Investments and fair value measurements

12 Months Ended

Dec. 31, 2023

4. Investments and fair value measurements

The Company’s assets and liabilities that are measured at fair value on a recurring or nonrecurring basis within the fair value hierarchy are as follows (in thousands):


As of December 31, 2023	Level 1		Level 2		Level 3
Current assets:
Cash equivalents:
Money market funds	$	266,692	$	—	$	—

Marketable securities:
U.S. government securities	$	—	$	171,372	$	—

Non-current assets:
Strategic investments	$	—	$	—	$	10,311

Non-current liabilities:
Cash settled stock appreciation rights	$	—	$	—	$	48


As of December 31, 2022	Level 1		Level 2		Level 3
Cash equivalents:
Money market funds	$	130,377	$	—	$	—
U.S. government securities	—		48,900		—
Total cash equivalents	$	130,377	$	48,900	$	—

Marketable securities:
U.S. government securities	$	—	$	151,687	$	—

Non-current assets:
Strategic investments	$	—	$	—	$	12,104

Non-current liabilities:
Cash settled stock appreciation rights	$	—	$	—	$	462

A summary of the changes in the fair value of Level 3 financial instruments, of which remeasurement of SARs and impairment of strategic investments are recognized in the consolidated statements of operations, is as follows (in thousands):


	Warrants		Stock Appreciation Rights		Strategic Investments
Balance— December 31, 2020	$	160	$	268	$	—
Exercise of redeemable convertible preferred stock warrants	(160)		—		—
Vesting and remeasurement of SARs, net of exercises	—		550		—
Purchases of strategic investments	—		—		10,000
Balance— December 31, 2021	—		818		10,000
Vesting and remeasurement of SARs, net of exercises	—		(294)		—
Purchases of strategic investments	—		—		5,000
Amount reclassified from liability to equity upon exchange	—		(62)		—
Unrealized loss on strategic investments	—		—		(2,896)
Balance— December 31, 2022	—		462		12,104
Vesting and remeasurement of SARs	—		(161)		—
Exercises of SARs	—		(253)		—
Unrealized loss on strategic investments	—		—		(1,793)
Balance— December 31, 2023	$	—	$	48	$	10,311

During the fiscal year ended December 31, 2021, the remaining outstanding 12,595 warrants to purchase Series A-1 redeemable convertible preferred stock were exercised for an immaterial amount of cash proceeds at an exercise price of $0.196 per share. The Company reclassified the $0.2 million fair value of the warrants into Series A-1 redeemable convertible preferred stock on the consolidated balance sheet. The change in fair value of the warrants during fiscal year ended December 31, 2021 was immaterial.

The Company evaluates its strategic investments for impairment at each reporting period. This evaluation consists of several potential qualitative and quantitative impairment indicators including, but not limited to, the investee's financial metrics, whether there were any significant adverse changes in the economic environment or general market conditions of the geographies and industries in which the investee operates, and any other publicly available information that may affect the value of the investment. The Company determined impairment indicators existed as of June 30, 2023, and the fair value of its strategic investments was less than their carrying value. There were no other remeasurement events for the Company's strategic investments for the remainder of 2023.

The difference between the strategic investment’s cost basis of $15.0 million and the carrying value of $10.3 million is due to cumulative impairment charges of $4.7 million, of which $1.8 million was recorded during the second quarter of 2023, and $2.9 million was recorded during the third quarter of 2022.

- 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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