Fair value measurements and investments

3 Months Ended

Mar. 31, 2024

FAIR VALUE MEASUREMENTS AND INVESTMENTS

Fair Value Measurements

The guidance on fair value measurements and disclosures defines fair value, establishes a framework for measuring fair value, and requires enhanced disclosures about assets and liabilities measured at fair value. Fair value is defined as the price at which an asset could be exchanged in a current transaction between knowledgeable, willing parties. A liability’s fair value is defined as the amount that would be paid to transfer the liability to a new obligor, not the amount that would be paid to settle the liability with the creditor. Where available, fair value is based on observable market prices or parameters or derived from such prices or parameters. Where observable prices or inputs are not available, valuation models are used to determine fair value. These models employ valuation techniques that involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the instruments or market and the instruments’ complexity.

Assets and liabilities recorded at fair value on a recurring basis in our condensed consolidated balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair value. Hierarchical levels, defined by the guidance on fair value measurements, are directly related to the amount of subjectivity associated with the inputs to fair valuation of these assets and liabilities and are as follows:

Level 1 - Valuation is based upon quoted market prices for identical instruments traded in active markets.

Level 2 - Valuation is based on quoted market prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.

Level 3 - Valuation is generated from model-based techniques that use significant assumptions not observable in the market. Valuation techniques include use of discounted cash flow models and similar techniques.

The fair values of our cash and cash equivalents, accounts receivable, and accounts payable, approximate their carrying amounts due to their short duration.

Financial assets subject to the fair value disclosure requirements are included in the table below. All of our financial assets are classified as Level 1. At March 31, 2024 and December 31, 2023, the fair value of these investments approximated its carrying amount.


	As of March 31, 2024
Assets	Level 1		Level 2		Level 3
Short-term investments: U.S. Treasury securities	$	19,763	$	—	$	—
Total	$	19,763	$	—	$	—


	As of December 31, 2023
Assets	Level 1		Level 2		Level 3
Cash and cash equivalents: U.S. Treasury securities	$	9,871	$	—	$	—
Short-term investments: U.S. Treasury securities	19,496		—		—
Total	$	29,367	$	—	$	—

The fair value of the Notes (as defined in Note 15 to the condensed consolidated financial statements) was approximately $64.9 million and $65.3 million as of March 31, 2024 and December 31, 2023, respectively. Fair value was determined based on the closing trading price of the Notes as of the last trading day of the quarter and was primarily affected by the trading price of the Company's common stock and market interest rates. The fair value of the Notes is considered a Level 2 measurement as they are not actively traded.