Fair Value Measurements

6 Months Ended

Jun. 30, 2020

The carrying amounts of the Company’s financial instruments of cash and certain cash equivalents, accounts receivable, accounts payable, accrued liabilities and deferred revenue approximate their fair values due to their short maturities. The Company has evaluated the estimated fair values of these financial instruments using available market information and management’s estimates. The use of different market assumptions and/or estimation methodologies could have a significant effect on the estimated fair value amounts.

The outstanding balance of the Company’s term loan facility as of June 30, 2020 and December 31, 2019 approximates fair value due to its variable market interest rate and relative short maturity.

Items measured at fair value on a recurring basis include the Company’s money market funds, derivative assets and liabilities and contingent consideration. During the periods presented, the Company has not changed the manner in which it values assets and liabilities that are measured at fair value using Level 3 inputs of the fair value hierarchy.

The following table sets forth the fair value hierarchy information for each major category of the Company’s assets and liabilities measured at fair value on a recurring basis as of June 30, 2020 and December 31, 2019:



(in thousands)	Quoted Prices in Active Markets for Identical Items (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total
June 30, 2020
Assets:
Money market funds	$	20,296	$	—		$	—		$	20,296
Derivative assets	—		566			—			566
Total assets	$	20,296	$	566		$	—		$	20,862
Liabilities:
Contingent consideration	$	—	$	—		$	(939	)	$	(939	)
Derivative liabilities	—		(1,314		)	—			(1,314		)
Total liabilities	$	—	$	(1,314	)	$	(939	)	$	(2,253	)
December 31, 2019
Assets:
Money market funds	$	7,108	$	—		$	—		$	7,108
Derivative assets	—		583			—			583
Total assets	$	7,108	$	583		$	—		$	7,691
Liabilities:
Contingent consideration	$	—	$	—		$	(894	)	$	(894	)
Derivative liabilities	—		(1,463		)	—			(1,463		)
Total liabilities	$	—	$	(1,463	)	$	(894	)	$	(2,357	)

Fair Value of Contingent Consideration

The following table sets forth a summary of changes in the fair value of the Company’s contingent consideration liability as of June 30, 2020:



(in thousands)	Contingent Consideration
Balance as of January 1, 2020	$	894
Accretion	45
Balance as of June 30, 2020	$	939

The Company’s contingent consideration liability represents its contingent performance obligations related to the acquisition of Initech, LLC on March 5, 2019 and is measured at fair value using the income approach with assumed discount rates and payment probabilities. These assumptions are based on unobservable inputs in the market, which represents a Level 3 measurement within the fair value hierarchy. The Company assesses these estimates on an ongoing basis as additional data impacting the assumptions is obtained. The fair value of the Company’s contingent consideration liability is recognized on its consolidated balance sheets within accrued liabilities as of June 30, 2020 and within other liabilities as of December 31, 2019 and any changes therein are recognized within acquisition, restructuring and other expenses in the consolidated statements of operations and comprehensive income for the three and six months ended June 30, 2020 and 2019.

- 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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