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Fair Value of Financial Instruments

3 Months Ended

Mar. 31, 2024

The following table provides information by level for the Company’s assets and liabilities that were measured at fair value on a recurring basis (in thousands):


	March 31, 2024
	Level 1		Level 2		Level 3		Total
Assets
Cash and cash equivalents:
Money market funds	$	21,793	$	—	$	—	$	21,793

Short-term investments:
Commercial paper	—		82,917		—		82,917
Corporate debt and U.S. government agency securities	—		56,629		—		56,629
Total short-term investments	—		139,546		—		139,546
Total financial assets	$	21,793	$	139,546	$	—	$	161,339
Liabilities
Warrant liabilities	$	—	$	—	$	250	$	250
Total financial liabilities	$	—	$	—	$	250	$	250


	December 31, 2023
	Level 1		Level 2		Level 3		Total
Assets
Cash and cash equivalents:
Money market funds	$	7,354	$	—	$	—	$	7,354
Commercial paper	—		2,989		—		2,989
Short-term investments:
Commercial paper	—		80,620		—		80,620
Corporate debt and U.S. government agency securities	—		58,538		—		58,538
Total short-term investments	—		139,158		—		139,158
Total financial assets	$	7,354	$	142,147	$	—	$	149,501
Liabilities
Warrant liabilities	$	—	$	—	$	229	$	229
Total financial liabilities	$	—	$	—	$	229	$	229

Money market funds are included within Level 1 of the fair value hierarchy because they are valued using quoted market prices in active markets. Market valuations of our investments which are classified as Level 2 are provided by an independent third party. In accordance with the fair value hierarchy, the market valuation sources include observable market inputs and are therefore considered Level 2 inputs for purposes of determining the fair values.

The fair value of the Private Placement warrant liabilities is based on significant unobservable inputs, which represent Level 3 measurements within the fair value hierarchy. In determining the fair value of the warrant liabilities, the Company used the Black-Scholes option pricing model to estimate the fair value using unobservable inputs including the expected term, expected volatility, risk-free interest rate and dividend yield (see Note 7).

The following table presents a summary of the changes in the fair value of the Company’s Level 3 financial instruments (in thousands):


	Private Placement Warrant Liability
Fair value as of December 31, 2023	$	229
Change in the fair value included in other income, net	21
Fair value as of March 31, 2024	$	250

Fair value as of December 31, 2022	180

Change in the fair value included in other income, net	(106)

Fair value as of March 31, 2023	$	74

Non-Recurring Fair Value Measurements

The Company has certain assets, including intangible assets, which are measured at fair value on a non-recurring basis and are adjusted to fair value only if an impairment charge is recognized. The categorization of the framework used to measure fair value of the assets is considered to be within the Level 3 valuation hierarchy due to the subjective nature of the unobservable inputs used.

Disclosure of Fair Values

The Company’s financial instruments that are not re-measured at fair value include accounts receivable, accounts payable, accrued and other current liabilities and debt. The carrying values of these financial instruments approximate their fair values.

- 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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