Fair Value Measurement

3 Months Ended

Mar. 31, 2024

The Company’s financial assets and liabilities subject to fair value measurements on a recurring basis and the level of inputs used for such measurements were as follows:


	Fair Value as of March 31, 2024
(in thousands)	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents	$	37,941	$	—	$	—	$	37,941
Marketable securities	—		70,857		—		70,857
Derivative asset	—		48		—		48
Total fair value	$	37,941	$	70,905	$	—	$	108,846
Liabilities:
Common stock warrants (Public)	$	471	$	—	$	—	$	471
Common stock warrants (Private Placement)	—		221		—		221
Earnout liability	—		—		265		265
Derivative liability	—		26		—		26
Total fair value	$	471	$	247	$	265	$	983


	Fair Value as of December 31, 2023
(in thousands)	Level 1		Level 2		Level 3		Total
Assets:
Cash and cash equivalents	$	75,502	$	—	$	—	$	75,502
Marketable securities	—		82,761		—		82,761

Total fair value	$	75,502	$	82,761	$	—	$	158,263
Liabilities:
Common stock warrants (Public)	$	913	$	—	$	—	$	913
Common stock warrants (Private Placement)	—		428		—		428
Earnout liability	—		—		1,783		1,783
Derivative liability	—		300		—		300
Total fair value	$	913	$	728	$	1,783	$	3,424

The Company performs routine procedures such as comparing prices obtained from independent sources to ensure that appropriate fair values are recorded. The cash, cash equivalents and Public Warrants are categorized as Level 1 instruments as the fair value was determined based on the unadjusted quoted prices are available in active markets for identical assets or liabilities as of the reporting date. The marketable securities, derivative asset and derivative liability are categorized as Level 2 instruments as the estimated fair value was determined based on the estimated or actual bids and offers of the marketable securities in an over-the-counter market on the last business day of the period. The Warrants are classified within Level 1 or Level 2 because the transfer of Private Placement Warrants to anyone outside of certain permitted transferees of Artius Acquisition Partners LLC (the “Sponsor”) would result in the Private Placement Warrants having substantially the same terms as the Public Warrants, the Company determined that the fair value of each Private Placement Warrant is consistent with that of a Public Warrant. Accordingly, the Private Placement Warrants are classified as Level 2 financial instruments.

The value of the Earnout liability is classified as Level 3 measurements under the fair value hierarchy, as these liabilities have been valued based on significant inputs not observable in the market (see Note 9). A gain of $1.5 million and $12.9 million during the three months ended March 31, 2024 and 2023, respectively, was recorded on the unaudited condensed consolidated statement of operations and comprehensive (loss) income in the gain in fair value of earnout liability.

The following table summarizes the activities for the earnout liability:


(in thousands)	March 31, 2024		March 31, 2023
Balance at beginning of period	$	1,783	$	42,533
Gain in fair value of earnout liability	(1,518)		(12,872)
Other	—		233
Balance at end of period	$	265	$	29,894

As of March 31, 2024 and December 31, 2023, the carrying values of accounts receivable, accounts payable, accrued liabilities and deferred income approximate their respective fair values due to their short-term nature. We have determined the fair value of notes payable approximates the carrying value due to the standard terms of the arrangement including but not limited to the amount borrowed, the term, and the interest rate.

Marketable Securities

The Company’s marketable securities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy. Amortized cost net of unrealized gain (loss) is equal to fair value. The following table summarized the marketable securities by major security type as follows:


	As of March 31, 2024
(in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value

Corporate bonds	$	13,271	$	23	$	(730)	$	12,564
Asset-backed securities	48,478		29		(1,901)		46,606
U.S. government and agency securities	11,551		2		(192)		11,361
Foreign government and agency securities	372		—		(46)		326



Total marketable securities	$	73,672	$	54	$	(2,869)	$	70,857


	As of December 31, 2023
(in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value

Corporate bonds	$	21,869	$	26	$	(847)	$	21,048
Asset-backed securities	52,199		26		(2,289)		49,936
U.S. government and agency securities	11,706		—		(270)		11,436
Foreign government and agency securities	372		—		(31)		341



Total marketable securities	$	86,146	$	52	$	(3,437)	$	82,761

The realized gains and losses are included in other expenses, net in the unaudited condensed consolidated statements of operations and comprehensive (loss) income.

We sold marketable securities for proceeds of $441.4 million and $1,000.7 million during the three months ended March 31, 2024 and 2023, respectively. As a result of those sales, we realized a loss of $0.1 million and $0.8 million during the three months ended March 31, 2024 and 2023, respectively. We regularly review our available-for-sale marketable securities in an unrealized loss position and evaluate the current expected credit loss by considering factors such as historical experience, market data, issuer-specific factors, and current economic conditions. The aggregate fair value of the marketable securities in an unrealized loss position was $57.6 million and $73.2 million as of March 31, 2024 and December 31, 2023, respectively. The unrealized losses were attributable to changes in interest rates that impacted the value of the investments, and not related to increased credit risk. Accordingly, we have not recorded an allowance for credit losses associated with these investments.

The contractual maturities of the investments classified as marketable securities are as follows:


	As of March 31, 2024
(in thousands)	Mature within one year		Mature after one year through two years		Mature over two years		Fair Value

Corporate bonds	$	11,098	$	1,264	$	202	$	12,564
Asset-backed securities	—		1,212		45,394		46,606
U.S. government and agency securities	8,994		—		2,367		11,361
Foreign government and agency securities	326		—		—		326



Total marketable securities	$	20,418	$	2,476	$	47,963	$	70,857


	As of December 31, 2023
(in thousands)	Mature within one year		Mature after one year through two years		Mature over two years		Fair Value

Corporate bonds	$	20,756	$	292	$	—	$	21,048
Asset-backed securities	238		1,806		47,892		49,936
U.S. government and agency securities	8,929		—		2,507		11,436
Foreign government and agency securities	341		—		—		341



Total marketable securities	$	30,264	$	2,098	$	50,399	$	82,761

Derivative Asset and Liabilities

The Company entered into foreign currency derivative contracts with financial institutions to reduce foreign exchange risk related to certain marketable securities denominated in foreign currency. Foreign currency derivative contracts are marked-to-market at the end of each reporting period with gains and losses recognized as other income (expenses). The Company recognized a net gain of $0.3 million and $0.8 million during the three months ended March 31, 2024 and 2023, respectively, on the fair value adjustment of the foreign currency derivative contracts. The notional amount of foreign currency derivative contracts as of March 31, 2024 and December 31, 2023 was $29.5 million and $14.7 million, respectively.

- 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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