The Company measures certain financial assets and liabilities at fair value. Fair value is determined based upon the exit price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants, as determined by either the principal market or the most advantageous market. Inputs used in the valuation techniques to derive fair values are classified based on a three-level hierarchy, as follows:
•Level 1: Quoted prices in active markets for identical assets or liabilities.
•Level 2: Observable inputs, other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
•Level 3: Unobservable inputs that are supported by little or no market activity.
The following tables present information about the Company’s financial assets and liabilities that are measured at fair value and indicate the fair value hierarchy of the valuation inputs used (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2025 |
| Level 1 | | Level 2 | | Level 3 | | Total |
| Liabilities: | | | | | | | |
| Contingent consideration | — | | | — | | | 8,873 | | | 8,873 | |
| Total liabilities | $ | — | | | $ | — | | | $ | 8,873 | | | $ | 8,873 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2024 |
| Level 1 | | Level 2 | | Level 3 | | Total |
| Assets: | | | | | | | |
| Marketable Securities: | | | | | | | |
| | | | | | | |
| Corporate bonds | — | | | 3,745 | | | — | | | 3,745 | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| Total assets | $ | — | | | $ | 3,745 | | | $ | — | | | $ | 3,745 | |
There were no transfers of financial instruments between Level 1, Level 2, and Level 3 during the periods presented.
The contingent consideration as presented in the fair value table above relates to the NewsWhip acquisition, and represents the future potential earnout payments based on the achievement of specified financial performance metrics through June 30, 2027. Refer to Note 4 for further discussion of the acquisition.
The fair value of the contingent consideration was determined using a scenario-based approach. The model includes significant unobservable inputs including the discount rate and projected revenues
over the earn-out period. The contingent consideration was classified as Level 3 within the fair value hierarchy.
The contingent consideration is remeasured to fair value at each reporting date until the contingency is resolved. Changes in the fair value of contingent consideration, other than measurement period adjustments, are recorded within General and administrative expenses within the consolidated statements of operations. The current and non-current portions of contingent consideration are recorded to Accrued expenses and other and Other noncurrent liabilities, respectively, within the consolidated balance sheets.
The change in fair value of the contingent consideration (a Level 3 input) was as follows (in thousands):
| | | | | |
| Contingent consideration liability as of NewsWhip acquisition date | $ | 8,450 | |
| Change due to accretion | 423 | |
Contingent consideration liability as of December 31, 2025 | $ | 8,873 | |
Marketable securities are classified within Level 2 because they are valued using inputs other than quoted prices that are directly or indirectly observable in the market. The Company’s marketable securities, which were accounted for as available-for-sale securities, matured as of June 30, 2025. There was not a significant difference between the amortized cost and fair value of these securities in the periods presented, and the gross unrealized gains and losses associated with these securities were immaterial. There were no available-for-sale securities as of December 31, 2025.
The carrying amounts of certain financial instruments, including cash held in banks, cash equivalents, accounts receivable, accounts payable and accrued liabilities, approximate fair value due to their short-term maturities and are excluded from the fair value tables above.