| Fair Value of Financial Instruments | Fair Value of Financial Instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. For certain of the Company’s financial instruments, including certain cash equivalents, accounts receivable, accounts payable, and other current liabilities, the carrying amounts approximate their fair values due to the relatively short maturity of these balances. The Company measures and reports certain cash equivalents, investments and derivative foreign currency forward contracts at fair value in accordance with the provisions of the authoritative accounting guidance that addresses fair value measurements. This guidance establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. The hierarchy is broken down into three levels based on the reliability of inputs as follows: Level 1 —Valuations based on quoted prices in active markets for identical assets or liabilities. Level 2 —Valuations based on other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3— Valuations based on inputs that are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The Company's financial instruments consist of assets and liabilities measured using Level 1 and 2 inputs. Level 1 assets include a highly liquid money market fund, which is valued using unadjusted quoted prices that are available in an active market for an identical asset. Level 2 assets include fixed-income U.S. government agency securities, commercial paper, corporate bonds, asset-backed securities and derivative financial instruments consisting of foreign currency forward contracts. The securities, bonds and commercial paper are valued using prices from independent pricing services based on quoted prices in active markets for similar instruments or on industry models using data inputs such as interest rates and prices that can be directly observed or corroborated in active markets. The foreign currency forward contracts are valued usi ng observable inputs, such as quotations on forward foreign exchange points and foreign interest rates. The Company's cash and cash equivalents, short-term investments, and long-term investments consist of the following: September 30, 2017 Amortized Cost Unrealized Gains Unrealized Losses Fair Value (in thousands) Cash and cash equivalents: Cash $ 90,472 $ — $ — $ 90,472 Money market funds 45 — — 45 Total 90,517 — — 90,517 Short-term investments: Commercial paper 20,930 4 (1 ) 20,933 Corporate bonds 31,786 3 (22 ) 31,767 Asset-backed securities 491 — — 491 U.S. government agencies 159,135 3 (119 ) 159,019 Total 212,342 10 (142 ) 212,210 Long-term investments: Asset-backed securities 2,855 1 — 2,856 Corporate bonds 37,490 32 (20 ) 37,502 Total 40,345 33 (20 ) 40,358 Total $ 343,204 $ 43 $ (162 ) $ 343,085 December 31, 2016 Amortized Cost Unrealized Gains Unrealized Losses Fair Value (in thousands) Cash and cash equivalents: Cash $ 72,673 $ — $ — $ 72,673 Money market funds 473 — — 473 Commercial paper 13,591 — — 13,591 Total 86,737 — — 86,737 Short-term investments: Commercial paper 14,782 5 — 14,787 Corporate bonds 13,490 — (11 ) 13,479 Asset-backed securities 1,235 1,235 U.S. government agencies 127,660 (42 ) 127,618 Total 157,167 5 (53 ) 157,119 Long-term investments: Asset-backed securities 5,091 2 — 5,093 U.S. government agencies 29,501 — (71 ) 29,430 Corporate bonds 11,243 — (41 ) 11,202 Total 45,835 2 (112 ) 45,725 Total $ 289,739 $ 7 $ (165 ) $ 289,581 The following table shows the changes to accumulated other comprehensive income (loss) for the nine months ended September 30, 2017 (in thousands): Unrealized Gain (Loss), net on Investments Balance at December 31, 2016 $ (156 ) Change in net realized gain (loss) on investments 32 Amounts reclassified for net realized gain (loss) included in net income 4 Other comprehensive income (loss), net 36 Balance at September 30, 2017 $ (120 ) The following table sets forth by level within the fair value hierarchy the fair value of the Company's available-for-sale securities measured on a recurring basis, excluding cash and money market funds: September 30, 2017 Level 1 Level 2 Level 3 Fair Value (in thousands) Commercial paper $ — $ 20,933 $ — $ 20,933 U.S. government agencies — 159,019 — 159,019 Corporate bonds — 69,269 — 69,269 Asset-backed securities — 3,347 — 3,347 Total $ — $ 252,568 $ — $ 252,568 December 31, 2016 Level 1 Level 2 Level 3 Fair Value (in thousands) Commercial paper $ — $ 28,378 $ — $ 28,378 U.S. government agencies — 157,048 — 157,048 Corporate bonds — 24,681 — 24,681 Asset-backed securities — 6,328 — 6,328 Total $ — $ 216,435 $ — $ 216,435 There were no transfers between Level 1, Level 2 or Level 3 of the fair value hierarchy, as determined at the end of each reporting period. The following summarizes the fair value of securities classified as available-for-sale by contractual, or effective, maturity: September 30, 2017 Mature within One Year After One Year through Two Years Over Two Years Fair Value (in thousands) Commercial paper $ 20,933 $ — $ — $ 20,933 U.S. government agencies 159,019 — — 159,019 Corporate bonds 32,783 27,037 9,449 69,269 Asset-backed securities 1,781 1,000 566 3,347 Total $ 214,516 $ 28,037 $ 10,015 $ 252,568 Derivative Financial Instruments Derivative financial instruments are utilized by the Company to reduce foreign currency exchange risks. The Company uses foreign currency forward contracts to mitigate the impact of foreign currency fluctuations of certain non-U.S. dollar denominated asset positions, primarily cash and accounts receivable. These contracts are recorded within prepaid expenses and other current assets or accrued liabilities in the condensed consolidated balance sheets. Gains and losses resulting from currency exchange rate movements on these forward contracts are recognized in other income (expense) in the accompanying condensed consolidated statements of operations in the period in which the exchange rates change and offset the foreign currency gains and losses on the underlying exposure being hedged. The Company does not enter into derivative financial instruments for trading or speculative purposes. At September 30, 2017 , the Company had two outstanding forward contrac ts with notional amounts of 6.7 million Euros and 4.8 million British Pounds, which expire on October 31, 2017 . At December 31, 2016 , the Company had two outstanding forward contracts with notional amounts of 7.6 million Euros and 4.6 million British Pounds, which expired on February 2, 2017 . These forward contracts were entered into at the end of each month, and thus the fair value of these contracts was $0 at September 30, 2017 and December 31, 2016 . These derivatives did not meet the criteria to be designated as hedges. These instruments were valued using Level 2 inputs. The following summarizes the gains (losses) recognized in Other expense, net on the condensed consolidated statement of operations, from forward contracts and other foreign currency transactions: Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 (in thousands) Net loss from forward contracts $ (463 ) $ (82 ) $ (1,585 ) $ (9 ) Other foreign currency transactions gain 431 (2 ) 1,424 (276 ) Total foreign exchange gain (loss), net $ (32 ) $ (84 ) $ (161 ) $ (285 ) |
