12. Fair Value Measurements

 

We have financial instruments as of December 31, 2024 and 2023 for which the fair value is summarized below (in thousands):

  

 

 

December 31, 2024

 

 

December 31, 2023

 

 

 

Carrying

Value

 

 

Estimated

Fair Value

 

 

Carrying

Value

 

 

Estimated

Fair Value

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Trade receivables, net

 

$4,352

 

 

$4,352

 

 

$3,476

 

 

$3,476

 

Equipment financing receivables

 

 

3,446

 

 

 

3,446

 

 

 

2,624

 

 

 

2,624

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Finance leases

 

$23

 

 

$23

 

 

$98

 

 

$98

 

Notes payable

 

 

592

 

 

 

587

 

 

 

1,049

 

 

 

1,012

 

 

We have no liabilities for which fair value is recognized in the balance sheet on a recurring basis as of December 31, 2024 and 2023.

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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.