Annual report [Section 13 and 15(d), not S-K Item 405]

Fair Value Measurement

v3.25.0.1
Fair Value Measurement
12 Months Ended
Dec. 31, 2024
Fair Value Measurement  
Fair Value Measurement

8. Fair Value Measurement

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

As of December 31, 2024

Quoted Market

Prices in Active

Significant

Markets for

Significant Other

Unobservable

Identical Assets

Observable Inputs

 Inputs

Total Fair Value 

(in thousands)

    

(Level 1)

    

(Level 2)

    

(Level 3)

    

Measurements

Assets:

  

  

  

  

Cash equivalents

$

67,645

$

$

$

67,645

Short-term investments

$

17,805

$

$

$

17,805

As of December 31, 2023

Quoted Market

Prices in Active

Significant 

Markets for

Significant Other

Unobservable

Identical Assets

Observable Inputs

 Inputs

Total Fair Value 

(in thousands)

    

(Level 1)

    

(Level 2)

    

(Level 3)

    

Measurements

Assets:

  

  

  

  

Cash equivalents:

$

61,463

$

$

$

61,463

Cash equivalents consisted of treasury bills with original maturities at the date of purchase of three months or less and money market funds for a total of $67.6 million and $61.5 million as of December 31, 2024 and 2023, respectively.

Short-term investments consisted of treasury bills and treasury notes of $17.8 million as of December 31, 2024. As of December 31, 2024, all of the Company’s Short-term investments are contractually due within one year.

As of December 31, 2024 and 2023, the amortized cost of the Company’s treasury bills and treasury notes approximated fair value. The Company did not record any unrealized gains, unrealized losses, or credit losses for the years ended December 31, 2024 and 2023.

Contingent consideration relates to potential payments that the Company may be required to make associated with a business combination. To the extent that the valuations of these liabilities are based on inputs that are less observable or not observable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for measures categorized in Level 3.

There was no activity for contingent consideration during the year ended December 31, 2024. Rollforward of the fair value measurements of the contingent consideration categorized with Level 3 inputs for the years ended December 31, 2023 and 2022 is as follows:

(in thousands)

    

Balance as of January 1, 2022

$

1,717

Payments during the year

(1,717)

Balance as of December 31, 2022

    

Fair value at date of acquisition

 

1,193

Fair value adjustments

(1,193)

Balance as of December 31, 2023

$

As described in Footnote 4, Business Combinations, on February 16, 2022, pursuant to the terms of the Zentrick Early Termination Agreement, the Company paid the remaining balance of the contingent consideration referred to as the Zentrick Deferred Payment Terms.

The fair value of contingent consideration from the Scibids Contingent Payment related to the achievement of certain performance metrics have been estimated using a Black-Scholes option pricing model. As of the acquisition date, forecasted amounts for the Earn-Out Period were taken and discounted to the valuation date using a risk adjusted discount rate of 11.3%. Additional significant assumptions include volatility of 25.0% and operating leverage of 160%. Volatility was estimated based on asset volatilities of comparable companies, which were calculated based on observed equity volatilities, adjusted for financial leverage using the Merton Model. Operating leverage of the seller was calculated as the ratio of the present value of the forecasted fixed cost and EBITDA.

The Earn-out Period concluded on December 31, 2023. For the year-ended December 31, 2023, there was a decrease in fair value of $1.2 million recorded as a gain in Other income, net in the Consolidated Statements of Operations and Comprehensive Income in relation to the Scibids Contingent Payment. The decrease in fair value was due to the actual performance metrics during the Earn-out Period not exceeding a certain threshold.