Joby Aviation, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Fair Value Measurements

Fair Value Measurements

6 Months Ended

Jun. 30, 2022

Assets and liabilities recorded at fair value on a recurring basis in the condensed consolidated balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair values. Fair value represents 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. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The authoritative guidance on fair value measurements establishes a three-tier fair value hierarchy for disclosure of fair value measurements as follows:

•Level 1 - Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date;

•Level 2 - Inputs are observable, unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities; and

•Level 3 - Unobservable inputs that are significant to the measurement of the fair value of the assets or liabilities that are supported by little or no market data.

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.

The Company’s financial assets consist of Level 1 and 2 assets. The Company classifies its cash equivalents and marketable debt securities within Level 1 or Level 2 because they are valued using either quoted market prices or inputs other than quoted prices which are directly or indirectly observable in the market, including readily-available pricing sources for the identical underlying security which may not be actively traded. The Company’s fixed income available-for-sale securities consist of high quality, investment grade securities from diverse issuers. The valuation techniques used to measure the fair value of the Company’s marketable debt securities were derived from non-binding market consensus prices that are corroborated by observable market data and quoted market prices for similar instruments.

The Company’s financial liabilities measured at fair value on a recurring basis consist of Level 1, Level 2 and Level 3 liabilities. The Company’s Public Warrants (as defined in Note 8) are classified as Level 1 because they are directly observable in the market. The Company classifies the Private Placement Warrants (as defined in Note 8) within Level 2, because they were valued using inputs other than quoted prices which are directly observable in the market, including readily available pricing for the Company’s Public Warrants. The Company classifies the Earnout Shares Liability (as defined in Note 8) within Level 3. The Earnout Shares Liability is measured at fair value on a recurring basis. Changes in fair value of Level 3 liabilities are recorded in other income, net, in the condensed consolidated statements of operations.

The following tables set forth the fair value of the Company’s financial assets and liabilities measured on a recurring basis by level within the fair value hierarchy as of June 30, 2022 and December 31, 2021 (in thousands):


	June 30, 2022
	Level 1		Level 2		Level 3		Total
Assets measured at fair value
Money market funds	$	291,003	$	—	$	—	$	291,003
Cash equivalents	291,003		—		—		291,003
Term deposits	—		40,301		—		40,301
Asset backed securities	—		38,352		—		38,352
Government debt securities	—		344,485		—		344,485
Corporate debt securities	—		417,240		—		417,240
Available-for-sale investments	—		840,378		—		840,378
Total fair value of assets	$	291,003	$	840,378	$	—	$	1,131,381

Liabilities measured at fair value
Common stock warrant liabilities (Public)	$	18,716	$	—	$	—	$	18,716
Common stock warrant liabilities (Private Placement)	—		12,514		—		12,514
Earnout Shares Liability	—		—		64,005		64,005
Total fair value of liabilities	$	18,716	$	12,514	$	64,005	$	95,235


	December 31, 2021
	Level 1		Level 2		Level 3		Total
Assets measured at fair value
Money market funds	$	929,842	$	—	$	—	$	929,842
Cash equivalents	929,842		—		—		929,842
Term deposits	—		40,069		—		40,069
Asset backed securities	—		69,496		—		69,496
Government debt securities	—		47,308		—		47,308
Corporate debt securities	—		186,376		—		186,376
Available-for-sale investments	—		343,249		—		343,249
Total fair value of assets	$	929,842	$	343,249	$	—	$	1,273,091

Liabilities measured at fair value
Common stock warrant liabilities (Public)	$	26,910	$	—	$	—	$	26,910
Common stock warrant liabilities (Private Placement)	—		17,992		—		17,992
Earnout Shares Liability	—		—		109,844		109,844
Total fair value of liabilities	$	26,910	$	17,992	$	109,844	$	154,746

The following is a summary of the Company’s available-for-sale securities (in thousands):


	June 30, 2022
	Adjusted Basis		Unrealized Gains		Unrealized Losses		Recorded Basis
Assets measured at fair value
Term deposits	$	40,301	$	—	$	—	$	40,301
Asset backed securities	38,653		8		(309)		38,352
Government debt securities	346,460		—		(1,975)		344,485
Corporate debt securities	420,077		—		(2,837)		417,240
Total	$	845,491	$	8	$	(5,121)	$	840,378


	December 31, 2021
	Adjusted Basis		Unrealized Gains		Unrealized Losses		Recorded Basis
Assets measured at fair value
Term deposits	$	40,069	$	—	$	—	$	40,069
Asset backed securities	69,579		—		(83)		69,496
Government debt securities	47,355		—		(47)		47,308
Corporate debt securities	186,471		—		(95)		186,376
Total	$	343,474	$	—	$	(225)	$	343,249

There were no transfers between Level 1, Level 2 or Level 3 financial instruments in the six months ended June 30, 2022 and 2021.

The following table sets forth a summary of the change in the fair value, which is recognized as a component of other income within the condensed consolidated statement of operations, of the Company’s Level 3 financial liabilities (in thousands):


	Earnout Shares Liability
Fair value as of January 1, 2022	$	109,844
Change in fair value	(45,839)
Fair value as of June 30, 2022	$	64,005

The fair value of the Earnout Shares Liability (see Note 8) are based on significant unobservable inputs, which represent Level 3 measurements within the fair value hierarchy.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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