v3.24.2
Fair Value Measurements
 6 Months Ended
Jun. 30, 2024
Fair Value Disclosures [Abstract]  
Fair Value Measurements

Note 2. Fair Value Measurements

Accounting standards define fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. The standards also establish a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. There are three levels of inputs that may be used to measure fair value:

•
Level 1 — Quoted prices in active markets for identical assets or liabilities.
•
Level 2 — Assets and liabilities valued based on observable market data for similar instruments, such as quoted prices for similar assets or liabilities.
•
Level 3 — Unobservable inputs that are supported by little or no market activity; instruments valued based on the best available data, some of which is internally developed, and considers risk premiums that a market participant would require.

We do not have any financial assets or liabilities in Level 3 as of June 30, 2024, and only had the liability for the earnout consideration related to the Voyantic Oy acquisition in Level 3 as of December 31, 2023. We classified this liability as Level 3 because we determined the fair value using significant unobservable inputs.

We applied the following methods and assumptions in estimating our fair value measurements:

Cash Equivalents — Cash equivalents comprise highly liquid investments, including money market funds with original maturities of less than three months at the acquisition date. We record the fair value measurement of these assets based on quoted market prices in active markets.

Investments — Our investments comprise fixed income securities, which include U.S. government agency securities, corporate notes and bonds, commercial paper, treasury bills and asset-backed securities. The fair value measurement of these assets is based on observable market-based inputs or inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Long-term Debt — See Note 7 for the carrying amount and estimated fair value of the Notes.

Contingent Consideration — The contingent consideration liability is related to our acquisition of Voyantic Oy (see Note 4: Goodwill and Intangible Assets). We paid the contingent consideration amount of $7.2 million in second-quarter 2024.

The following table presents the balances of assets and liabilities measured at fair value on a recurring basis, by level within the fair value hierarchy, as of the dates presented (in thousands):

 

 

June 30, 2024

 

 

December 31, 2023

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

181,391

 

 

$

—

 

 

$

—

 

 

$

181,391

 

 

$

78,661

 

 

$

—

 

 

$

—

 

 

$

78,661

 

Total cash equivalents

 

 

181,391

 

 

 

—

 

 

 

—

 

 

 

181,391

 

 

 

78,661

 

 

 

—

 

 

 

—

 

 

 

78,661

 

Short-term investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government agency securities

 

 

—

 

 

 

3,493

 

 

 

—

 

 

 

3,493

 

 

 

—

 

 

 

11,893

 

 

 

—

 

 

 

11,893

 

Yankee bonds

 

 

—

 

 

 

1,998

 

 

 

—

 

 

 

1,998

 

 

 

—

 

 

 

1,951

 

 

 

—

 

 

 

1,951

 

Agency bonds

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

2,994

 

 

 

—

 

 

 

2,994

 

Asset-backed securities

 

 

—

 

 

 

72

 

 

 

—

 

 

 

72

 

 

 

—

 

 

 

1,602

 

 

 

—

 

 

 

1,602

 

Total short-term investments

 

 

—

 

 

 

5,563

 

 

 

—

 

 

 

5,563

 

 

 

—

 

 

 

18,440

 

 

 

—

 

 

 

18,440

 

Total

 

$

181,391

 

 

$

5,563

 

 

$

—

 

 

$

186,954

 

 

$

78,661

 

 

$

18,440

 

 

$

—

 

 

$

97,101

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition related contingent consideration liability

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

6,180

 

 

 

6,180

 

Total liabilities at fair value

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

6,180

 

 

$

6,180

 

 

The following table presents additional information about liabilities measured at fair value for which the Company uses Level 3 inputs to determine fair value as of June 30, 2024 (in thousands):

 

 

 

Six Months Ended June 30,

 

 

 

2024

 

Balance as of January 1

 

$

6,180

 

Change in fair value of contingent consideration liability due to remeasurement

 

 

986

 

Contingent consideration payment made

 

 

(7,166

)

Balance as of June 30

 

$

—

 

 

 

At the acquisition date, we recorded the contingent consideration related to the Voyantic Oy acquisition at its fair value using unobservable inputs and used the Monte Carlo simulation option pricing framework, incorporating contractual terms and assumptions regarding financial forecasts, discount rates and volatility of forecasted revenue and gross margins. Developing and determining the unobservable inputs for Level 3 fair-value measurements and fair-value calculations is management's responsibility with assistance from a third-party valuation specialist. During the quarter ended June 30, 2024, we made the payment for contingent consideration and as of June 30, 2024, the contingent consideration liability is $0.

 

As of December 31, 2023, the contingent consideration liability was $6.2 million.

 

We expect short-term investments to mature within 1 year of the reporting date. See Note 7 for the carrying amount and estimated fair value of our convertible senior notes due 2027.

Investments

The following tables present the cost or amortized cost, gross unrealized gains, gross unrealized losses and total estimated fair value of our financial assets as of the dates presented (in thousands):

 

June 30, 2024

 

 

Cost or

 

 

Gross

 

 

Gross

 

 

Total Estimated

 

 

Amortized Cost

 

 

Unrealized Gains

 

 

Unrealized Losses

 

 

Fair Value

 

Description:

 

 

 

 

 

 

 

 

 

 

 

Money market funds

$

181,391

 

 

$

—

 

 

$

—

 

 

$

181,391

 

U.S. government agency securities

 

3,496

 

 

 

—

 

 

 

(3

)

 

 

3,493

 

Yankee bonds

 

1,998

 

 

 

—

 

 

 

—

 

 

 

1,998

 

Asset-backed securities

 

72

 

 

 

—

 

 

 

—

 

 

 

72

 

Total

$

186,957

 

 

$

—

 

 

$

(3

)

 

$

186,954

 

 

 

December 31, 2023

 

 

Cost or

 

 

Gross

 

 

Gross

 

 

Total Estimated

 

 

Amortized Cost

 

 

Unrealized Gains

 

 

Unrealized Losses

 

 

Fair Value

 

Description:

 

 

 

 

 

 

 

 

 

 

 

Money market funds

$

78,661

 

 

$

—

 

 

$

—

 

 

$

78,661

 

U.S. government agency securities

 

11,932

 

 

 

—

 

 

 

(39

)

 

 

11,893

 

Yankee bonds

 

1,956

 

 

 

—

 

 

 

(5

)

 

 

1,951

 

Agency bond

 

2,998

 

 

 

—

 

 

 

(4

)

 

 

2,994

 

Asset-backed securities

 

1,604

 

 

 

—

 

 

 

(2

)

 

 

1,602

 

Total

$

97,151

 

 

$

—

 

 

$

(50

)

 

$

97,101

 

Marketable securities in a continuous loss position for less than 12 months had an estimated fair value of $2.0 million and immaterial unrealized losses as of June 30, 2024, and an estimated fair value of $10.2 million and $25,000 in unrealized losses as of December 31, 2023. Marketable securities in a continuous loss position for greater than 12 months had an estimated fair value of $3.6 million and immaterial unrealized losses as of June 30, 2024, and an estimated fair value of $8.2 million $26,000 in unrealized losses as of December 31, 2023.