Fair Value Measurements
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The following tables present information about the Company’s financial assets that are measured at fair value on a recurring basis (in thousands):
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| January 31, 2026 |
| Level 1 | | Level 2 | | Level 3 | | Total |
| Assets: | | | | | | | |
| Cash equivalents: | | | | | | | |
| Money market funds | $ | 308,535 | | | $ | — | | | $ | — | | | $ | 308,535 | |
| Total cash equivalents | $ | 308,535 | | | $ | — | | | $ | — | | | $ | 308,535 | |
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| January 31, 2025 |
| Level 1 | | Level 2 | | Level 3 | | Total |
| Assets: | | | | | | | |
| Cash equivalents: | | | | | | | |
| Money market funds | $ | 81,972 | | | $ | — | | | $ | — | | | $ | 81,972 | |
| Total cash equivalents | $ | 81,972 | | | $ | — | | | $ | — | | | $ | 81,972 | |
| Liabilities: | | | | | | | |
| Contingent consideration | $ | — | | | $ | — | | | $ | 5,700 | | | $ | 5,700 | |
| Total liabilities | $ | — | | | $ | — | | | $ | 5,700 | | | $ | 5,700 | |
The Company’s carrying amounts of financial instruments, including cash, accounts receivable, accounts payable, and accrued expenses are considered Level 1 and approximate their fair values due to their short maturities as of January 31, 2026 and January 31, 2025 and are excluded from the fair value tables above. The carrying value of debt at January 31, 2025 is considered Level 1 and approximates fair value.
The Company measured the fair value of the contingent consideration associated with its Imprivata acquisition on a recurring basis using significant unobservable inputs, classified as Level 3. The Company recorded the contingent consideration at its fair value on the acquisition date. The Company determined the fair value of contingent consideration using a probability weighted discounted cash flow method. Each reporting period thereafter, the obligation is revalued and changes in its fair values are recorded within sales and marketing expenses within the consolidated statements of operations. Changes in the fair
value of the contingent consideration can result from changes in assumed discount periods and rates and from changes pertaining to the estimated or actual achievement of the defined milestones. Significant judgment is employed in determining the appropriateness of these assumptions as of the acquisition date and for each subsequent period. Accordingly, future business and economic conditions, as well as changes in any of the assumptions described above, can materially impact the fair value and corresponding changes in fair value of the contingent consideration the Company records in any given period.
During the year ended January 31, 2026, the Company remeasured the fair value of the contingent consideration associated with the Imprivata acquisition of $5.7 million reported as of January 31, 2025. This remeasurement resulted in a $1.6 million increase to the obligation, with the additional expense recorded in sales and marketing expenses within the consolidated statements of operations for the year ended January 31, 2026. The fair value of the contingent consideration was determined using a 99% probability of achievement with no additional discount rate due to the short-term expected timing of payment. The contingent consideration balance of $7.3 million was fully settled during August 2025.
The estimated fair value of the contingent consideration associated with the Imprivata acquisition was determined with the following key inputs:
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| | January 31, 2025 |
Probability of achievement | | 84.2 | % |
Expected timing of payment | | Fiscal 2026 |
Discount rate | | 13.5 | % |
The estimated fair value of the contingent consideration of $0.2 million associated with the Savvy Security Ltd. acquisition was determined using a 100% probability of achievement as of December 31, 2025 and as of the acquisition date. Prior to January 31, 2026, the contingency was satisfied and the liability was fully settled. See Note 5 for additional information on the Savvy acquisition.
There were no transfers between fair value measurement levels during the period ended January 31, 2026 and January 31, 2025.