Fair Value Measurements

3 Months Ended

Mar. 31, 2024

Fair Value Disclosures [Abstract]

Fair Value Measurements

Note 2. Fair Value Measurements

Accounting standards define fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. The standards also establish a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. There are three levels of inputs that may be used to measure fair value:

•Level 1 — Quoted prices in active markets for identical assets or liabilities.

•Level 2 — Assets and liabilities valued based on observable market data for similar instruments, such as quoted prices for similar assets or liabilities.

•Level 3 — Unobservable inputs that are supported by little or no market activity; instruments valued based on the best available data, some of which is internally developed, and considers risk premiums that a market participant would require.

We do not have any financial assets or liabilities in Level 3 as of March 31, 2024 or December 31, 2023, except for the liability for the earnout consideration related to the Voyantic Oy acquisition. We have classified this liability as such because we determined the fair value using significant unobservable inputs.

We applied the following methods and assumptions in estimating our fair value measurements:

Cash Equivalents — Cash equivalents comprise highly liquid investments, including money market funds with original maturities of less than three months at the acquisition date. We record the fair value measurement of these assets based on quoted market prices in active markets.

Investments — Our investments comprise fixed income securities, which include U.S. government agency securities, corporate notes and bonds, commercial paper, treasury bills and asset-backed securities. The fair value measurement of these assets is based on observable market-based inputs or inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Long-term Debt — See Note 7 for the carrying amount and estimated fair value of the Notes.

Contingent Consideration — The contingent consideration liability is related to the acquisition of Voyantic Oy (see Note 4: Goodwill and Intangible Assets), and the related payments are expected to occur in 2024. As of March 31, 2024, the contingent consideration liability of $7.1 million is included in "Accrued expenses and other current liabilities" on the condensed consolidated balance sheet.

The following table presents the balances of assets and liabilities measured at fair value on a recurring basis, by level within the fair value hierarchy, as of the dates presented (in thousands):

	March 31, 2024								December 31, 2023
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Cash equivalents:
Money market funds	$	132,475	$	—	$	—	$	132,475	$	78,661	$	—	$	—	$	78,661
Total cash equivalents		132,475		—		—		132,475		78,661		—		—		78,661
Short-term investments:
U.S. government agency securities		—		4,963		—		4,963		—		11,893		—		11,893
Corporate notes and bonds		—		—		—		—		—		—		—		—
Commercial paper		—		—		—		—		—		—		—		—
Treasury bill		—		—		—		—		—		—		—		—
Yankee bonds		—		1,973		—		1,973		—		1,951		—		1,951
Agency bonds		—		—		—		—		—		2,994		—		2,994
Asset-backed securities		—		356		—		356		—		1,602		—		1,602
Total short-term investments		—		7,292		—		7,292		—		18,440		—		18,440
Long-term investments:
U.S. government agency securities		—		—		—		—		—		—		—		—
Yankee bonds		—		—		—		—		—		—		—		—
Agency bonds		—		—		—		—		—		—		—		—
Asset-backed securities		—		—		—		—		—		—		—		—
Total long-term investments		—		—		—		—		—		—		—		—
Total	$	132,475	$	7,292	$	—	$	139,767	$	78,661	$	18,440	$	—	$	97,101
Acquisition related contingent consideration liability		—		—		7,087		7,087		—		—		6,180		6,180
Total liabilities at fair value	$	—	$	—	$	7,087	$	7,087	$	—	$	—	$	6,180	$	6,180

The following table presents additional information about liabilities measured at fair value for which the Company utilizes Level 3 inputs to determine fair value as of March 31, 2024 (in thousands):

	Three Months Ended March 31,
	2024
Balance as of January 1	$	6,180
Change in fair value of contingent consideration liability due to remeasurement		907
Balance as of March 31	$	7,087

At the acquisition date, we recorded the contingent consideration related to the Voyantic Oy acquisition at its fair value using unobservable inputs and used the Monte Carlo simulation option pricing framework, incorporating contractual terms and assumptions regarding financial forecasts, discount rates and volatility of forecasted revenue and gross margins. The development and determination of the unobservable inputs for Level 3 fair value measurements and fair value calculations is management's responsibility with the assistance of a third-party valuation specialist. During the quarter ended March 31, 2024, we remeasured the fair value of the contingent consideration liability based on updated inputs related to actual performance results and recorded an additional expense of $907,000 in general and administrative expense on the consolidated statement of operations. As of March 31, 2024 the contingent consideration liability of $7.1 million is included in "Accrued expenses and other current liabilities" on the condensed consolidated balance sheet.

As of December 31, 2023, the contingent consideration liability was $6.2 million.

We expect short-term investments to mature within 1 year of the reporting date. We expect long-term investments to mature between 1 and 2 years from the reporting date. See Note 7 for the carrying amount and estimated fair value of our convertible senior notes due 2027.

Investments

The following tables present the cost or amortized cost, gross unrealized gains, gross unrealized losses and total estimated fair value of our financial assets as of the dates presented (in thousands):

	March 31, 2024
	Cost or		Gross		Gross			Total Estimated
	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Description:
Money market funds	$	132,475	$	—	$	—		$	132,475
U.S. government agency securities		4,975		—		(12	)		4,963
Corporate notes and bonds		—		—		—			—
Yankee bonds		1,977		—		(4	)		1,973
Commercial paper		—		—		—			—
Treasury bill		—		—		—			—
Agency bond		—		—		—			—
Asset-backed securities		356		—		—			356
Total	$	139,783	$	—	$	(16	)	$	139,767

	December 31, 2023
	Cost or		Gross		Gross			Total Estimated
	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Description:
Money market funds	$	78,661	$	—	$	—		$	78,661
U.S. government agency securities		11,932		—		(39	)		11,893
Corporate notes and bonds		—		—		—			—
Yankee bonds		1,956		—		(5	)		1,951
Commercial paper		—		—		—			—
Treasury bill		—		—		—			—
Agency bond		2,998		—		(4	)		2,994
Asset-backed securities		1,604		—		(2	)		1,602
Total	$	97,151	$	—	$	(50	)	$	97,101

Marketable securities in a continuous loss position for less than 12 months had an estimated fair value of $7.1 million and $10.2 million and unrealized losses of $16,000 and $25,000 as of March 31, 2024 and December 31, 2023, respectively. Marketable securities in a continuous loss position for greater than 12 months had an estimated fair value of $100,000 and $8.2 million and immaterial unrealized losses as of March 31, 2024 and $26,000 in unrealized losses as of December 31, 2023.

Unrealized losses from our fixed-income securities are primarily attributable to changes in interest rates and not to lower credit ratings of the issuers. In determining whether an unrealized loss is other-than-temporary, for the periods presented, we determined we do not have plans to sell the securities nor is it more likely than not that we would be required to sell the securities before their anticipated recovery. We used the specific identification method to determine cost of securities sold.