Fair Value Measurements

9 Months Ended

Sep. 30, 2018

Fair Value Disclosures [Abstract]

Fair Value Measurements

3. Fair Value Measurements

Assets and liabilities measured at fair value on a recurring basis

The fair value measurements of assets and liabilities recognized in the accompanying consolidated balance sheets measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements fall on dates presented as follows (in thousands):

			Fair Value Measurements Using
			Quoted Prices		Significant
			in Active		Other	Significant
			Markets for		Observable	Unobservable
	Fair		Identical Assets		Inputs	Inputs
September 30, 2018	Value		(Level 1)		(Level 2)	(Level 3)
Money market funds	$	134,844	$	134,844

			Fair Value Measurements Using
			Quoted Prices		Significant
			in Active		Other	Significant
			Markets for		Observable	Unobservable
	Fair		Identical Assets		Inputs	Inputs
December 31, 2017	Value		(Level 1)		(Level 2)	(Level 3)
Money market funds	$	10,261	$	10,261	$	$
Earnout related to acquisitions		380					380

The Company uses the fair value hierarchy for financial assets and liabilities. The Company’s non-financial assets and liabilities, which include goodwill, intangible assets, and long-lived assets, are not required to be measured at fair value on a recurring basis.

Earnout Liability

The Company estimates the fair value of earnout liability using the probability-weighted discounted cash flow and Monte Carlo simulations. As of December 31, 2017, the earnout liability associated with the 2016 acquisition of Gyori was valued utilizing a discount rate of 22%, and a risk-free rate based on linear interpolated U.S. Treasury rates commensurate with the term.

Earnout liabilities are classified as Level 3 liabilities because the Company uses unobservable inputs to value them, reflecting its assessment of the assumptions market participants would use to value these liabilities. Changes in the fair value of earnout liability are recorded as other (income) expense, net in the consolidated statements of operations.

A reconciliation of the beginning and ending balances of recurring fair value measurements recognized in the accompanying consolidated balance sheets using significant unobservable (Level 3) inputs, except for the earnout liability for VAT Applications, is as follows (in thousands):

	September 30,			December 31,
	2018			2017
Earnout liability:
Balance beginning of period	$	380		$	6,235
Payments of earnout liability		-			(2,101	)
Settlement of earnout liability		-			(3,051	)
Total unrealized (gains) losses included in other income		(380	)		(703	)
Balance end of period	$	-		$	380
Balance of earnout liability included in current liabilities (1)	$	3,000		$	3,061
Balance of earnout liability included in noncurrent liabilities		-			370

⁽¹⁾ Balance at September 30, 2018 and December 31, 2017 includes $3.0 million and $3.1 million for the settlement of the VAT Applications earnout, respectively. In the fourth quarter of 2018, the VAT Applications earnout was settled for a fixed €2.5 million, with the change in the liability related to currency fluctuation.