 

 

-

 

 

 

11,774

 

 

 

-

 

Asset-backed securities

 

 

16,899

 

 

 

-

 

 

 

16,899

 

 

 

-

 

U.S. government agency securities

 

 

23,896

 

 

 

-

 

 

 

23,896

 

 

 

-

 

Total

 

$

195,396

 

 

$

116,202

 

 

$

79,194

 

 

$

-

 

 

 

 

December 31, 2017

 

 

 

Total

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

 

(in thousands)

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

6,578

 

 

$

6,578

 

 

$

-

 

 

$

-

 

Commercial paper

 

 

7,689

 

 

 

-

 

 

 

7,689

 

 

 

-

 

Corporate debt securities

 

 

800

 

 

 

-

 

 

 

800

 

 

 

-

 

U.S. government agency securities

 

 

3,893

 

 

 

-

 

 

 

3,893

 

 

 

-

 

Total

 

$

18,960

 

 

$

6,578

 

 

$

12,382

 

 

 

-

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Redeemable convertible preferred stock

   warrant liability

 

$

1,708

 

 

$

-

 

 

$

-

 

 

$

1,708

 

Total

 

$

1,708

 

 

$

-

 

 

$

-

 

 

$

1,708

 

 

Where applicable, the Company uses quoted market prices in active markets for identical assets to determine fair value. This pricing methodology applies to Level 1 investments, which are composed of money market funds.

If quoted prices in active markets for identical assets are not available, then the Company uses quoted prices for similar assets or inputs other than quoted prices that are observable, either directly or indirectly. These investments are included in Level 2 and consist of commercial paper, corporate debt securities, and U.S. government agency securities. These assets are valued using market prices when available, adjusting for accretion of the purchase price to face value at maturity.

A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the asset or liability.

In certain cases where there is limited activity or less transparency around inputs to valuation, securities are classified as Level 3 within the valuation hierarchy. Level 3 liabilities that are measured at estimated fair value on a recurring basis consist of the redeemable convertible preferred stock warrant liability. Refer to Note 10 for the valuation techniques used to measure fair value and a description of the inputs and the information used to develop the inputs to the valuation models.

Generally, increases or decreases in the fair value of the underlying redeemable convertible preferred stock would result in a directionally similar impact in the fair value measurement of the associated warrant liability. There were no transfers within the hierarchy during the years ended December 31, 2018 and 2017.

 

Upon closing of the IPO on October 1, 2018, a majority of the outstanding redeemable convertible preferred stock warrants either expired or were converted into common stock warrants, which resulted in the reclassification of the redeemable convertible preferred stock warrant liability to other income and additional paid-in-capital.  The following table sets forth a summary of the changes in the estimated fair value of the Company’s redeemable convertible preferred stock warrant liability:

 

 

 

Redeemable

Convertible

Preferred Stock

Warrant Liability

 

 

 

(in thousands)

 

Balance as of December 31, 2016

 

$

1,193

 

Estimated fair value of warrants issued

 

 

329

 

Changes in estimated fair value of warrant liability included

   in other income (expense), net

 

 

186

 

Balance as of December 31, 2017

 

 

1,708

 

Change in estimated fair value of warrant liability included in

   other income (expense), net, immediately prior to

   conversion of redeemable convertible preferred stock warrants

   to common stock warrants.

 

 

(841

)

Reclassification of redeemable convertible preferred stock warrant

   liability to other income upon expiration

 

 

(133

)

Reclassification of redeemable convertible preferred stock warrant

   liability to additional paid-in-capital due to conversion to

   common stock warrants upon completion of IPO

 

 

(734

)

Balance as of December 31, 2018

 

$

-