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Fair Value Measurement (Tables)

3 Months Ended

Mar. 31, 2017

Summary of assets at fair value on recurring basis

The following table summarizes the Company’s assets and liabilities measured at fair value on a recurring basis (in thousands):



	As of March 31, 2017
	Level 1		Level 2		Level 3		Total
Assets
Cash and cash equivalents ⁽¹⁾	$	5,986	$	—	$	—	$	5,986

Liabilities
Contingent consideration ⁽²⁾	$	—	$	—	$	8,300	$	8,300



	As of December 31, 2016
	Level 1		Level 2		Level 3		Total
Assets
Cash and cash equivalents ⁽¹⁾	$	1,128	$	—	$	—	$	1,128

Liabilities
Contingent consideration ⁽²⁾	$	—	$	—	$	8,300	$	8,300

⁽¹⁾ Represents the cash and cash equivalents that were held in a money market fund as of March 31, 2017, and December 31, 2016, as presented in the tables above.

⁽²⁾ Represents the contingent earn-out consideration related to the Passport acquisition as described further in Note 4.

Summary of liabilities at fair value on recurring basis

The following table summarizes the Company’s assets and liabilities measured at fair value on a recurring basis (in thousands):



	As of March 31, 2017
	Level 1		Level 2		Level 3		Total
Assets
Cash and cash equivalents ⁽¹⁾	$	5,986	$	—	$	—	$	5,986

Liabilities
Contingent consideration ⁽²⁾	$	—	$	—	$	8,300	$	8,300



	As of December 31, 2016
	Level 1		Level 2		Level 3		Total
Assets
Cash and cash equivalents ⁽¹⁾	$	1,128	$	—	$	—	$	1,128

Liabilities
Contingent consideration ⁽²⁾	$	—	$	—	$	8,300	$	8,300

⁽¹⁾ Represents the cash and cash equivalents that were held in a money market fund as of March 31, 2017, and December 31, 2016, as presented in the tables above.

⁽²⁾ Represents the contingent earn-out consideration related to the Passport acquisition as described further in Note 4.

Changes in contingent consideration measured at fair value

The changes in our contingent consideration, measured at fair value, for which the Company uses Level 3 inputs to determine fair value are as follows (in thousands):



	For the Three
	Months Ended
	March 31,
	2017		2016
Balance as of beginning-of-period	$	8,300	$	—
Additions	—		7,766
Balance as of end-of-period	$	8,300	$	7,766

Valuation techniques and significant unobservable inputs of Level 3 fair value measurements

The following table summarizes the fair value (in thousands), valuation techniques and significant unobservable inputs of our Level 3 fair value measurements as of March 31, 2017, and December 31, 2016:



	Fair		Valuation	Significant	Assumption or
	Value		Technique	Unobservable Inputs	Input Ranges
Contingent consideration ⁽¹⁾	$	8,300	Real options approach	Risk-adjusted recurring revenue CAGR	97.0	%	⁽²⁾
				Discount rate/time value	2.5% - 4.5%

⁽¹⁾ Related to additional Passport earn-out consideration as described further in Note 4.

⁽²⁾ The risk-adjusted recurring revenue CAGR is calculated over the five year period 2017-2021. Given that there was no recurring revenue in 2016, the calculation of the 2017 growth rate is based on a theoretical 2016 recurring revenue of $1.0 million, resulting in a higher growth rate. The risk-adjusted recurring revenue CAGR over the period 2018-2021 is 50.8%.