Fair Value Measurements

6 Months Ended

Jun. 30, 2022

Fair Value Disclosures [Abstract]

Fair Value Measurements

Note 10 - Fair Value Measurements

The following tables present the Company’s financial instruments that are measured at fair value on a recurring basis (in thousands):

	June 30, 2022
	Level 1		Level 2		Level 3		Total Fair Value Measurements
Assets:
Cash and cash equivalents	$	334,645	$	—	$	—	$	334,645
Derivative asset		—		18,638		—		18,638
Equity investments		—		—		2,609		2,609
	$	334,645	$	18,638	$	2,609	$	355,892
Liabilities:
Contingent earn-out liability	$	—	$	—	$	80,113	$	80,113
	$	—	$	—	$	80,113	$	80,113

	December 31, 2021
	Level 1		Level 2		Level 3		Total Fair Value Measurements
Assets:
Cash and cash equivalents	$	369,175	$	—	$	—	$	369,175
Derivative asset		—		5,008		—		5,008
Equity investments		—		—		2,610		2,610
	$	369,175	$	5,008	$	2,610	$	376,793
Liabilities:
Contingent earn-out liability	$	—	$	—	$	96,600	$	96,600
	$	—	$	—	$	96,600	$	96,600

There were no transfers between levels between June 30, 2022 and December 31, 2021.

The carrying value of accounts receivable, accounts payable, income tax payable, accrued expenses and other payables approximate their fair values due to the short-term maturities of these instruments.

The Company’s contingent earn-out liability is measured at fair value on a recurring basis using significant unobservable inputs (Level 3) and totaled $80.1 million and $96.6 million as of June 30, 2022 and December 31, 2021, respectively. The portion of the contingent earn-out liability expected to be payable within one year is included in “Total accrued expenses and other current liabilities” and the amount expected to be payable beyond one year is included is included in “Other liabilities” in the accompanying condensed consolidated balance sheets.

As of June 30, 2022, there is a contingent consideration arrangement, consisting of an earn-out payment to former shareholders of Worldwide Vision Limited of up to $150 million. The Company determined the fair value of the contingent earn-out liability by using a probability-weighted analysis to determine the amount of the liability, and applying a discount rate that captures the risks associated with the duration of the obligation. The number of scenarios in the probability-weighted analyses vary; generally, more scenarios are prepared for longer duration and more complex arrangements. As of June 30, 2022 and December 31, 2021, the fair value of the contingent earn-out liability reflects a risk-free rate of 2.8% and 0.5%, respectively.

In addition, as of June 30, 2022, there is a contingent consideration arrangement, consisting of an earn-out payment of up to $10 million in connection with the acquisition of Fruitz in January 2022. The Company determined the fair value of the contingent earn-out liability using a probability-weighted analysis and applied a discount rate that captures the risks associated with the obligation that is long-term in nature. As of June 30, 2022, the fair value of the contingent earn-out liability reflects a risk-free rate of 3.4%.

The Company classified contingent earn-out arrangements as liabilities at the time of the acquisition, as they will be settled in cash, and remeasures the fair values of the contingent earn-out liabilities each reporting period thereafter until settled. The fair value of the contingent earn-out liabilities are sensitive to changes in the forecasts of earnings and/or the relevant operating metrics and changes in discount rates. Changes in fair values of contingent earn-out liabilities are recognized in “General and administrative expense” in the accompanying condensed consolidated statements of operations. The change in fair value of the contingent earn-out liability was $1.3 million and $0.5 million for the three months ended June 30, 2022 and 2021, respectively, and $(19.4) million and $72.4 million for the six months ended June 30, 2022 and 2021, respectively.