Fair Value Measurements
The following tables present the fair value hierarchy for the Company’s assets and liabilities measured at fair value on a recurring basis (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | |
| As of March 31, 2026 |
| Level 1 | | Level 2 | | Level 3 | | Total |
| Cash equivalents: | | | | | | | |
| Commercial paper | $ | — | | | $ | 8,498 | | | $ | — | | | $ | 8,498 | |
| | | | | | | |
| Money market funds | 174,953 | | | — | | | — | | | 174,953 | |
| | | | | | | |
| Total cash equivalents | 174,953 | | | 8,498 | | | — | | | 183,451 | |
| Marketable securities: | | | | | | | |
| | | | | | | |
| | | | | | | |
| Commercial paper | — | | | 11,312 | | | — | | | 11,312 | |
| Corporate notes and bonds | — | | | 390,773 | | | — | | | 390,773 | |
| | | | | | | |
| U.S. government and agency securities | 124,338 | | | 3,000 | | | — | | | 127,338 | |
| | | | | | | |
| Total marketable securities | 124,338 | | | 405,085 | | | — | | | 529,423 | |
| Total cash equivalents and marketable securities | $ | 299,291 | | | $ | 413,583 | | | $ | — | | | $ | 712,874 | |
| | | | | | | |
| Liabilities: | | | | | | | |
| Contingent earn-out consideration liability | $ | — | | | $ | — | | | $ | 5,910 | | | $ | 5,910 | |
| Total contingent earn-out consideration liability | $ | — | | | $ | — | | | $ | 5,910 | | | $ | 5,910 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| As of March 31, 2025 |
| Level 1 | | Level 2 | | Level 3 | | Total |
| Cash equivalents: | | | | | | | |
| Commercial paper | $ | — | | | $ | 73,047 | | | $ | — | | | $ | 73,047 | |
| | | | | | | |
| Money market funds | 84,475 | | | — | | | — | | | 84,475 | |
| | | | | | | |
| Total cash equivalents | 84,475 | | | 73,047 | | | — | | | 157,522 | |
| Marketable securities: | | | | | | | |
| | | | | | | |
| | | | | | | |
| Commercial paper | — | | | 42,863 | | | — | | | 42,863 | |
| Corporate notes and bonds | — | | | 502,444 | | | — | | | 502,444 | |
| | | | | | | |
| U.S. government and agency securities | 157,727 | | | 3,016 | | | — | | | 160,743 | |
| Total marketable securities | 157,727 | | | 548,323 | | | — | | | 706,050 | |
| Total cash equivalents and marketable securities | $ | 242,202 | | | $ | 621,370 | | | $ | — | | | $ | 863,572 | |
| | | | | | | |
| Liabilities: | | | | | | | |
| Contingent earn-out consideration liability | $ | — | | | $ | — | | | $ | 11,493 | | | $ | 11,493 | |
| Total contingent earn-out consideration liability | $ | — | | | $ | — | | | $ | 11,493 | | | $ | 11,493 | |
During the fiscal years ended March 31, 2026 and 2025, the Company had no transfers between levels of the fair value hierarchy.
Contingent Earn-out Consideration Liability
The following table summarizes the changes in the contingent earn-out consideration liability (in thousands):
| | | | | | | | | | | |
| Fiscal Year Ended March 31, |
| 2026 | | 2025 |
| Beginning fair value | $ | 11,493 | | | $ | 16,813 | |
| Additions in the period | — | | | — | |
| Change in fair value | 417 | | | 680 | |
| Payments | (6,000) | | | (6,000) | |
| Ending fair value | $ | 5,910 | | | $ | 11,493 | |
The contingent earn-out consideration liability relates to the AMiON acquisition, which closed on April 1, 2022. The fair value of the liability is remeasured at each reporting date until the related contingency is resolved, with any changes to the fair value recognized as sales and marketing expense in the consolidated statements of operations.
To determine the fair value of the contingent earn-out consideration liability, the Company used the discounted cash flow method. The significant inputs used in the fair value measurement of the contingent earn-out consideration liability are the discount rate and the timing and amounts of the future payments, which are based upon estimates of future achievement of the performance metrics. As these inputs are not based on observable market data, they represent a Level 3 measurement within the fair value hierarchy. Changes in the significant inputs used would significantly impact the fair value of the contingent earn-out consideration liability.
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.