Fair Value Measurements

12 Months Ended

Dec. 31, 2021

6. Fair Value Measurements

The following tables present the Company’s fair value hierarchy for its assets and liabilities that were measured at fair value on a recurring basis (in thousands):


	December 31, 2021
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents - money market funds	$	205,010	$	—	$	—	$	205,010
Liabilities:
Contingent consideration liability	$	—	$	—	$	2,800	$	2,800


	December 31, 2020
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents - money market funds	$	4,405	$	—	$	—	$	4,405
Liabilities:
Contingent consideration liability	$	—	$	—	$	3,365	$	3,365

Money market funds held as of December 31, 2021 and 2020 were valued by the Company based on quoted market prices, which represent a Level 1 measurement within the fair value hierarchy. The carrying values of the Company’s accounts receivable, unbilled receivables, accounts payable, and accrued expenses approximate their fair values due to the short-term nature of these assets and liabilities. The carrying value of the Company’s long-term debt approximated its fair value due to its variable interest rate. There were no transfers into or out of Level 3 during the periods presented.

The Company’s recurring fair value measurements using Level 3 inputs relate to the Company’s contingent consideration liability, as the significant inputs to the valuation are not observable in the market (refer to Note 5 - Acquisitions). Changes in the fair value of the Company’s contingent consideration liability were as follows (in thousands):


Balance as of December 31, 2019	$	—
Contingent consideration liability recorded in connection with acquisitions		4,608
Payment of contingent consideration		(1,500	)
Change in fair value		257
Balance as of December 31, 2020		3,365
Payment of contingent consideration		(1,868	)
Change in fair value		1,303
Balance as of December 31, 2021	$	2,800

As of December 31, 2021, the maximum amount of future contingent consideration (undiscounted) that the Company could be required to pay associated with its prior acquisitions was $3.0 million.

- 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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