Fair Value of Financial Instruments
Financial instruments measured at fair value on a recurring basis
The following tables present the Company's financial assets and liabilities that are measured at estimated fair value on a recurring basis as of December 31, 2024 and 2023:
Fair value measurements as of December 31, 2024
(in thousands)
Carrying valueLevel 1Level 2Level 3
Financial assets:
Cash equivalents:
Money market funds13,144 13,144 — — 
Total13,144 13,144 — — 
Available-for-sale marketable securities:
U.S. treasury securities27,237 — 27,237 — 
U.S. government agencies securities40,619 — 40,619 — 
Total67,856 — 67,856 — 
Total$81,000 $13,144 $67,856 $ 
Liabilities:
Contingent consideration11 — — 11 
Total
$11 $ $ $11 
Fair value measurements as of December 31, 2023
(in thousands)
Carrying valueLevel 1Level 2Level 3
Liabilities:
Contingent consideration112 — — 112 
Total
$112 $ $ $112 
The Company's level 1 financial assets were valued using quoted prices in active markets for identical assets as of December 31, 2024. The Company’s level 2 financial assets were determined based on third-party inputs which are either directly or indirectly observable, such as reported trades and broker or dealer quotes. The Company's marketable securities have an amortized cost that approximates fair value as of December 31, 2024.
Pursuant to the Company’s stock purchase agreements for the acquisition of Nangate in March of 2018 and PolytEDA Cloud LLC (“PolytEDA”) in January of 2021, the selling shareholders are entitled to additional milestone and earn out consideration based on operating income generated by the business and technical achievements. The milestone consideration and earn-out liabilities are classified as contingent consideration as the obligations are due in cash. As such the obligations are recorded at their fair value and re-valued period to period with any changes recorded to interest and other expense, net in the consolidated statements of loss.
The Company's contingent consideration is valued using a discounted cash flow model, and the assumptions used in preparing the discounted cash flow model include estimates for interest rates and the amount of cash flows, in addition to the expected net revenue, operating income and technical achievement of the acquired technology.
The following is a reconciliation of changes in the liability related to contingent consideration during the years ended December 31, 2024 and 2023:
Year Ended December 31,
20242023
(in thousands)
Fair value as of January 1,
$112 $792 
Change in fair value(27)325 
Earn-out payments(74)(502)
Milestone achievement paid
— (500)
Foreign exchange— (3)
Fair value as of December 31, $11 $112 
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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.