Fair Value Measurements

12 Months Ended

Dec. 31, 2022

Fair Value Measurements

Fair Value Measurements

3. Fair Value Measurements

The following tables present the Company’s fair value hierarchy for its assets and liabilities that are measured at fair value on a recurring basis (in thousands):

	Fair Value Measurements at December 31, 2022 Using:
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents - Money market funds	$	27,866	$	—	$	—	$	27,866
	$	27,866	$	—	$	—	$	27,866
Other current liabilities:
Acquisition-related contingent consideration	$	—	$	—	$	343	$	343
Acquisition-related contingent consideration - pension liability		—		—		900		900
		—		—		1,243		1,243
Other long-term liabilities:
Acquisition-related contingent consideration		—		—		555		555
Total liabilities measured at fair value	$	—	$	—	$	1,798	$	1,798

	Fair Value Measurements at December 31, 2021 Using:
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market funds	$	634	$	—	$	—	$	634

Money Market Funds

Money market funds were valued by the Company based on quoted market prices, which represent a Level 1 measurement within the fair value hierarchy. There were no transfers into or out of Level 3 during the year ended December 31, 2022 or 2021.

Contingent Consideration

Acquisition-related contingent consideration is measured and reported at fair value using the Monte Carlo simulation method or probability weighted scenario based on the unobservable inputs, which are significant to the fair value and classified within Level 3 of the fair value hierarchy. The amount is contingent based on the acquired business’ performance for the milestones ranging from the date of acquisition to June 30, 2024.

The unobservable inputs used in the fair value measurements include the probabilities of successful achievement of certain technological integration targets, forecasted results or targets, volatility, and discount rates. The total maximum payments due relate to the technological integration and revenue targets is approximately $2 million, of which the value as of December 31, 2022 is approximately $0.9 million. The payment contingent on the seller completing the assignment of the pension liability is $0.9 million.

The weighted average probability of achieving the technology integration target is approximately 95%. The average estimated revenue volatility and discount rate are approximately 40.9% and 23.0%, respectively. Increases or decreases in these assumptions may result in a higher or lower fair value measurement, respectively. The following table provides a roll-forward of the fair value of the Company’s contingent consideration, for which fair value is determined using Level 3 inputs (in thousands):

Balances as of December 31, 2021	$	—
Acquisition date fair value of contingent consideration - earnout		737
Acquisition date fair value of contingent consideration - pension liability		900
Accretion - earnout		161
Balance as of December 31, 2022	$	1,798

Please refer to Note 17, Acquisition, for further detail. Changes in the fair value of contingent consideration resulting from a change in the underlying inputs are recognized in our consolidated statements of operations until the arrangement is settled.