Financial Instruments and Fair Value Measurements

6 Months Ended

Jun. 30, 2024

Fair Value Disclosures [Abstract]

Financial Instruments and Fair Value Measurements

Financial Instruments and Fair Value Measurements

The following table sets forth the Company’s financial instruments that are measured at fair value on a recurring basis based on the three-tier fair value hierarchy (in thousands):

				As of June 30, 2024
	Balance Sheet Location	Total		Level 1		Level 2		Level 3
Financial Assets:
Money market deposit accounts	Cash and cash equivalents	$	1,389	$	1,389	$	—	$	—
Total financial assets		$	1,389	$	1,389	$	—	$	—

				As of December 31, 2023
	Balance Sheet Location	Total		Level 1		Level 2		Level 3
Financial Assets:
Money market deposit accounts	Cash and cash equivalents	$	1,352	$	1,352	$	—	$	—
Total financial assets		$	1,352	$	1,352	$	—	$	—

Derivatives Not Designated as Hedging Instruments

In October 2022 and March 2023, the Company entered into multiple pay-fixed receive-variable interest rate swaps as part of its interest rate risk management strategy in connection with the term loans under a certain credit agreement (see Note 11 - Credit Agreement). The Company elected to not designate the interest rate swaps as hedging instruments for accounting purposes and recorded both realized and unrealized gains and losses associated with the interest rate swaps immediately through earnings in interest expense in the Company's condensed consolidated statement of operations. The fair value of the interest rate swaps are determined using widely accepted valuation techniques including discounted cash flow analysis based on the expected cash flows of the interest rate swaps. The Company has determined that the significant inputs, such as interest yield curve and discount rate, used to value its interest rate swaps fall within Level 2 of the fair value hierarchy.

In June 2023, the Company settled the March 2023 interest rate swaps with the counterparties and received $12.2 million. The net cash proceeds received from the settlement of the interest rate swaps are presented in net cash provided by operating activities and the supplemental disclosure of cash paid for interest, net in the Company's condensed consolidated statement of cash flows. The remaining interest rate swap matured on October 31, 2023. In relation to these interest rate swaps, the Company recorded a net gain of $21.4 million and $15.7 million during the three and six months ended June 30, 2023, respectively.

Non-Marketable Equity Securities Measured at Net Asset Value

The Company held equity interests in certain private equity funds of $78.0 million and $56.7 million as of June 30, 2024 and December 31, 2023, respectively, which are measured using the net asset value practical expedient. Under the net asset value practical expedient, the Company records investments based on the proportionate share of the underlying funds’ net asset value as of the Company's reporting date. These investments are included in other assets in the Company’s condensed consolidated balance sheets.

These funds vary in investment strategies and generally have an initial term of 7 to 10 years, which may be extended for 2 to 3 additional years with the applicable approval. These investments are subject to certain restrictions regarding transfers and withdrawals and generally cannot be redeemed with the funds. Distributions from the funds will be received as the underlying investments are liquidated. The Company’s maximum exposure to loss is limited to the carrying value of these investments of $78.0 million and the unfunded commitments of $22.2 million as of June 30, 2024.

During the three and six months ended June 30, 2024, the Company made total capital contributions of nil and $18.3 million, respectively, related to these investments. The unrealized gains related to these investments were not material for the three and six months ended June 30, 2024 and 2023, respectively.

Non-Marketable Equity Securities Measured at Fair Value on a Non-Recurring Basis

The Company's non-marketable equity securities are investments in privately held companies without readily determinable fair values. The Company elected the measurement alternative to account for these investments. Under the measurement alternative, the carrying value of the non-marketable equity securities are adjusted based on price changes from observable transactions of identical or similar securities of the same issuer or for impairment. Any changes in carrying value are recorded within other income, net in the Company's condensed consolidated statement of operations.

In February 2024, the Company entered into an agreement to invest $50.0 million in the Series C preferred stock financing of Humans, Inc., the developer of the Flip Shop social shopping app ("Flip Shop"), of which $10.0 million was closed in February 2024 and the remaining $40.0 million was closed in April 2024. In February 2024, the Company also entered into an arm's length commercial agreement with Flip Shop related to its use of the Company's AXON technology under a revenue share model.

In the second quarter of 2024, the Company purchased certain additional non-marketable equity securities for a total of $8.0 million.

As of June 30, 2024 and December 31, 2023, the carrying amounts of the Company's non-marketable equity securities were $68.1 million and $10.1 million, respectively, and were included in other assets in the Company’s condensed consolidated balance sheets.