Fair Value Measurements
We measure certain financial instruments at fair value using a fair value hierarchy. In the hierarchy, assets are classified based on the lowest level inputs used in valuation into the following categories:
•Level 1 — Quoted prices in active markets for identical assets and liabilities;
•Level 2 — Observable inputs including quoted market prices for similar assets and liabilities in active markets, quoted prices for identical assets and liabilities in inactive markets, or inputs that are corroborated by observable market data; and
•Level 3 — Unobservable inputs.
The following tables summarize assets that are measured at fair value on a recurring basis:
| | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2025 |
| (in thousands) | Level 1 | | Level 2 | | Level 3 | | Total |
| Cash equivalents | | | | | | | |
| Money market funds | $ | 59,760 | | | $ | — | | | $ | — | | | $ | 59,760 | |
| | | | | | | |
| Total cash equivalents | $ | 59,760 | | | $ | — | | | $ | — | | | $ | 59,760 | |
| | | | | | | |
| Short-term investments | | | | | | | |
| Commercial paper | $ | — | | | $ | 5,066 | | | $ | — | | | $ | 5,066 | |
| Corporate bonds | — | | | 94,894 | | | — | | | 94,894 | |
| Asset backed securities | — | | | 17,364 | | | — | | | 17,364 | |
| | | | | | | |
| | | | | | | |
| Yankee bonds | — | | | 13,293 | | | — | | | 13,293 | |
| U.S. Treasury and agency obligations | — | | | 83,802 | | | — | | | 83,802 | |
| Total short-term investments | $ | — | | | $ | 214,419 | | | $ | — | | | $ | 214,419 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2024 |
| (in thousands) | Level 1 | | Level 2 | | Level 3 | | Total |
| Cash equivalents | | | | | | | |
| Money market funds | $ | 190,750 | | | $ | — | | | $ | — | | | $ | 190,750 | |
| Total cash equivalents | $ | 190,750 | | | $ | — | | | $ | — | | | $ | 190,750 | |
| | | | | | | |
| Short-term investments | | | | | | | |
| Commercial paper | $ | — | | | $ | 41,604 | | | $ | — | | | $ | 41,604 | |
| Corporate bonds | — | | | 95,410 | | | — | | | 95,410 | |
| Asset backed securities | — | | | 30,796 | | | — | | | 30,796 | |
| | | | | | | |
| | | | | | | |
| Yankee bonds | — | | | 14,007 | | | — | | | 14,007 | |
| U.S. Treasury and agency obligations | — | | | 66,730 | | | — | | | 66,730 | |
| Total short-term investments | $ | — | | | $ | 248,547 | | | $ | — | | | $ | 248,547 | |
Other Investments
Our investments in privately held securities were as follows:
| | | | | | | | | | | |
| December 31, |
| (in thousands) | 2025 | | 2024 |
| Equity securities | $ | 6,702 | | | $ | 6,701 | |
| Debt and other securities | 1,000 | | | 1,871 | |
| Total other investments | $ | 7,702 | | | $ | 8,572 | |
Other investments are classified as Level 3 as they do not have readily determinable market values.
We received $0.9 million and $3.5 million in proceeds from one of our SAFE investments in 2025 and 2024, respectively. Additionally in 2024, we recognized a $1.5 million gain on the conversion of our SAFE investment to an investment in preferred stock.
We did not have any liabilities measured and recorded at fair value on a recurring basis at December 31, 2025 and 2024.
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.