Fair Value Measurements

12 Months Ended

Dec. 31, 2019

Fair Value Disclosures [Abstract]

Fair Value Measurements

Note 6 - Fair Value Measurements

The Company has certain financial assets and liabilities which have been classified as either Level 1, 2 or 3 within the fair value hierarchy as described below.

Level 1 — Fair value based on quoted prices in active markets for identical assets or liabilities.

Level 2 —Fair value based on inputs other than Level 1 inputs that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices 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 assets or liabilities.

Level 3 —Fair value based on unobservable inputs that are supported by little or no market activity and such inputs are significant to the fair value of the assets or liabilities.

The following table represents the Company’s fair value hierarchy for its financial assets and liabilities that are measured at fair value on a recurring basis (in thousands):

	Fair Value Measurements
	As of  December 31, 2019
	Level 1		Level 2			Level 3			Total
Assets:
Money market funds (1)	$	2,354	$	—		$	—		$	2,354
Total Assets	$	2,354	$	—		$	—		$	2,354
Liabilities:
Contingent purchase price (2)	$	—	$	—		$	(2,511	)	$	(2,511	)
Interest rate swap (3)		—		(144	)		—			(144	)
Total Liabilities	$	—	$	(144	)	$	(2,511	)	$	(2,655	)

(1) Included in cash and cash equivalents in the Consolidated Balance Sheets.

(2) Included in accrued expenses and other current liabilities in the Consolidated Balance Sheets.

(3) The Company has an interest rate swap contract that hedges the risk of variability from interest payments on its borrowings (see Note 4 – Debt and Note 11 – Derivatives and Hedging). The fair value of the interest rate swap is based on mark-to-market valuations prepared by a third-party broker. Those valuations are based on observable interest rates and other observable market data, which the Company considers Level 2 inputs.

	Fair Value Measurements
	As of December 31, 2018
	Level 1		Level 2		Level 3			Total
Assets:
Money market funds (1)	$	255	$	—	$	—		$	255
Total Assets	$	255	$	—	$	—		$	255
Liabilities:
Contingent purchase price (2)	$	—	$	—	$	(4,196	)	$	(4,196	)
Total Liabilities	$	—	$	—	$	(4,196	)	$	(4,196	)

(1) Included in cash and cash equivalents in the Consolidated Balance Sheets.

(2) $1.8 million is included in accrued expenses and other current liabilities and $2.4 million is included in non-current liabilities in the Consolidated Balance Sheets.

During the years ended December 31, 2019 and 2018, the Company did not transfer assets or liabilities between levels of the fair value hierarchy. Additionally, there have been no changes to the valuation techniques for Level 2 or Level 3 liabilities.

Level 3 liabilities at December 31, 2019 consist entirely of the contingent purchase price related to the acquisition of FeedbackNow. Changes in the fair value of Level 3 contingent consideration for the years ended December 31, 2019 and 2018 were as follows (in thousands):

	Contingent
	Consideration
Acquisition of FeedbackNow (1)	$	(3,388	)
Fair value adjustment of contingent purchase price (2) (3)		(780	)
Foreign exchange effect		(28	)
Balance at December 31, 2018		(4,196	)
Fair value adjustment of contingent purchase price (2) (4)		(68	)
Payment of contingent purchase price		1,769
Foreign exchange effect		(16	)
Balance at December 31, 2019	$	(2,511	)

(1) See Note 2 – Acquisitions for a discussion of the fair value of the contingent purchase price as of the acquisition date.

(2) Subsequent to the acquisition of FeedbackNow on July 6, 2018, the fair value of the contingent consideration increased by $0.1 million and $0.8 million during 2019 and 2018, respectively, due primarily to the achievement of contract bookings during this period. This amount was recognized as acquisition and integration costs within the Consolidated Statements of Income (Loss).

(3) As of December 31, 2018, the significant unobservable inputs used in the Monte Carlo simulation to fair value the contingent consideration included projected contract bookings, a discount rate of 23.8%, and revenue volatility of 21.9%. Increases or decreases in the inputs would result in a higher or lower fair value measurement.

(4) As of December 31, 2019, the significant unobservable inputs used in the Monte Carlo simulation to fair value the contingent consideration included projected contract bookings, a discount rate of 17.3%, and revenue volatility of 26.6%. Increases or decreases in the inputs would result in a higher or lower fair value measurement.