Fair Value Measurements of Assets and Liabilities

The Company classifies marketable securities as available-for-sale. The fair value hierarchy established in the guidance adopted by the Company prioritizes the inputs used in valuation techniques into three levels as follows:


•	Level 1 – Observable inputs – quoted prices in active markets for identical assets and liabilities;


•	Level 2 – Observable inputs – other than the quoted prices in active markets for identical assets and liabilities – includes quoted prices for similar instruments, quoted prices for identical or similar instruments in inactive markets, and amounts derived from valuation models where all significant inputs are observable in active markets; and


•	Level 3 – Unobservable inputs – includes amounts derived from valuation models where one or more significant inputs are unobservable and require the Company to develop relevant assumptions.

The following is a summary of assets, liabilities and redeemable noncontrolling interest and their related classifications under the fair value hierarchy:



	September 30, 2016
	Total		(Level 1)		(Level 2)		(Level 3)
Assets
Cash and cash equivalents (A)	$	123,319	$	123,319	$	—	$	—
Securities available-for-sale (B)	20,941		—		20,941		—
Total assets	$	144,260	$	123,319	$	20,941	$	—
Liabilities
Contingent consideration obligation	$	8,229	$	—	$	—	$	8,229
Total liabilities	$	8,229	$	—	$	—	$	8,229
Temporary Equity
Redeemable noncontrolling interest (C)	$	52,616	$	—	$	—	$	52,616
Total temporary equity	$	52,616	$	—	$	—	$	52,616



	December 31, 2015
	Total		(Level 1)		(Level 2)		(Level 3)
Assets
Cash and cash equivalents (A)	$	147,634	$	147,634	$	—	$	—
Securities available-for-sale (B)	85,992		—		85,992		—
Total assets	$	233,626	$	147,634	$	85,992	$	—
Liabilities
Contingent consideration obligation	$	930	$	—	$	—	$	930
Total liabilities	$	930	$	—	$	—	$	930
Temporary Equity
Redeemable noncontrolling interest	$	61,452	$	—	$	—	$	61,452
Total temporary equity	$	61,452	$	—	$	—	$	61,452


(A)	Cash and cash equivalents includes money market funds.


(B)	Securities available-for-sale include municipal bonds, commercial papers, certificates of deposit, enhanced income money market fund and corporate bonds which are classified as marketable securities.


(C)	As of September 30, 2016, the carrying amount of the redeemable noncontrolling interest was greater than the fair value and accordingly no adjustment to the fair value was recorded.

The Company utilizes the market approach to measure fair value for its financial assets. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets. The Company's marketable securities investments classified as Level 2 primarily utilize broker quotes in a non-active market for valuation of these securities. No transfers of assets between Level 1, Level 2 and Level 3 of the fair value measurement hierarchy occurred during the nine months ended September 30, 2016.

Available-for-Sale Securities

At September 30, 2016 and December 31, 2015, the estimated fair value of investments classified as available for sale, are as follows:



	September 30, 2016
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available-for-sale securities:
Certificates of deposit	$	450	$	1	$	—		$	451
Corporate bonds	3,032		—		(31		)	3,001
Municipal bonds	17,513		1		(25		)	17,489
Total available-for-sale securities	$	20,995	$	2	$	(56	)	$	20,941



	December 31, 2015
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available-for-sale securities:
Certificates of deposit	$	2,329	$	—	$	(5	)	$	2,324
Corporate bonds	39,986		—		(253		)	39,733
Municipal bonds	38,564		11		(44		)	38,531
Fixed Income Fund	5,593		—		(189		)	5,404
Total available-for-sale securities	$	86,472	$	11	$	(491	)	$	85,992

Unrealized gains and losses are reported as a component of accumulated other comprehensive income (loss) in stockholders' equity. The cost of securities sold is based on the specific identification method. The Company evaluates investments with unrealized losses to determine if the losses are other than temporary. The Company has determined that the gross unrealized losses as of September 30, 2016 and December 31, 2015 are temporary. In making this determination, the Company considered the financial condition, credit ratings and near-term prospects of the issuers, the underlying collateral of the investments, and the magnitude of the losses as compared to the cost and the length of time the investments have been in an unrealized loss position. Additionally, while the Company classifies the securities as available-for-sale, the Company does not currently intend to sell such investments and it is more likely than not to recover the carrying value prior to being required to sell such investments.

The unrealized losses and fair values of available-for-sale securities that have been in an unrealized loss position for a period of less than and greater than 12 months as of September 30, 2016, are as follows:



	September 30, 2016
	Securities in unrealized loss position less than 12 months					Securities in unrealized loss position greater than 12 months					Total
	Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value
Corporate bonds	$	(31	)	$	3,001	$	—		$	—	$	(31	)	$	3,001
Municipal bonds	(13		)	15,585		(1		)	689		(14		)	16,274
	$	(44	)	$	18,586	$	(1	)	$	689	$	(45	)	$	19,275

The unrealized losses and fair values of available-for-sale securities that have been in an unrealized loss position for a period of less than and greater than 12 months as of December 31, 2015, are as follows:



	December 31, 2015
	Securities in unrealized loss position less than 12 months					Securities in unrealized loss position greater than 12 months					Total
	Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value
Certificates of deposit	$	(5	)	$	2,324	—			$	—	$	(5	)	$	2,324
Corporate bonds	(253		)	39,808		—			—		(253		)	39,808
Municipal bonds	(43		)	20,630		(1		)	550		(44		)	21,180
Fixed Income Fund	—			—		(189		)	5,404		(189		)	5,404
	$	(301	)	$	62,762	$	(190	)	$	5,954	$	(491	)	$	68,716

Expected maturities of available-for-sale securities are as follows:



	September 30, 2016
	Amortized Cost		Fair Value
Due within one year	$	17,019	$	16,973
Due after 1 year through 5 years	3,976		3,968
Total available-for-sale securities	$	20,995	$	20,941

Contingent Consideration

The Company determined the fair value of the contingent consideration related to the acquisition of Razorsight using a real options approach which uses a risk-adjusted expected growth rate based on assessments of expected growth in revenue, adjusted by an appropriate factor. The fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement. The significant unobservable inputs used in the fair value measurement of the Company’s contingent consideration obligation are the probabilities of achieving certain financial targets and contractual milestones. Significant changes in any of those probabilities in isolation may result in a higher (lower) fair value measurement.

The changes in fair value of the Company’s Level 3 contingent consideration obligation during the nine months ended September 30, 2016 were as follows:



Balance at December 31, 2015	$	930
Fair value adjustment to contingent consideration obligation included in net loss	7,299
Balance at September 30, 2016	$	8,229

Redeemable Noncontrolling Interests

The Company accounts for the redeemable noncontrolling interest at its fair value as temporary equity, due to the redemption option existing outside the control of the Company. The noncontrolling shareholders have the option, which is embedded in the noncontrolling interest, to require the Company to purchase the remaining noncontrolling share at a formula price designed to approximate fair value based on operating results of the entity.

The Company recognizes changes in the redemption value immediately as they occur and adjusts the carrying value of the noncontrolling interest to the greater of the estimated redemption value, which approximates fair value, at the end of each reporting period or the initial carrying amount. As of September 30, 2016, the carrying amount of the redeemable noncontrolling interest was greater than the fair value and accordingly no adjustment to the fair value was recorded.

The fair value of the redeemable noncontrolling interest was estimated by applying an income approach using a discounted cash flow analysis. This fair value measurement is based on significant inputs that are not observable in the market and thus represents a Level 3 measurement. Significant changes in the underlying assumptions used to value the redeemable noncontrolling interest could significantly increase or decrease the fair value estimates recorded in the condensed consolidated balance sheets.

The changes in fair value of the Company’s Level 3 redeemable noncontrolling interests during the nine months ended September 30, 2016 were as follows:



Balance at December 31, 2015	$	61,452
Fair value adjustment	—
Net loss attributable to redeemable noncontrolling interests	(8,836		)
Balance at September 30, 2016	$	52,616