Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2022

Schedule of Assets and Liabilities Measured at Fair Value on Recurring Basis

The following financial assets and liabilities are measured at fair value on a recurring basis. The fair values recognized in the accompanying consolidated balance sheets and the level within the fair value hierarchy in which the fair value measurements fall is as follows (in thousands):

			Fair Value Measurements Using
			Quoted Prices		Significant
			in Active		Other		Significant
			Markets for		Observable		Unobservable
	Fair		Identical Assets		Inputs		Inputs
March 31, 2022	Value		(Level 1)		(Level 2)		(Level 3)
Money market funds	$	1,405,965	$	1,405,965	$	—	$	—
Available-for-sale securities:
U.S. treasury securities		359		359		—		—
Earnouts related to business combinations		96,757		—		—		96,757

			Fair Value Measurements Using
			Quoted Prices		Significant
			in Active		Other		Significant
			Markets for		Observable		Unobservable
	Fair		Identical Assets		Inputs		Inputs
December 31, 2021	Value		(Level 1)		(Level 2)		(Level 3)
Money market funds	$	1,439,522	$	1,439,522	$	—	$	—
Available-for-sale securities:
U.S. treasury securities		370		370		—		—
Earnouts related to business combinations		113,978		—		—		113,978

Summary of Assumptions Used to Calculate the Estimated Earnout Liabilities

The following table provides summary information of the assumptions used to calculate the estimated earnout liabilities related to 2021 and 2020 acquisitions (in thousands):

						Discount Rate as of				Balance as of		Balance as of
Acquisition	Year of Acquisition		Earnout Target	Method	Earnout Period	March 31, 2022				March 31, 2022		December 31, 2021
CrowdReason		2021	Specific revenue growth thresholds through October 2024, a cap of $30.0 million is available; to be settled in cash.	Probability-weighted discounted cash flows and Monte Carlo simulation	October 2024		5.0	%	(a)	$	24,368	$	26,320
Track1099		2021	Specific revenue growth thresholds through April 2023, with a cap of $12.5 million; to be settled in cash.	Probability-weighted discounted cash flows and Monte Carlo simulation	April 2023		10.0	%	(a)		6,570		7,880
Davo		2021	Specific revenue growth thresholds through March 2023, with no cap; to be settled in cash.	Probability-weighted discounted cash flows and Monte Carlo simulation	March 2023		8.0	%	(a)		34,940		35,885
Transaction Tax Resources (“TTR”)		2020	Specific revenue growth thresholds through December 2022, with cap of $26.4 million; to be settled in cash.	Probability-weighted discounted cash flows and Monte Carlo simulation	December 2022		15.0	%	(c)		11,910		24,830
Business Licenses		2020	Achievement of certain performance metrics through November 2024, with cap of $20.7 million; to be settled in common stock.	Scenario-based approach	November 2024		6.2	%	(b)		18,969		19,063
Balance end of period										$	96,757	$	113,978

(a) The discount rate was calculated using the build-up method with a risk-free rate commensurate with the term of the earnout based on the equity, asset and revenue betas, size premium, and the Company’s specific risk premium, as well as the market risk premium using a bottom-up approach.
(b) The discount rate was based on the Company's estimated credit yield. The Business Licenses earnout was assumed by management to have a high probability of achievement.
(c) $13.2 million was paid on March 2, 2022 in satisfaction of the first earnout period for TTR. The second earnout period, if achieved, is payable in March 2023. The discount rate of 15% was only used for revenue that was non-contracted as of March 31, 2022. The discount rate of 15% was calculated using the build-up method with a risk-free rate commensurate with the term of the earnout based on the equity, asset and revenue betas, size premium, and the Company’s specific risk premium, as well as the market risk premium using a bottom-up approach. For contracted revenue, no risk adjusted discount rate was assumed, other than the cost of debt, as it is not subject to forecasting uncertainty.

Summary of Reconciliation of Beginning and Ending Balances of Recurring Fair Value Measurements

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, is as follows (in thousands):

	For the Three Months Ended March 31,
	2022			2021
Earnout liabilities related to business combinations:
Balance beginning of period	$	113,978		$	34,501
Measurement period adjustments		—			1,802
Payments of earnout liabilities		(13,220	)		—
Fair value changes included in total other expense (income), net		(4,001	)		1,350
Balance end of period	$	96,757		$	37,653