Fair value measurement
The following tables set forth the Company’s financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2025 and 2024, based on the three-tier fair value hierarchy:
| | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2025 |
| (In thousands) | Level 1 | | Level 2 | | Level 3 | | Total |
| Assets: | | | | | | | |
| Cash equivalents: | | | | | | | |
| Money market accounts | $ | 31,241 | | | $ | — | | | $ | — | | | $ | 31,241 | |
| Available-for-sale securities: | | | | | | | |
| U.S. government securities | 20,749 | | | — | | | — | | | 20,749 | |
| Corporate debt securities | 6,700 | | | 45,180 | | | — | | | 51,880 | |
| Other debt securities | — | | | 14,510 | | | — | | | 14,510 | |
| Convertible promissory note | — | | | — | | | 2,983 | | | 2,983 | |
| Total | $ | 58,690 | | | $ | 59,690 | | | $ | 2,983 | | | $ | 121,363 | |
| | | | | | | | | | | | | | | | | | | |
| December 31, 2024 |
| (In thousands) | Level 1 | | Level 2 | | | | Total |
| Assets: | | | | | | | |
| Cash equivalents: | | | | | | | |
| Money market accounts | $ | 89,119 | | | $ | — | | | | | $ | 89,119 | |
| Available-for-sale securities: | | | | | | | |
| U.S. government securities | 1,494 | | | — | | | | | 1,494 | |
| Corporate debt securities | 398 | | | 8,602 | | | | | 9,000 | |
| Other debt securities | — | | | 3,332 | | | | | 3,332 | |
| Total | $ | 91,011 | | | $ | 11,934 | | | | | $ | 102,945 | |
In July 2025, the Company invested $2.0 million cash in a convertible promissory note issued by an unrelated third-party company. The convertible promissory note accrues interest at an annual rate of 10%. The principal and accrued paid in
kind ("PIK") interest are payable at maturity on October 1, 2028. The carrying value of the convertible promissory note is approximately $3.0 million as of December 31, 2025. There have been no transfers of assets or liabilities between the fair value measurement levels. We had no financial assets that utilize Level 3 inputs of measurement as of December 31, 2024.
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.