Fair Value of Financial Instruments
The following table provides information by level for the Company’s assets and liabilities that were measured at fair value on a recurring basis (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2025 |
| Level 1 | | Level 2 | | Level 3 | | Total |
| Assets | | | | | | | |
| Cash and cash equivalents: | | | | | | | |
| Money market funds | $ | 54,475 | | | $ | — | | | $ | — | | | $ | 54,475 | |
| | | | | | | |
| Short-term investments: | | | | | | | |
| Commercial paper | — | | | 68,326 | | | — | | | 68,326 | |
| Corporate debt | — | | | 72,846 | | | — | | | 72,846 | |
| Total short-term investments | — | | | 141,172 | | | — | | | 141,172 | |
| Total financial assets | $ | 54,475 | | | $ | 141,172 | | | $ | — | | | $ | 195,647 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2024 |
| Level 1 | | Level 2 | | Level 3 | | Total |
| Assets | | | | | | | |
| Cash and cash equivalents: | | | | | | | |
| Money market funds | $ | 24,740 | | | $ | — | | | $ | — | | | $ | 24,740 | |
| | | | | | | |
| Short-term investments: | | | | | | | |
| Commercial paper | — | | | 56,886 | | | — | | | 56,886 | |
| Corporate debt | — | | | 69,594 | | | — | | | 69,594 | |
| Total short-term investments | — | | | 126,480 | | | — | | | 126,480 | |
| Total financial assets | $ | 24,740 | | | $ | 126,480 | | | $ | — | | | $ | 151,220 | |
| Liabilities | | | | | | | |
| Warrant liabilities | $ | — | | | $ | — | | | $ | 126 | | | $ | 126 | |
| Total financial liabilities | $ | — | | | $ | — | | | $ | 126 | | | $ | 126 | |
Money market funds are included within Level 1 of the fair value hierarchy because they are valued using quoted market prices in active markets. Level 3 liabilities that are measured on a recurring basis for the years ended December 31, 2025 and 2024 were not material.
Non-Recurring Fair Value Measurements
The Company has certain assets, including intangible assets, which are measured at fair value on a non-recurring basis and are adjusted to fair value only if an impairment charge is recognized. The categorization of the framework used to measure fair value of the assets is considered to be within the Level 3 valuation hierarchy due to the subjective nature of the unobservable inputs used.
Disclosure of Fair Values
Our financial instruments that are not re-measured at fair value include accounts receivable, accounts payable, accrued and other current liabilities and debt. The carrying values of these financial instruments approximate their fair values.
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.