Fair Value Measurements
Financial assets measured and recorded at fair value on a recurring basis consist of the following as of:
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| December 31, 2025 |
| Level 1 | | Level 2 | | Level 3 | | Total |
| (In thousands) | | | | | | | |
| Cash equivalents | | | | | | | |
| Money market funds | $ | 65,607 | | | $ | — | | | $ | — | | | $ | 65,607 | |
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| Total cash equivalents | $ | 65,607 | | | $ | — | | | $ | — | | | $ | 65,607 | |
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| December 31, 2024 |
| Level 1 | | Level 2 | | Level 3 | | Total |
| (In thousands) | | | | | | | |
| Cash equivalents | | | | | | | |
| Money market funds | $ | 55,280 | | | $ | — | | | $ | — | | | $ | 55,280 | |
| Total cash equivalents | $ | 55,280 | | | $ | — | | | $ | — | | | $ | 55,280 | |
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The carrying amounts for the Company’s cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate fair value due to their short maturities.
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.