Investments and fair value measurements

9 Months Ended

Sep. 30, 2024

Fair Value Disclosures [Abstract]

Investments and fair value measurements

4. Investments and fair value measurements

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

As of September 30, 2024	Level 1		Level 2		Level 3
Assets
Cash equivalents1:
Money market funds	$	160,819	$	—	$	—
Time deposits	6,445		—		—
Marketable securities:
U.S. government securities	—		152,546		—
Strategic investments	—		—		—
Total assets	$	167,264	$	152,546	$	—
Liabilities
Accrued expenses and other current liabilities:
Cash settled stock appreciation rights	$	—	$	—	$	4
Other liabilities, non-current:
Cash settled stock appreciation rights	—		—		6
Total liabilities	$	—	$	—	$	10

As of December 31, 2023	Level 1		Level 2		Level 3
Assets
Cash equivalents1:
Money market funds	$	266,692	$	—	$	—
Marketable securities:
U.S. government securities	—		171,372		—
Strategic investments	—		—		10,311
Total assets	$	266,692	$	171,372	$	10,311
Other liabilities, non-current:
Cash settled stock appreciation rights	$	—	$	—	$	48

(1) Included in cash and cash equivalents in the accompanying condensed consolidated balance sheets, in addition to $37.3 million and $38.9 million of cash, as of September 30, 2024 and December 31, 2023, respectively.

The Company’s money market funds and time deposits are classified within Level 1 of the fair value hierarchy because they are valued using quoted prices in active markets. The Company’s investments in U.S. government securities are classified within Level 2 of the fair value hierarchy because they have been valued using inputs other than quoted prices in active markets that are directly or indirectly observable. The Company’s strategic investment and cash settled stock appreciation rights are classified within Level 3 of the fair value hierarchy because they have been valued using significant unobservable inputs for which the Company has been required to develop its own assumptions.

A summary of the changes in the fair value of Level 3 financial instruments, of which vesting and remeasurement of stock appreciation rights (SARs) and impairment of strategic investments are recognized in the consolidated statements of operations, is as follows (in thousands):

	Stock Appreciation Rights		Strategic Investments
Balance— June 30, 2024	$	16	$	—
Vesting and remeasurement of SARs	(6)		—
Balance— September 30, 2024	$	10	$	—
Balance— June 30, 2023	$	30	$	10,311
Vesting and remeasurement of SARs	(4)		—
Balance— September 30, 2023	$	26	$	10,311
Balance— December 31, 2023	$	48	$	10,311
Vesting and remeasurement of SARs	(31)		—
Exercises of SARs	(7)		—
Unrealized loss on strategic investments	—		(10,311)
Balance— September 30, 2024	$	10	$	—
Balance— December 31, 2022	$	462	$	12,104
Vesting and remeasurement of SARs	(183)		—
Exercises of SARs	(253)		—
Unrealized loss on strategic investments	—		(1,793)
Balance— September 30, 2023	$	26	$	10,311

The Company evaluates its strategic investments for impairment at each reporting period. This evaluation considers several potential qualitative and quantitative impairment indicators including, but not limited to, the investee's financial metrics, whether there were any significant adverse changes in the economic environment or general market conditions of the geographies and industries in which the investee operates, and any other publicly available information that may affect the value of the investment. The Company determined that qualitative indicators of impairment existed as of June 30, 2024, and therefore performed an assessment of the fair value of its investment.

The fair value analysis involved the use of significant observable and unobservable assumptions, including the investee’s forecasted financial condition in relation to its outstanding obligations, ability to secure additional funds through various alternative scenarios, and a dual market and income approach involving revenue multiples of publicly traded peer companies and financial forecasts provided by the investee. Based on the assessment performed as of June 30, 2024, the Company recognized an impairment loss of $10.3 million during the second quarter of 2024, such that the carrying value of its strategic investments was reduced to zero.

The cost basis of the strategic investments is $15.0 million. In addition to the $10.3 million impairment charge recognized during the second quarter of 2024, the Company previously recognized impairment charges of $1.8 million during the second quarter of 2023 and $2.9 million during the third quarter of 2022. There have been no observable price changes in orderly transactions for identical or similar investments of the same issuer during the periods presented.