The Company enters into foreign currency forward contracts to reduce the risk of variability in future cash flow due to foreign currency exchange rate fluctuation from certain forecasted revenue transactions billed in currencies other than the U.S. Dollar. These transactions are designated as cash flow hedges. The foreign currency forward contracts have maturities 12 months or less. Hedge effectiveness is assessed at inception and at each reporting period utilizing statistical regression analysis. The derivatives are subject to master netting arrangements and are disclosed on a gross basis on the consolidated balance sheets. Unrealized foreign exchange gains or losses related to those designated cash flow hedge contracts are recorded in accumulated other comprehensive income ("AOCI") and are reclassified into revenues in the same periods when the hedged transactions are recognized in earnings. Cash flows from the settlement of these forward contracts are classified as operating activities on the consolidated statements of cash flows. As of September 30, 2024, the Company had designated cash flow hedge forward contracts with notional amounts equivalent to $28.1 million.

The following summarizes the fair value of derivative financial instruments as of September 30, 2024 and December 31, 2023:


	As of September 30, 2024		As of December 31, 2023
	(in thousands)
Accrued expenses and other current liabilities
Cash flow hedges	$	766	$	—
Total	$	766	$	—

The following table presents the activity of foreign currency forward contracts designated as hedging instruments and the impact of these derivatives on AOCI:


	Nine Months Ended September 30,
	2024			2023
	(in thousands)
Beginning balance at January 1, 2024	$	—		$	—
Net losses recognized in other comprehensive income, net of tax		1,245			—
Net losses reclassified from AOCI to earnings		(310	)		—
Ending balance at September 30, 2024	$	935		$	—

The effect of hedges on the consolidated statements of operations was as follows:


	Three Months Ended September 30,					Nine Months Ended September 30,
	2024			2023		2024			2023
	(in thousands)
Losses reclassified from AOCI related to cash flow hedges
Revenue	$	(254	)	$	—	$	(310	)	$	—

As of September 30, 2024, the Company estimates the net amount of unrealized gain (losses) before tax on the foreign currency contracts expected to be reclassified into revenue over the next 12 months is approximately $0.3 million.