Fair Value Measurements
The following table summarizes the Company’s financial assets and liabilities measured at fair value on a recurring basis by level, within the fair value hierarchy. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement (in thousands):
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| December 31, 2025 |
| Level 1 | | Level 2 | | Level 3 | | Total |
| Cash equivalents | | | | | | | |
| Money market funds | $ | 173,099 | | | $ | — | | | $ | — | | | $ | 173,099 | |
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| Marketable securities | | | | | | | |
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| U.S. treasury securities | 205,704 | | | — | | | — | | | 205,704 | |
| Commercial paper | — | | | 152,792 | | | — | | | 152,792 | |
| Corporate bonds | — | | | 29,682 | | | — | | | 29,682 | |
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| Total assets | $ | 378,803 | | | $ | 182,474 | | | $ | — | | | $ | 561,277 | |
| Liabilities | | | | | | | |
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| Foreign currency forward contracts | $ | — | | | $ | 37 | | | $ | — | | | $ | 37 | |
| Total liabilities | $ | — | | | $ | 37 | | | $ | — | | | $ | 37 | |
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| December 31, 2024 |
| Level 1 | | Level 2 | | Level 3 | | Total |
| Cash equivalents | | | | | | | |
| Money market funds | $ | 809,906 | | | $ | — | | | $ | — | | | $ | 809,906 | |
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| Total assets | $ | 809,906 | | | $ | — | | | $ | — | | | $ | 809,906 | |
| Liabilities | | | | | | | |
| Contingent consideration | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| Total liabilities | $ | — | | | $ | — | | | $ | — | | | $ | — | |
The following table summarizes the changes in the contingent consideration liability (in thousands):
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| Year Ended December 31, |
| 2025 | | 2024 | | 2023 |
| Beginning fair value | $ | — | | | $ | — | | | $ | 41,549 | |
| Additions in the period | — | | | — | | | — | |
| Payments in the period | — | | | — | | | (8,000) | |
| Change in fair value | — | | | — | | | (33,549) | |
| Ending fair value | $ | — | | | $ | — | | | $ | — | |
The Company classified the marketable debt securities as available-for-sale debt securities at the time of purchase and reevaluated such classification at each balance sheet date. The valuation techniques used to measure the fair values of instruments that were classified as Level 1 were derived from quoted market prices for identical instruments in active markets. The valuation techniques used to measure the fair values of Level 2 instruments were derived from broker reports that utilized quoted market prices for similar instruments.
Foreign currency forward contracts are classified within the Level 2 value hierarchy, as the valuation inputs are not actively traded, and the valuation inputs are based on quoted market prices for similar instruments, including currency spot and forward rates.
As a condition of the FourQ Acquisition that occurred on January 26, 2022, the Company agreed to pay additional cash consideration if FourQ realized certain firm-specific targets over a three-year period subsequent to the acquisition date. The maximum cash consideration to be distributed was $73.2 million. At December 31, 2025, the related liability was zero, and the Company is no longer obligated to pay the contingent consideration of $73.2 million.
Increases and decreases in the fair value of contingent consideration, if any, are recorded as expense or reversals of expense, respectively, within general and administrative expenses in the consolidated statements of operations
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.