Fair Value of Financial Instruments

The Company’s financial instruments consist primarily of cash, cash equivalents, marketable securities, accounts receivable and accounts payable. The carrying values of cash, cash equivalents, accounts receivable and accounts payable approximate their respective fair values due to the short-term nature of these instruments. Cash equivalents include amounts held in money market accounts that are measured at fair value using observable market prices. Marketable securities include debt securities that are measured at fair value using observable inputs.

The Company uses a three-tier fair value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:

Level 1. Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2. Significant other inputs that are directly or indirectly observable in the marketplace.

Level 3. Significant unobservable inputs that are supported by little or no market activity.

The Company evaluates its financial assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level in which to classify them for each reporting period. The following table summarizes the Company’s financial assets measured at fair value as of December 31, 2025 and 2024 and indicates the fair value hierarchy of the valuation:


			Fair Value at Reporting Date Using
(in thousands)	December 31, 2025		Level 1		Level 2		Level 3
Assets:
Cash equivalents(1)	$	51,426	$	51,426	$	—	$	—
Marketable securities:
Corporate bonds	9,732		—		9,732		—
Commercial paper	995		—		995		—
U.S. Treasury debt securities	23,905		23,905		—		—
International debt securities	1,003		—		1,003		—
Total marketable securities	35,635		23,905		11,730		—
Total Assets	$	87,061	$	75,331	$	11,730	$	—

(1) Includes insured cash sweep account, cash sweep account, money market account and money market funds that have investments primarily in U.S. Government Agency debt, U.S. Treasury debt, U.S. Treasury Repurchase Agreements, U.S. Government Agency Repurchase Agreements, and corporate bonds that have a maturity of three months or less from the original acquisition date.


			Fair Value at Reporting Date Using
(in thousands)	December 31, 2024		Level 1		Level 2		Level 3
Assets:
Cash equivalents(1)	$	62,434	$	62,434	$	—	$	—
Marketable securities:
Corporate bonds	4,368		—		4,368		—
Commercial paper	1,580		—		1,580		—
U.S. Treasury debt securities	15,427		15,427		—		—
Total marketable securities	21,375		15,427		5,948		—
Total Assets	$	83,809	$	77,861	$	5,948	$	—

(1) Includes insured cash sweep account, cash sweep account, money market account and money market funds that have investments primarily in U.S. Government Agency debt, U.S. Treasury debt, U.S. Treasury Repurchase Agreements, U.S. Government Agency Repurchase Agreements and corporate bonds that have a maturity of three months or less from the original acquisition date.

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.

ALKAMI TECHNOLOGY, INC. Fair Value Disclosure

About Fair Value Disclosures

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