Fair Value Measurement
The following tables present information about the Company’s financial assets measured at fair value on a recurring basis as of December 31, 2025 and 2024, and indicate the fair value hierarchy of the valuation inputs utilized to determine such fair value (in thousands):
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| December 31, 2025 |
| Level 1 | | Level 2 | | Level 3 | | Total |
| Cash equivalents: | | | | | | | |
| Money market funds | $ | 85,140 | | | $ | — | | | $ | — | | | $ | 85,140 | |
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| Total financial assets | $ | 85,140 | | | $ | — | | | $ | — | | | $ | 85,140 | |
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| December 31, 2024 |
| Level 1 | | Level 2 | | Level 3 | | Total |
| Cash equivalents: | | | | | | |
| Money market funds | $ | 69,475 | | | $ | — | | | $ | — | | | $ | 69,475 | |
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| Marketable securities: | | | | | | | |
| Corporate securities | — | | | 42,943 | | | — | | | 42,943 | |
| U.S. treasury and agency securities | — | | | 3,093 | | | — | | | 3,093 | |
| Total financial assets | $ | 69,475 | | | $ | 46,036 | | | $ | — | | | $ | 115,511 | |
The Company classifies its highly liquid money market funds and U.S treasury securities within Level 1 of the fair value hierarchy because they are valued based on quoted market prices in active markets. The Company classifies its corporate bonds and U.S. agency securities within Level 2 because they are valued using inputs other than quoted prices that are directly or indirectly observable in the market, including readily available pricing sources for the identical underlying security which may not be actively traded.
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.