
	Fair Value Measurement as of September 30, 2023
	Level 1		Level 2		Level 3		Total Fair Value
Assets
Money market mutual funds	$	194,989	$	—	$	—	$	194,989
Debt securities:
U.S. Treasuries	32,066		—		—		32,066
Obligations of states and municipalities	—		13,534		—		13,534
Corporate bonds	—		43,626		—		43,626
Residential and commercial mortgage-backed securities	—		22,528		—		22,528
Other loan-backed and structured securities	—		3,614		—		3,614
	$	227,055	$	83,302	$	—	$	310,357
Liabilities
Contingent consideration - business combinations (1)	$	—	$	—	$	20,529	$	20,529
Contingent consideration - earnout	—		—		44		44
Private warrant liability	—		—		87		87
Embedded derivatives	—		—		26,310		26,310
	$	—	$	—	$	46,970	$	46,970


	Fair Value Measurement as of December 31, 2022
	Level 1		Level 2		Level 3		Total Fair Value
Assets
Money market mutual funds	$	6,619	$	—	$	—	$	6,619
Debt securities:
U.S. Treasuries	35,322		—		—		35,322
Obligations of states and municipalities	—		10,225		—		10,225
Corporate bonds	—		28,227		—		28,227
Residential and commercial mortgage-backed securities	—		11,533		—		11,533
Other loan-backed and structured securities	—		6,334		—		6,334
	$	41,941	$	56,319	$	—	$	98,260
Liabilities
Contingent consideration - business combinations (2)	$	—	$	—	$	24,546	$	24,546
Contingent consideration - earnout	—		—		44		44
Private warrant liability	—		—		707		707
	$	—	$	—	$	25,297	$	25,297

(1)The Condensed Consolidated Balance Sheets include $0.7 million in accrued expenses and other current liabilities and $19.9 million in other liabilities as of September 30, 2023, for contingent consideration related to business combinations.

(2)The Condensed Consolidated Balance Sheets include $1.4 million in accrued expenses and other current liabilities and $23.2 million in other liabilities as of December 31, 2022, for contingent consideration related to business combinations.

Money market mutual funds are valued at the closing price reported by the fund sponsor from an actively traded exchange. As the funds are generally maintained at a net asset value which does not fluctuate, cost approximates fair value. These are included as a Level 1 measurement in the table above. The fair values for available-for-sale fixed-maturity securities are based upon prices provided by an independent pricing service. We have reviewed these prices for reasonableness and have not adjusted any prices received from the independent provider. Level 2 securities represent assets whose fair value is determined using observable market information such as previous day trade prices, quotes from less active markets or quoted prices of securities with similar characteristics. There were no transfers between Level 1 and Level 2.

We estimated the fair value of the business combination contingent consideration related to the Floify LLC (“Floify”) acquisition in October 2021 and triggered by stock price milestones using the Monte Carlo simulation method. The fair value is based on the simulated market price of our common stock over the maturity date of the contingent consideration. As of September 30, 2023, the key inputs used to determine the fair value of $16.6 million included the stock price of $0.80, strike price of $36.00, discount rate of 15.6% and volatility of 95%. As of December 31, 2022, the key inputs used in the determination of the fair value of $15.5 million included the stock price of $1.88, strike price of $36.00, discount rate of 10.3% and volatility of 95%.

We estimated the fair value of the business combination contingent consideration based on specific metrics related to the acquisition of Residential Warranty Services (“RWS”) in April 2022, using the discounted cash flow method. The fair value is based on a percentage of revenue over the maturity date of the contingent consideration. As of September 30, 2023, the key inputs used to determine the fair value of $4.3 million were management’s cash flow estimates and the discount rate of 17%. As of December 31, 2022, the key inputs used to determine the fair value of $9.0 million were management’s cash flow estimates and the discount rate of 17%.

We estimated the fair value of the earnout contingent consideration using the Monte Carlo simulation method. The fair value of less than $0.1 million is based on the simulated market price of our common stock until the maturity date of the contingent consideration and increased by certain employee forfeitures. As of September 30, 2023, the key inputs used to determine the fair value included exercise price of $22.00, volatility of 100%, forfeiture rate of 15%, and stock price of $0.80 As of December 31, 2022, the key inputs used in the determination of the fair value included exercise price of $22.00, volatility of 100%, forfeiture rate of 15% and stock price of $1.88.

We estimated the fair value of the private warrants using the Black-Scholes-Merton option pricing model. As of September 30, 2023, the key inputs used to determine the fair value included exercise price of $11.50, expected volatility of 95%, remaining contractual term of 2.23 years, and stock price of $0.80. As of December 31, 2022, the key inputs used to determine the fair value included exercise price of $11.50, expected volatility of 90%, remaining contractual term of 2.98 years, and stock price of $1.88.

In connection with the issuance of senior secured convertible notes in April 2023 (see Note 7) and in accordance with Accounting Standards Codification 815-15, Derivatives and Hedging – Embedded Derivatives, certain features of the senior secured convertible notes were bifurcated and accounted for separately from the notes. The following features are recorded as derivatives.

•Repurchase option. If more than $30 million aggregate principal amount of the 2026 Notes remains outstanding on June 14, 2026, the 2028 Note holders have the right to require us to repurchase for cash on June 15, 2026, all or any portion of their 2028 Notes, in principal amounts of one thousand dollars or an integral number thereof, at a repurchase price equal to 106.5% of the principal amount of the 2028 Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the repurchase date.

•Fundamental change option. If we undergo a fundamental change, as defined in the indenture governing the 2028 Notes and subject to certain conditions, holders of the 2028 Notes have the right to require us to repurchase for cash all or any portion of their 2028 Notes, in principal amounts of one thousand dollars or an integral multiple thereof, at a repurchase price equal to 105.25% of the principal amount of the 2028 Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the repurchase date. A

•Asset sale repurchase option. If we sell assets and receive net cash proceeds of $2.5 million in excess of the Asset Sale Threshold (as defined below) (such excess net cash proceeds, the “Excess Proceeds”), we must offer to all holders of 2028 Notes to repurchase their 2028 Notes for an aggregate amount of cash equal to 50% of such Excess Proceeds at a repurchase price per 2028 Note equal to 100% of the principal amount thereof, plus accrued and unpaid interest to, but excluding, the relevant purchase date, if any. “Asset Sale Threshold” means $20.0 million in the aggregate, provided that on and after the date on which the cumulative net cash proceeds received by the Company and its restricted subsidiaries from the sale of assets after April 20, 2023 exceeds $20.0 million in the aggregate, the “Asset Sale Threshold” means $0.

The inputs for determining fair value of the embedded derivatives are classified as Level 3 inputs. Level 3 fair value is based on unobservable inputs based on the best information available. These inputs include the probabilities of a repurchase, a fundamental change, and qualifying asset sales, ranging from 1% to 35%.

Fair value measurements categorized within Level 3 are sensitive to changes in the assumptions or methodology used to determine fair value, and such changes could result in a significant increase or decrease in the fair value.


	Contingent Consideration - Earnout		Contingent Consideration - Business Combinations		Embedded Derivatives		Private Warrant Liability
Fair value as of December 31, 2022	$	44	$	24,546	$	—	$	707
Additions	—		—		23,870		—
Settlements	—		(420)		—		—
Change in fair value, loss (gain) included in net loss(1)	—		(3,597)		2,440		(620)
Fair value as of September 30, 2023	$	44	$	20,529	$	26,310	$	87


	Contingent Consideration - Earnout		Contingent Consideration - Business Combinations		Private Warrant Liability
Fair value as of December 31, 2021	$	13,866	$	9,617	$	15,193
Additions	—		8,900		—
Settlements	—		(540)		—
Change in fair value, loss (gain) included in net loss(1)	(13,809)		5,251		(14,391)
Fair value as of September 30, 2022	$	57	$	23,228	$	802

(1)Changes in fair value of contingent consideration related to business combinations are included in general and administrative expenses in the unaudited condensed consolidated statements of operations. Changes in fair value of the earnout contingent consideration and private warrant liability are disclosed separately in the unaudited condensed consolidated statements of operations. Changes in the fair value of the embedded derivatives are included in change in fair value of derivatives in the unaudited condensed consolidated statements of operations.

As of September 30, 2023, and December 31, 2022, the fair value of the 2026 Notes (see Note 7) is $73.4 million and $238.6 million, respectively. The decrease of $165.2 million is primarily due to the decline in the stock price at September 30, 2023, as compared to December 31, 2022. As of September 30, 2023, the fair value of the 2028 Notes (see Note 7) was $195.0 million. The fair values of the line of credit, advance funding arrangement and other notes approximate