XML 26 R16.htm IDEA: XBRL DOCUMENT v3.23.3
Fair Value Measurements
 3 Months Ended
Sep. 30, 2023
Fair Value Disclosures [Abstract]  
Fair Value Measurements

Note 6. Fair Value Measurements

The authoritative guidance on fair value measurements establishes a three-tier fair value hierarchy for disclosure of fair value measurements as follows:

Level 1—Inputs are unadjusted, quoted prices in active markets for identical, assets or liabilities at the measurement date;

Level 2—Inputs are quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability;

Level 3—Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).

Money market funds are classified as Level 1 as the assets are valued using quoted prices in active markets. Liabilities for contingent consideration related to business combinations are classified as Level 3 liabilities as the Company uses unobservable inputs in the valuation, specifically related to the projected total contract value generated by the acquired businesses for a distinct period of time.

The following table sets forth the Company’s financial assets that were measured at fair value on a recurring basis as of the date indicated by level within the fair value hierarchy (in thousands):

 

 

 

September 30, 2023

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Financial assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

75,639

 

 

$

—

 

 

$

—

 

 

$

75,639

 

Total

 

$

75,639

 

 

$

—

 

 

$

—

 

 

$

75,639

 

 

The following tables set forth the Company’s financial liabilities that were measured at fair value on a recurring basis as of the dates indicated by level within the fair value hierarchy (in thousands):

 

 

 

September 30, 2023

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Liability for contingent consideration, current portion

 

$

—

 

 

$

—

 

 

$

933

 

 

$

933

 

Liability for contingent consideration, non-current portion

 

 

—

 

 

 

—

 

 

 

4,317

 

 

 

4,317

 

Total

 

$

—

 

 

$

—

 

 

$

5,250

 

 

$

5,250

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2023

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Liability for contingent consideration, current portion

 

$

—

 

 

$

—

 

 

$

2,364

 

 

$

2,364

 

Liability for contingent consideration, non-current portion

 

—

 

 

 

—

 

 

 

4,317

 

 

 

4,317

 

Total

 

$

—

 

 

$

—

 

 

$

6,681

 

 

$

6,681

 

 

In connection with the acquisition of Paragon Data Labs, Inc. in May 2023, the Company recorded a contingent consideration liability of $4.3 million on the acquisition date for the estimated fair value of the contingent consideration. The fair value was measured based on the probability of achieving certain performance measures pursuant to the acquisition agreement. The liability was included in other liabilities on the audited consolidated balance sheet as of June 30, 2023 with no changes in fair value during the three months ended September 30, 2023.

In connection with the acquisition of Billstream in June 2022, the Company recorded $4.1 million on the acquisition date for the estimated fair value of the contingent consideration. The fair value was measured based on the probability of achieving certain performance measures pursuant to the acquisition agreement. The fair value of the contingent consideration was remeasured at $2.4 million and was included in other current liabilities on the audited consolidated balance sheet as of June 30, 2023. As of September 30, 2023, the fair value of the contingent consideration was remeasured at $0.9 million.

The fair value of the contingent consideration was initially estimated on the acquisition date using the Monte Carlo simulation and included key assumptions used by management related to the estimated probability of occurrence and discount rates. Subsequent changes in the fair value of the contingent consideration liabilities, resulting from management’s revision of key assumptions and estimates, have been recorded in general and administrative expense in the unaudited condensed consolidated statements of operations. Gains and losses arising from exchange rate fluctuation on these liabilities not denominated in U.S. Dollars have been included in interest and other income (expense), net on the unaudited condensed consolidated statements of operations.

Changes in the fair value of contingent consideration liabilities during the three months ended September 30, 2023 and 2022 were as follows (in thousands):

 

 

 

Three Months Ended September 30,

 

 

 

2023

 

 

2022

 

Balance, beginning of period

 

$

6,681

 

 

$

13,835

 

Payment of contingent consideration

 

 

—

 

 

 

(9,299

)

Change in fair value of contingent consideration

 

 

(1,431

)

 

 

—

 

Effect of foreign currency exchange rate changes

 

 

—

 

 

 

(410

)

Balance, end of period

 

$

5,250

 

 

$

4,126

 

 

Other financial instruments consist of accounts receivable, accounts payable and accrued expenses and other current liabilities. Accounts receivable, accounts payable and accrued liabilities are stated at their carrying value, which approximates fair value due to the short time to expected receipt or payment.