XML 23 R16.htm IDEA: XBRL DOCUMENT v3.25.0.1
Fair Value Measurements
 6 Months Ended
Dec. 31, 2024
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):

 

 

 

December 31, 2024

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Financial assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

218,231

 

 

$

—

 

 

$

—

 

 

$

218,231

 

Total financial assets

 

$

218,231

 

 

$

—

 

 

$

—

 

 

$

218,231

 

 

 

 

June 30, 2024

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Financial assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

78,677

 

 

$

—

 

 

$

—

 

 

$

78,677

 

Total financial assets

 

$

78,677

 

 

$

—

 

 

$

—

 

 

$

78,677

 

 

 

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):

 

 

 

December 31, 2024

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Financial Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Liability for contingent consideration, current portion

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

Liability for contingent consideration, non-current portion

 

 

—

 

 

 

—

 

 

 

305

 

 

 

305

 

Total financial liabilities

 

$

—

 

 

$

—

 

 

$

305

 

 

$

305

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2024

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Financial Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Liability for contingent consideration, current portion

 

$

—

 

 

$

—

 

 

$

2,405

 

 

$

2,405

 

Liability for contingent consideration, non-current portion

 

—

 

 

 

—

 

 

 

153

 

 

 

153

 

Total financial liabilities

 

$

—

 

 

$

—

 

 

$

2,558

 

 

$

2,558

 

 

In connection with the acquisition of TDI, the Company is obligated to pay up to $1.0 million in cash on achievement of certain performance measures and in some cases, continued employment or service with the Company or its subsidiaries. The fair value of the contingent consideration liability was measured based on the probability of achieving certain performance measures pursuant to the acquisition agreement. The total fair value of the contingent consideration liability was $0.8 million as of December 31, 2024 and June 30, 2024, of which $0.1 million was included as part of purchase consideration upon acquisition and $0.7 million was accounted for as post-combination compensation costs to be recognized over the required service period. Accordingly, the Company recorded a contingent consideration liability of $0.3 million as of December 31, 2024 and $0.2 million as of June 30, 2024 in other liabilities on the unaudited condensed consolidated balance sheets.

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. During the six months ended December 31, 2024, the Company made a fair value adjustment of $1.0 million based on the probability of achieving certain performance measures and paid $1.4 million related to the contingent consideration. Accordingly, the contingent consideration was fully settled as of December 31, 2024, as compared to the fair value of $2.4 million as of June 30, 2024, which was included in other current liabilities on the unaudited condensed consolidated balance sheets.

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 expenses 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 contingent consideration liabilities were as follows (in thousands):

 

 

 

Six Months Ended December 31,

 

 

 

2024

 

 

2023

 

Balance, beginning of period

 

$

2,558

 

 

$

6,681

 

Payment of contingent consideration

 

 

(1,401

)

 

 

(985

)

Change of contingent consideration

 

 

(848

)

 

 

(2,215

)

Effect of foreign currency exchange rate changes

 

 

(4

)

 

 

—

 

Balance, end of period

 

$

305

 

 

$

3,481

 

 

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