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Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________ 
FORM 10-Q
____________________________ 
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2020
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                     to
Commission file number: 000-32259
____________________________
ALIGN TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
____________________________ 
Delaware94-3267295
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification Number)
2820 Orchard Parkway
San Jose, California 95134
(Address of principal executive offices)
(408) 470-1000
(Registrant’s telephone number, including area code)
 ____________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, $0.0001 par valueALGNThe NASDAQ Stock Market LLC
(NASDAQ Global Market)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13 (a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No 
The number of shares outstanding of the registrant’s Common Stock, $0.0001 par value, as of July 24, 2020 was 78,786,683.


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ALIGN TECHNOLOGY, INC.
INDEX
 
PART I
ITEM 1.
ITEM 2.
ITEM 3.
ITEM 4.
PART II
ITEM 1.
ITEM 1A.
ITEM 2.
ITEM 3.
ITEM 4.
ITEM 5.
ITEM 6.

Invisalign, Align, the Invisalign logo, ClinCheck, Made to Move, Invisalign Assist, Invisalign Teen, Invisalign Go, Vivera, SmartForce, SmartTrack, SmartStage, SmileView, iTero, iTero Element, Orthocad, iCast, iRecord and exocad, among others, are trademarks and/or service marks of Align Technology, Inc. or one of its subsidiaries or affiliated companies and may be registered in the United States and/or other countries.
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Table of Contents
PART I—FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
ALIGN TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)

Three Months Ended
June 30,
Six Months Ended
June 30,
 2020201920202019
Net revenues$352,314  $600,697  $903,277  $1,149,668  
Cost of net revenues127,986  168,408  284,593  315,283  
Gross profit224,328  432,289  618,684  834,385  
Operating expenses:
Selling, general and administrative256,967  267,948  539,873  515,058  
Research and development40,361  38,851  81,893  76,354  
Impairments and other charges      29,782  
Litigation settlement gain  (51,000)   (51,000) 
Total operating expenses297,328  255,799  621,766  570,194  
Income (loss) from operations(73,000) 176,490  (3,082) 264,191  
Interest income and other income (expense), net:
Interest income473  3,465  2,459  6,098  
Other income (expense), net(966) 13,892  (19,515) 8,146  
      Total interest income and other income (expense), net(493) 17,357  (17,056) 14,244  
Net income (loss) before provision for (benefit from) income taxes and equity in losses of investee(73,493) 193,847  (20,138) 278,435  
Provision for (benefit from) income taxes(32,891) 43,121  (1,497,667) 51,917  
Equity in losses of investee, net of tax  3,584    7,528  
Net income (loss)$(40,602) $147,142  $1,477,529  $218,990  
Net income (loss) per share:
Basic
$(0.52) $1.84  $18.78  $2.74  
Diluted
$(0.52) $1.83  $18.70  $2.71  
Shares used in computing net income (loss) per share:
Basic
78,769  79,943  78,681  79,901  
Diluted
78,769  80,590  79,016  80,665  

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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ALIGN TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
(unaudited)
 
Three Months Ended
June 30,
Six Months Ended
June 30,
 2020201920202019
Net income (loss)$(40,602) $147,142  $1,477,529  $218,990  
Change in foreign currency translation adjustment, net of tax9,294  213  9,983  622  
Change in unrealized gains (losses) on investments, net of tax  192  (194) 276  
Other comprehensive income
9,294  405  9,789  898  
Comprehensive income (loss)$(31,308) $147,547  $1,487,318  $219,888  

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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ALIGN TECHNOLOGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
(unaudited)

June 30,
2020
December 31,
2019
ASSETS
Current assets:
Cash and cash equivalents$404,359  $550,425  
Marketable securities, short-term  318,202  
Accounts receivable, net of allowance for doubtful accounts of $17,099 and $6,756, respectively
473,314  550,291  
Inventories131,276  112,051  
Prepaid expenses and other current assets140,295  102,450  
Total current assets1,149,244  1,633,419  
Property, plant and equipment, net668,951  631,730  
Operating lease right-of-use assets, net68,578  56,244  
Goodwill and intangible assets, net543,211  75,692  
Deferred tax assets1,568,293  64,007  
Other assets27,580  39,610  
Total assets$4,025,857  $2,500,702  
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$94,987  $87,250  
Accrued liabilities244,774  319,958  
Deferred revenues601,831  563,762  
Total current liabilities941,592  970,970  
Income tax payable115,257  102,794  
Operating lease liabilities50,619  43,463  
Other long-term liabilities73,344  37,306  
Total liabilities1,180,812  1,154,533  
Commitments and contingencies (Notes 9 and 10)
Stockholders’ equity:
Preferred stock, $0.0001 par value (5,000 shares authorized; none issued)
    
Common stock, $0.0001 par value (200,000 shares authorized; 78,781 and 78,433 issued and outstanding, respectively)
8  8  
Additional paid-in capital918,495  906,937  
Accumulated other comprehensive income (loss), net9,101  (688) 
Retained earnings1,917,441  439,912  
Total stockholders’ equity2,845,045  1,346,169  
Total liabilities and stockholders’ equity$4,025,857  $2,500,702  

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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ALIGN TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands)
(unaudited)

Common StockAdditional Paid-In CapitalAccumulated Other Comprehensive Income (Loss), NetRetained EarningsTotal
Three Months Ended June 30, 2020SharesAmount
Balance as of March 31, 202078,759  $8  $895,131  $(193) $1,958,043  $2,852,989  
Net loss—  —  —  —  (40,602) (40,602) 
Net change in foreign currency translation adjustment—  —  —  9,294  —  9,294  
Issuance of common stock relating to employee equity compensation plans22  —    —  —    
Tax withholdings related to net share settlements of equity awards—  —  (1,643) —  —  (1,643) 
Stock-based compensation—  —  25,007  —  —  25,007  
Balance as of June 30, 202078,781  $8  $918,495  $9,101  $1,917,441  $2,845,045  



Common Stock
Additional
Paid-In
Capital
Accumulated
Other
Comprehensive
Income (Loss), Net
Retained EarningsTotal
Six Months Ended June 30, 2020SharesAmount
Balance as of December 31, 201978,433  $8  $906,937  $(688) $439,912  $1,346,169  
Net income—  —  —  —  1,477,529  1,477,529  
Net change in unrealized gains (losses) from investments—  —  —  (194) —  (194) 
Net change in foreign currency translation adjustment
 
—  —  —  9,983  —  9,983  
Issuance of common stock relating to employee equity compensation plans348  —  10,662  —  —  10,662  
Tax withholdings related to net share settlements of equity awards—  —  (47,038) —  —  (47,038) 
Stock-based compensation—  —  47,934  —  —  47,934  
Balance as of June 30, 202078,781  $8  $918,495  $9,101  $1,917,441  $2,845,045  

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

















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ALIGN TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (CONTINUED)
(in thousands)
(unaudited)

Common StockAdditional Paid-In CapitalAccumulated Other Comprehensive Income (Loss), NetRetained EarningsTotal
Three Months Ended June 30, 2019SharesAmount
Balance as of March 31, 201980,000  $8  $855,956  $(2,281) $402,021  $1,255,704  
Net income—  —  —  —  147,142  147,142  
Net change in unrealized gains (losses) from investments—  —  —  192  —  192  
Net change in foreign currency translation adjustment—  —  —  213  —  213  
Issuance of common stock relating to employee equity compensation plans26  —  5  —  —  5  
Tax withholdings related to net share settlements of equity awards—  —  (2,537) —  —  (2,537) 
Common stock repurchased and retired(161) —  (1,616) —  (47,888) (49,504) 
Stock-based compensation—  —  22,467  —  —  22,467  
Balance as of June 30, 201979,865  $8  $874,275  $(1,876) $501,275  $1,373,682  



Common Stock
Additional
Paid-In
Capital
Accumulated
Other
Comprehensive
Income (Loss), Net
Retained EarningsTotal
Six Months Ended June 30, 2019SharesAmount
Balance as of December 31, 201879,778  $8  $877,514  $(2,774) $378,143  $1,252,891  
Net income—  —  —  —  218,990  218,990  
Net change in unrealized gains (losses) from investments—  —  —  276  —  276  
Net change in foreign currency translation adjustment
 
—  —  —  622  —  622  
Issuance of common stock relating to employee equity compensation plans453  —  9,614  —  —  9,614  
Tax withholdings related to net share settlements of equity awards—  —  (52,718) —  —  (52,718) 
Common stock repurchased and retired(366) —  (3,646) —  (95,858) (99,504) 
Stock-based compensation—  —  43,511  —  —  43,511  
Balance as of June 30, 201979,865  $8  $874,275  $(1,876) $501,275  $1,373,682  

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.







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ALIGN TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)

 Six Months Ended
June 30,
 20202019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $1,477,529  $218,990  
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred taxes(1,504,251) 5,606  
Depreciation and amortization44,283  37,488  
Stock-based compensation47,934  43,511  
Non-cash operating lease cost11,148  8,681  
Allowance for doubtful accounts12,578  3,240  
Impairments on equity investments3,787  3,975  
Impairments on long-lived assets  28,498  
Gain from sale of equity method investment  (15,769) 
Equity in losses of investee  7,528  
Other non-cash operating activities11,542  9,548  
Changes in assets and liabilities, net of effects of acquisition:
Accounts receivable64,645  (89,055) 
Inventories(21,398) (26,681) 
Prepaid expenses and other assets(31,058) (48,949) 
Accounts payable11,918  1,847  
Accrued and other long-term liabilities(106,572) 1,321  
Long-term income tax payable6,707  9,608  
Deferred revenues40,892  95,174  
Net cash provided by operating activities69,684  294,561  
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition, net of cash acquired(420,788)   
Purchase of property, plant and equipment(80,502) (80,598) 
Purchase of marketable securities(5,341) (353,995) 
Proceeds from maturities of marketable securities42,641  107,021  
Proceeds from sales of marketable securities278,817  14,456  
Repayment on unsecured promissory note11,087  6,598  
Other investing activities1,760  (14,502) 
Net cash used in investing activities(172,326) (321,020) 
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock10,662  9,614  
Common stock repurchases  (99,504) 
Payroll taxes paid upon the vesting of equity awards(47,038) (52,718) 
Purchase of finance lease  (45,773) 
Net cash used in financing activities(36,376) (188,381) 
Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash(7,172) 1,467  
Net decrease in cash, cash equivalents, and restricted cash(146,190) (213,373) 
Cash, cash equivalents, and restricted cash at beginning of the period551,134  637,566  
Cash, cash equivalents, and restricted cash at end of the period$404,944  $424,193  

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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ALIGN TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

Note 1. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared by Align Technology, Inc. (“we”, “our”, or “Align”) in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) and contains all adjustments, including normal recurring adjustments, necessary to state fairly our results of operations for the three and six months ended June 30, 2020 and 2019, our comprehensive income for the three and six months ended June 30, 2020 and 2019, our financial position as of June 30, 2020, our stockholders’ equity for the three and six months ended June 30, 2020 and 2019, and our cash flows for the six months ended June 30, 2020 and 2019. The Condensed Consolidated Balance Sheet as of December 31, 2019 was derived from the December 31, 2019 audited financial statements. It does not include all disclosures required by accounting principles generally accepted in the United States of America (“U.S.”).

The results of operations for the three and six months ended June 30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020 or any other future period, and we make no representations related thereto. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the Consolidated Financial Statements and notes thereto included in Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2019.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles (“GAAP”) in the U.S. requires our management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates. On an ongoing basis, we evaluate our estimates, including those related to revenue recognition, useful lives of intangible assets and property and equipment, long-lived assets and goodwill, income taxes and contingent liabilities, the fair values of financial instruments, stock-based compensation, unsecured promissory note receivable, and valuation of investments in privately held companies among others. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities.

Significant Accounting Policies

Our significant accounting policies are described in Note 1 “Summary of Significant Accounting Policies” of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K. As a result of our exocad Global Holdings GmbH (“exocad”) acquisition, we have added or amended relevant significant accounting policies as described below. Refer to Note 4 "Business Combination" of the Notes to Condensed Consolidated Financial Statements for additional details on the exocad acquisition which is included in our Imaging Systems and CAD/CAM Services (Systems and Services) reportable segment.

Business Combinations

We allocate the fair value of the purchase consideration to the assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. When determining the fair value of assets acquired and liabilities assumed, management is required to make certain estimates and assumptions, especially with respect to intangible assets. The estimates and assumptions used in valuing intangible assets include, but are not limited to, the amount and timing of projected future cash flows, the discount rate used to determine the present value of these cash flows, and the determination of the assets’ life cycle. These estimates are inherently uncertain and, therefore, actual results may differ from the estimates made.

Revenue Recognition - Systems and Services

We sell intraoral scanners and computer-aided design/computer-aided manufacturing (CAD/CAM”) services through both our direct sales force and distribution partners. The intraoral scanner sales price includes one year of warranty and unlimited scanning services. The customer may also select, for additional fees, extended warranty and unlimited scanning services for periods beyond the initial year. When intraoral scanners are sold with an unlimited scanning service agreement and/or extended warranty, we allocate revenues based on the respective standalone selling price (SSP”) of the scanner and the subscription service. We estimate the SSP of each element, taking into consideration historical prices as well as our discounting
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strategies. Revenues are then recognized over time as the monthly services are rendered and upon shipment of the scanner, as that is when we deem the customer to have obtained control. CAD/CAM services, where sold separately, include the initial software license and maintenance and support. We allocate revenues based upon the respective SSPs of the software license and the maintenance and support. We estimate the SSP of each element using historical prices. Revenues related to the software license are recognized upfront and revenues related to the maintenance and support are recognized over time. For both scanner and service sales, most consideration is collected upfront and in cases where there are payment plans, consideration is collected within one year and, therefore, there are no significant financing components.

Certain Risks and Uncertainties

Due to the COVID-19 pandemic, we are subject to a greater degree of uncertainty than normal in making the judgments and estimates needed to apply our significant accounting policies. As the COVID-19 pandemic continues to be a global issue, we may make changes to these estimates and judgments, which could result in meaningful impacts to our financial statements in future periods. The extent and duration of the impact of the COVID-19 pandemic on our business is highly uncertain and difficult to predict and the response to the pandemic is rapidly evolving. The severity of the impact of the COVID-19 pandemic on our business will depend on a number of factors, including, but not limited to, the duration and severity of the pandemic and the extent and severity of the impact on our customers, all of which are uncertain and cannot be predicted. Our future results of operations and liquidity could be adversely impacted by delays in payments of outstanding receivable amounts beyond normal payment terms, supply chain disruptions and uncertain demand, and the impact of any initiatives or programs that we may undertake to address financial and operations challenges faced by us or our customers. Additionally, the uncertainty of future results and cash flows may impact our significant assumptions and estimates including the collectability of accounts and other receivables and realization of our deferred tax assets. As of the date of issuance of these condensed consolidated financial statements, the extent to which the COVID-19 pandemic may materially impact our financial condition, liquidity, or results of operations is uncertain.

Recent Accounting Pronouncements

(i) New Accounting Updates Recently Adopted

In June 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-13, “Financial Instruments - Credit Losses” (Topic 326) to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The amendments in this update replace the existing guidance of incurred loss impairment methodology with an approach that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. In November 2018, the FASB issued ASU 2018-19, “Codification Improvements to Topic 326, Financial Instruments - Credit Losses” which clarifies the scope of guidance in the ASU 2016-13. The updated guidance is effective for annual periods beginning after December 15, 2019, including interim periods within those fiscal years. We adopted this standard in the first quarter of fiscal year 2020 which did not have a material impact on our condensed consolidated financial statements and related disclosures.

In January 2017, the FASB issued ASU 2017-04, “Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment,” to simplify the subsequent measurement of goodwill by eliminating step two from the goodwill impairment test. Under the amendments in this update, an entity will recognize an impairment charge for the amount by which the carrying value exceeds the fair value. The updated guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2019 on a prospective basis. We adopted this standard in the first quarter of fiscal year 2020 which did not have any impact on our condensed consolidated financial statements and related disclosures.

In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement,” to modify the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement. The updated guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2019 on a prospective basis. We adopted this standard in the first quarter of fiscal year 2020 which did not have any impact on our condensed consolidated financial statements and related disclosures.

In August 2018, the FASB issued ASU 2018-15, “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40) Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract,” to clarify the guidance on the costs of implementing a cloud computing hosting arrangement that is a service contract. Under the amendments in this update, the entity is required to follow the guidance in Subtopic 350-40, Internal-Use Software, to determine which implementation costs under the service contract to be capitalized as an asset and which costs to expense. The updated guidance is effective for fiscal years and interim periods within those years beginning after December 15,
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2019 either on a retrospective or prospective basis. We adopted this standard in the first quarter of fiscal year 2020 on a prospective basis which did not have any impact on our condensed consolidated financial statements and related disclosures.

(ii) Recent Accounting Updates Not Yet Effective

In December 2019, the FASB issued ASU 2019-12, "Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes,” to enhance and simplify various aspects of the income tax accounting guidance. The amendment removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. The amendments are effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2020. We are currently evaluating the impact of this guidance on our consolidated financial statements and related disclosures; however, we anticipate the adoption of the guidance will not have a material impact to our consolidated financial statements and related disclosures.

Note 2. Investments and Fair Value Measurements

Marketable Securities

We have no short-term or long-term marketable securities as of June 30, 2020.

As of December 31, 2019, the estimated fair value of our short-term marketable securities, classified as available for sale, are as follows (in thousands):
December 31, 2019Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair Value
Corporate bonds$210,891  $142  $(27) $211,006  
U.S. government treasury bonds70,587  65  (2) 70,650  
U.S. government agency bonds22,085  17  (1) 22,101  
Commercial paper14,426      14,426  
Certificates of deposit19      19  
Total marketable securities, short-term$318,008  $224  $(30) $318,202  

We had no long-term marketable securities as of December 31, 2019.

Cash equivalents are not included in the table above as the gross unrealized gains and losses are not material. We had no short-term marketable securities that have been in a continuous material unrealized loss position for greater than twelve months as of December 31, 2019. Amounts reclassified to earnings from accumulated other comprehensive income (loss), net related to unrealized gains or losses were not material for the three and six months ended June 30, 2020 and 2019. For the three and six months ended June 30, 2020 and 2019, realized gains or losses were not material.

Our fixed-income securities investment portfolio allows for investments with a maximum effective maturity of up to 40 months on any individual security. The securities that we invest in are generally deemed to be low risk based on their credit ratings from the major rating agencies. The longer the duration of these securities, the more susceptible they are to changes in market interest rates and bond yields. As interest rates increase, those securities purchased at a lower yield show a mark-to-market unrealized loss which are primarily due to changes in interest rates and credit spreads. We expect to realize the full value of all these investments upon maturity or sale. The weighted average remaining duration of these securities was approximately seven months as of December 31, 2019.

As the carrying value approximates the fair value for our short-term marketable securities shown in the table above, the fair value of our short-term marketable securities as of December 31, 2019 had a contractual maturity one year or less.
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Fair Value Measurements

The following tables summarize our financial assets measured at fair value on a recurring basis as of June 30, 2020 and December 31, 2019 (in thousands):
DescriptionBalance as of
June 30, 2020
Level 1

Level 2
Level 3
Cash equivalents:
Money market funds$149,230  $149,230  $  $  
Prepaid expenses and other current assets:
Israeli funds3,291    3,291    
Current unsecured promissory note21,246      21,246  
$173,767  $149,230  $3,291  $21,246  

DescriptionBalance as of December 31, 2019Level 1Level 2Level 3
Cash equivalents:
Money market funds$236,923  $236,923  $  $  
Short-term investments:
Corporate bonds211,006    211,006    
Commercial paper