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Fair Value
 3 Months Ended
Mar. 31, 2025
Fair Value Disclosures [Abstract]  
Fair Value

5. Fair Value

 

The following table summarizes, by level within the fair value hierarchy, estimated fair values of the Company’s assets and liabilities measured at fair value on a recurring or nonrecurring basis or disclosed, but not carried, at fair value in the Condensed Consolidated Balance Sheets as of the dates presented. There were no transfers into, out of, or between levels within the fair value hierarchy during any of the periods presented.

 

 

 

March 31, 2025

 

($ in thousands)

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

165,466

 

 

$

—

 

 

$

—

 

 

$

165,466

 

Restricted cash

 

 

43,725

 

 

 

—

 

 

 

—

 

 

 

43,725

 

Other assets

 

 

—

 

 

 

2,500

 

 

 

—

 

 

 

2,500

 

Total assets

 

$

209,191

 

 

$

2,500

 

 

$

—

 

 

$

211,691

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Borrowings

 

$

—

 

 

$

456,189

 

 

$

—

 

 

$

456,189

 

Tax receivable agreement

 

 

—

 

 

 

—

 

 

 

190,441

 

 

 

190,441

 

Total liabilities

 

$

—

 

 

$

456,189

 

 

$

190,441

 

 

$

646,630

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2024

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

189,530

 

 

$

—

 

 

$

—

 

 

$

189,530

 

Restricted cash

 

 

47,179

 

 

 

—

 

 

 

—

 

 

 

47,179

 

Other assets

 

 

—

 

 

 

2,500

 

 

 

—

 

 

 

2,500

 

Total assets

 

$

236,709

 

 

$

2,500

 

 

$

—

 

 

$

239,209

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Borrowings

 

$

—

 

 

$

482,852

 

 

$

—

 

 

$

482,852

 

Tax receivable agreement

 

 

—

 

 

 

—

 

 

 

203,645

 

 

 

203,645

 

Total liabilities

 

$

—

 

 

$

482,852

 

 

$

203,645

 

 

$

686,497

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

Cash and cash equivalents contains cash on hand, demand deposit accounts, money market accounts and short term investments with original maturities of three months or less. They are classified within Level 1 of the fair value hierarchy, under Accounting Standard Codification (“ASC”) 820, Fair Value Measurements (“ASC 820”), as the price is obtained from quoted market prices in an active market. The carrying amounts of the Company’s cash and cash equivalents approximate their fair values due to the short maturities and highly liquid nature of these accounts.

Restricted Cash

Restricted cash is classified within Level 1 of the fair value hierarchy under ASC 820, as the primary component is cash that is used as collateral for debts. The carrying amounts of the Company’s restricted cash approximate their fair values due to the highly liquid nature.

Other assets

Other assets contain a minority equity investment in a privately-held company. The Company elected a measurement alternative for measuring this investment under ASC 321, Investments – Equity Securities, in which the carrying amount is adjusted based on any observable price changes in orderly transactions. The investment is classified as Level 2 as observable adjustments to value are infrequent and occur in an inactive market.

Borrowings

 

The revolving credit facility and convertible senior notes are measured at amortized cost, which the carrying value is unpaid principal net of unamortized debt discount and debt issuance costs (“DDIC”). The estimated fair value of the revolving credit facility approximates the unpaid principal because its interest rate approximates market interest rates. The estimated fair value of convertible senior notes is determined using the quoted prices from over-the-counter markets. The estimated fair value of the Company’s borrowings is classified within Level 2 of the fair value hierarchy, as the market interest rates and quoted prices are generally observable and do not contain a high level of subjectivity. As of March 31, 2025 and December 31, 2024, the Company had $0 drawn against the revolving credit facility.

 

The following table provides the carrying value and estimated fair value of borrowings. See Note 8. Borrowings for further discussion on borrowings.

 

 

 

March 31, 2025

 

($ in thousands)

 

Principal Amount

 

 

Unamortized DDIC

 

 

Carrying Value

 

 

Fair Value

 

2026 Notes

 

$

220,000

 

 

$

(893

)

 

$

219,107

 

 

$

209,660

 

2029 Notes

 

 

287,500

 

 

 

(7,132

)

 

 

280,368

 

 

 

246,529

 

Revolving credit facility

 

 

—

 

 

 

(1,887

)

 

 

(1,887

)

 

 

—

 

Total borrowings

 

$

507,500

 

 

$

(9,912

)

 

$

497,588

 

 

$

456,189

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2024

 

($ in thousands)

 

Principal Amount

 

 

Unamortized DDIC

 

 

Carrying Value

 

 

Fair Value

 

2026 Notes

 

$

220,000

 

 

$

(1,175

)

 

$

218,825

 

 

$

206,133

 

2029 Notes

 

 

287,500

 

 

 

(7,550

)

 

 

279,950

 

 

 

276,719

 

Revolving credit facility

 

 

—

 

 

 

(1,997

)

 

 

(1,997

)

 

 

—

 

Total borrowings

 

$

507,500

 

 

$

(10,722

)

 

$

496,778

 

 

$

482,852

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax Receivable Agreement

 

Upon the completion of the Business Combination, the Company entered into the TRA with holders of Post-Merger Repay Units. As a result of the TRA, the Company established a liability in its consolidated financial statements. The Company elected to measure TRA at fair value under ASC 825, Financial Instruments - Fair Value Option, to better align its economic value with the Company’s risk management strategies. The fair value of TRA is based on estimates of discounted future cash flows associated with the estimated payments to the Post-Merger Repay Unit holders. These inputs are not observable in the market; thus, the TRA is classified within Level 3 of the fair value hierarchy, under ASC 820. The change in fair value is re-measured at each reporting period with the change in fair value being recognized in accordance with ASC 805, Business Combinations, which is recorded within Change in fair value of tax receivable liability in the Company’s Condensed Consolidated Statements of Operations.

 

The Company used a discount rate, also referred to as the Early Termination Rate, as defined in the TRA, to determine the present value, based on a risk-free rate plus a spread, pursuant to the TRA. A rate of 6.13% was applied to

the forecasted TRA payments at March 31, 2025, in order to determine the fair value. A significant increase or decrease in the discount rate could have resulted in a lower or higher balance, respectively, as of the measurement date. During the three months ended March 31, 2025, the TRA balance was adjusted by $13.2 million through an exchange, a payment, accretion expense and a valuation adjustment, related to a decrease in the discount rate, which was 6.21% as of December 31, 2024.

 

The following table provides a rollforward of the TRA related to the acquisition and exchanges of Post-Merger Repay Units. See Note 12. Taxation for further discussion on the TRA.

 

 

Three Months Ended March 31,

 

($ in thousands)

 

2025

 

 

2024

 

Balance at beginning of period

 

$

203,645

 

 

$

188,911

 

Purchases

 

 

111

 

 

 

—

 

Payments

 

 

(16,337

)

 

 

(580

)

Accretion expense

 

 

3,003

 

 

 

3,324

 

Valuation adjustment

 

 

19

 

 

 

(411

)

Balance at end of period

 

$

190,441

 

 

$

191,244