4. Fair Value Measurements
Assets measured at fair value on a recurring basis are summarized below (in thousands):
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| | Fair Value Measurements at December 31, 2024 |
| | Level 1 | | Level 2 | | Level 3 | | Total |
| Assets: | | | | | | | |
| Cash equivalents - money market funds | $ | 40,428 | | | $ | — | | | $ | — | | | $ | 40,428 | |
| Interest rate swaps | $ | — | | | $ | 9,742 | | | $ | — | | | $ | 9,742 | |
| Total | $ | 40,428 | | | $ | 9,742 | | | $ | — | | | $ | 50,170 | |
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| | Fair Value Measurements at December 31, 2023 |
| | Level 1 | | Level 2 | | Level 3 | | Total |
| Assets: | | | | | | | |
| Cash equivalents - money market funds | $ | 211,661 | | | $ | — | | | $ | — | | | $ | 211,661 | |
| Interest rate swaps | — | | | 14,270 | | | — | | | 14,270 | |
| Total | $ | 211,661 | | | $ | 14,270 | | | $ | — | | | $ | 225,931 | |
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The Company’s cash equivalents - money market funds are measured at fair value using quoted market prices and active markets, therefore are categorized as Level 1.
In connection with entering into, and expanding, the Company's credit facility, as discussed further in “Note 7. Debt”, the Company entered into interest rate swaps. The fair value of these swaps are measured at the end of each interim reporting period based on the then assessed fair value and adjusted if necessary. As the fair value measure is based on the market approach, they are categorized as Level 2. As of December 31, 2024, the fair value of the interest rate swaps is included in the “Interest rate swap assets” on the Company's consolidated balance sheets.
The Company’s other financial instruments consist principally of cash and cash equivalents, accounts receivable, accounts payable, and long–term debt. The carrying value of cash and cash equivalents, accounts receivable, and accounts payable approximate fair value, primarily due to short maturities. The Company believes the carrying value of its long-term debt at December 31, 2024 approximates its fair value based on its variable interest rate feature and interest rates currently available to the Company. The estimated fair value and carrying value of the Company's debt, before debt discount, at December 31, 2024 and December 31, 2023 are $293.7 million and $482.1 million, respectively, based on valuation methodologies using interest rates currently available to the Company which are Level 2 inputs.
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.