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Fair Value of Financial Instruments | 3 Months Ended
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Mar. 31, 2025
Fair Value Disclosures [Abstract] |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Assets and liabilities measured at fair value on a recurring basis as of March 31, 2025 were as follows (in thousands):
| March 31, 2025
| Level 1 |  | Level 2 |  | Level 3 |  | Total
| (unaudited)
Money market funds | $ | 338,163 |  |  | $ | — |  |  | $ | — |  |  | $ | 338,163 |
Contingent consideration liabilities | — |  |  | — |  |  | (7,313) |  |  | (7,313) |
Total | $ | 338,163 |  |  | $ | — |  |  | $ | (7,313) |  |  | $ | 330,850 |
Assets measured at fair value on a recurring basis as of December 31, 2024 were as follows (in thousands):
| December 31, 2024
| Level 1 |  | Level 2 |  | Level 3 |  | Total
Money market funds | $ | 186,872 |  |  | $ | — |  |  | $ | — |  |  | $ | 186,872 |
U.S. Treasury notes | 177,199 |  |  | — |  |  | — |  |  | 177,199 |
Commercial paper | — |  |  | 13,941 |  |  | — |  |  | 13,941 |
Corporate bonds | — |  |  | 9,601 |  |  | — |  |  | 9,601 |
Total | $ | 364,071 |  |  | $ | 23,542 |  |  | $ | — |  |  | $ | 387,613 |
There were no transfers between Level 1 and Level 2 of the fair value measurement hierarchy during the three months ended March 31, 2025 and 2024. Convertible senior notes As of March 31, 2025 and December 31, 2024, the estimated fair value of our convertible senior notes, with aggregate principal totaling $230.0 million, was $230.7 million and $227.5 million, respectively. We estimate the fair value based on quoted market prices in an inactive market on the last trading day of the reporting period (Level 2). These convertible senior notes are recorded at face value less unamortized debt discount and transaction costs on our condensed consolidated balance sheets. Refer to Note 10—Debt for further information. Nonrecurring fair value measurements We recorded no impairment charges related to the impairment of ROU assets and leasehold improvements associated with office space designated for subleasing during the three months ended March 31, 2025 and $2.2 million for the three months ended March 31, 2024. These impairment charges were derived from the difference between the carrying value and the fair value of the relevant asset groups. The fair value of these asset groups was estimated using a discounted cash flow analysis of the office space designated for subleasing and included certain unobservable (Level 3) inputs, including the anticipated future sublease terms and rates. Level 3 fair value measurements The Upfront acquisition consideration included an initial estimate for contingent consideration based on certain revenue-based earn-out performance targets for Upfront during an earn-out period that ends on December 31, 2026. The Upfront contingent consideration is capped at $33.4 million and will be paid 63% in equity and 37% in cash to the extent achieved. We value Upfront’s expected contingent consideration and the corresponding liability using the Monte Carlo simulation valuation model using a distribution of potential outcomes of potential pay-out scenarios. The Lumeon acquisition consideration included an initial estimate for contingent consideration based on certain revenue-based earn-out performance targets for Lumeon during an earn-out period that ends on June 30, 2025. The Lumeon contingent consideration is capped at $25.0 million and will be paid in cash to the extent achieved. We value Lumeon’s expected contingent consideration and the corresponding liability using the Black-Scholes valuation method based on estimates of potential pay-out scenarios. The Carevive acquisition consideration included an initial estimate for contingent consideration based on certain revenue-based earn-out performance targets for Carevive during an earn-out period that ends on June 30, 2025. The Carevive contingent consideration is capped at $10.0 million and will be paid in cash to the extent achieved. We value Carevive’s expected contingent consideration and the corresponding liability using the Black-Scholes valuation method based on estimates of potential pay-out scenarios. The outstanding contingent consideration liabilities are categorized as Level 3 fair value measurements and are remeasured as of each reporting period. The aggregate intrinsic value of the revenue-based earn-out contingent consideration liabilities is $5.3 million based on a point estimate of our internal forecasting of the ultimate earn-out that will be earned and our closing stock price as of March 31, 2025. The recurring Level 3 fair value measurements of the contingent consideration liabilities include the other following significant inputs used during the three months ended March 31, 2025:
|  | Valuation Method |  |  |  | Market Price of Revenue Risk |  | Revenue Volatility |  | Expected Term (years) |  | Risk-free interest rate
|  | (unaudited) |  |  |  |
Revenue-based earn-out liabilities |  | Monte Carlo |  |  |  | 13.0% |  | 40% |  | 1.9 |  | 4.3%
The following table sets forth a summary of the changes in the estimated fair value of the contingent consideration liabilities, which are measured at fair value on a recurring basis using significant unobservable inputs (Level 3) (in thousands):
| Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
| (unaudited)
Balance as of December 31, 2024 | $ | — |
Acquisition-date contingent consideration liability from Upfront acquisition (see Note 2) | 7,313 |
Balance as of March 31, 2025 | $ | 7,313 |

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/exampleRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 55 -Paragraph 107 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482078/820-10-55-107 Reference 2: http://www.xbrl.org/2003/role/exampleRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 55 -Paragraph 100 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482078/820-10-55-100 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (c)(3) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2E -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2E Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (h) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (e) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (d) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (h) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (g) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Topic 940 -SubTopic 820 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147478119/940-820-50-1 + Details
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