Fair Value Measurements

12 Months Ended

Dec. 31, 2023

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, 2023 Using:
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents - Money market funds	$	94,165	$	—	$	—	$	94,165
Cash equivalents - U.S. Treasury securities		—		4,964		—		4,964
Marketable securities - U.S. Treasury securities due in 3 - 6 months		—		24,641		—		24,641
Total assets measured at fair value	$	94,165	$	29,605	$	—	$	123,770
Other current liabilities:
Acquisition-related contingent consideration	$	—	$	—	$	500	$	500
Total liabilities measured at fair value	$	—	$	—	$	500	$	500

	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

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 between Level 1, Level 2 or Level 3 during the years ended December 31, 2023 or 2022.

Marketable Securities

U.S. treasury securities were valued by the Company using quoted prices in active markets for similar securities, which represent a Level 2 measurement within the fair value hierarchy.

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 sellers achieved two of three milestones under the share purchase and transfer agreement and the Company paid $0.5 million in August 2023 and $0.5 million in February 2024.

During the fourth quarter of 2023, the probability weighted fair value of the future earnout was determined to be zero. Accordingly, the accumulated accretion under the last milestone and the relative contingent consideration have been reduced to zero.

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):

Balance as of December 31, 2022	$	1,798
Accretion - earnout		356
Deduction - earnout		(249)
Contingent consideration payment		(1,405)
Balance as of December 31, 2023	$	500

In April 2023, the Company received notice that the pension obligation had been transferred and no longer in Trace Analytics GmbH’s name and therefore the Company released the $0.9 million assignment of the pension liability and paid out the sellers.

Please refer to Note 18, 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.