Fair Value Measurement

9 Months Ended

Sep. 30, 2015

Fair Value Disclosures [Abstract]

Fair Value Measurement

7. FAIR VALUE MEASUREMENT:

We utilize the following valuation hierarchy for disclosure of the inputs to valuation used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows:

• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.

• Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument.

• Level 3 inputs are unobservable inputs based on our own assumptions used to measure assets and liabilities at fair value.

A financial asset or liability’s classification within the hierarchy is determined based upon the lowest level input that is significant to the fair value measurement.

As of September 30, 2015, our financial assets and liabilities required to be measured on a recurring basis were our money market investments and contingent earnout considerations. As of December 31, 2014, our only financial assets and liabilities required to be measured on a recurring basis were our money market investments.

The following table represents the Company’s fair value hierarchy for its financial assets and liabilities required to be measured on a recurring basis:

	Basis of Fair Value Measurements
	Balance		Quoted Prices in Active Markets for Identical Items (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In Thousands)
Balance at September 30, 2015:
Financial assets:
Money market investment	$	4,084	$	4,084	$	—	$	—
Total financial assets	$	4,084	$	4,084	$	—	$	—
Financial liabilities:
Contingent earnout consideration	$	6,909	$	—	$	—	$	6,909
Total financial liabilities	$	6,909	$	—	$	—	$	6,909
Balance at December 31, 2014:
Financial assets:
Money market investment	$	4,084	$	4,084	$	—	$	—
Total financial assets	$	4,084	$	4,084	$	—	$	—

No financial instruments were transferred into or out of Level 3 classification during the three- or nine-month periods ended September 30, 2015.

The Company has classified its net liability for contingent earnout considerations relating to its acquisitions of Zero2Ten and Branchbird within Level 3 of the fair value hierarchy because the fair value is determined using significant unobservable inputs, which included probability weighted cash flows. A description of these acquisitions is included within Note 3.

A reconciliation of the beginning and ending Level 3 net liabilities for the nine-month period ended September 30, 2015 is as follows:

	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	(In Thousands)
Balance at December 31, 2014	$	—
Initial estimate of fair value related to Zero2Ten contingent earnout consideration		4,367
Initial estimate of fair value related to Branchbird contingent earnout consideration		1,428
Accretion of contingent earnout consideration (included within other expense, net)		1,114
Ending balance at September 30, 2015	$	6,909

As of September 30, 2015 and December 31, 2014, the fair values of our other financial instruments, which include cash and cash equivalents, accounts receivable and accounts payable, approximate the carrying amounts of the respective asset and/or liability due to the short-term nature of these financial instruments.