Fair Value of Financial Instruments

9 Months Ended

Sep. 30, 2024

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

Fair Value of Financial Instruments

Fair value is the exchange price that would be received for an asset or paid to transfer a liability in an orderly transaction between market participants. In arriving at a fair value measurement, the Company uses a fair value

hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable. The three levels of inputs used to establish fair value are the following:

•Level 1 — Quoted prices in active markets for identical assets or liabilities;

•Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and

•Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

In situations where there is little, if any, market activity for the asset or liability at the measurement date, the fair value measurement reflects the Company’s own judgments about the assumptions that market participants would use in pricing the asset or liability. Those judgments are developed by the Company based on the best information available in the circumstances, including expected cash flows and appropriately risk-adjusted discount rates, available observable and unobservable inputs.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Certain assets are measured at fair value on a nonrecurring basis. These assets, including property and equipment and operating lease right-of-use assets, are subject to fair value adjustments whenever events or circumstances indicate the carrying value of the assets may not be recoverable and are subsequently written down to fair value when impaired. During the three and nine months ended September 30, 2024 and 2023, the Company had no impairment charges related to its property and equipment or operating lease right-of-use assets.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The Company’s financial assets measured at fair value on a recurring basis were as follows:

	Total		Fair value measurement as of September 30, 2024
			Level 1		Level 2		Level 3
	(in thousands)
Cash equivalents:
Money market funds	$	126,132	$	126,132	$	—	$	—
U.S. Treasury securities	109,373		109,373		—		—
Total	$	235,505	$	235,505	$	—	$	—

	Total		Fair value measurement as of December 31, 2023
			Level 1		Level 2		Level 3
	(in thousands)
Cash equivalents:
Money market funds	$	12,671	$	12,671	$	—	$	—
U.S. Treasury securities	199,121		199,121		—		—
Total	$	211,792	$	211,792	$	—	$	—

The amounts reported in the unaudited Condensed Consolidated Balance Sheets as current assets or current liabilities, including Cash, Restricted cash, Accounts receivable, net, Current contract assets, net, Other current assets, Accounts payable and Accrued expenses, each approximate their fair value due to the short-term maturities of the instruments.

Financial Instruments Not Carried at Fair Value

The following table provides the fair value of financial assets that are not measured at fair value:

	September 30, 2024				December 31, 2023
(in thousands)	Carrying value		Fair value		Carrying value		Fair value
Liabilities:
Debt	$	141,502	$	141,502	$	144,045	$	144,045
Total	$	141,502	$	141,502	$	144,045	$	144,045

The carrying amount of the Company’s debt approximates its fair value due to its variable interest rate. The fair value was determined using the Adjusted SOFR as of September 30, 2024 and December 31, 2023 plus an applicable spread, a Level 2 classification in the fair value hierarchy.

The Company’s accounting policy is to recognize transfers between levels of the fair value hierarchy on the date of the event or change in circumstances that caused the transfer. There were no transfers into or out of any level for the periods ended September 30, 2024 and December 31, 2023.