v3.26.1
Fair Value Measurements
 3 Months Ended
Mar. 31, 2026
Fair Value Disclosures [Abstract]  
Fair Value Measurements Fair Value Measurements
The Company follows Accounting Standards Codification (“ASC”) 820, Fair Value Measurements (“ASC 820”), in accounting for fair value measurements. ASC 820 defines fair value and prescribes a framework for measuring fair value in accordance with existing generally accepted accounting principles. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Observable inputs are based on market data obtained from independent sources. Fair value measurements are based on a fair value hierarchy, based on three levels of inputs, of which the first two are considered observable and the last unobservable, which are based on the following:
•Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
•Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, such as quoted market prices for similar assets and liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability.
•Level 3 – Unobservable inputs that reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date.
The carrying values of cash and cash equivalents, accounts receivable, prepaid expenses and other current assets, accounts payable and accrued expenses approximate their fair value due to the short maturity of these instruments.
The Company’s financial liabilities measured at fair value on a recurring basis and the level of inputs used for such measurements were as follows (in thousands):
As of
March 31,
2026		December 31,
2025
Level 3
Contingent liabilities$- $166 
A summary of the changes in fair value of the Company’s Level 3 financial instruments for the three months ended March 31, 2026 and March 31, 2025 were as follows (in thousands):
Contingent
Liabilities
Balance at December 31, 2025$166 
Change in fair value included in other income (expense), net
(166)
Balance at March 31, 2026$— 
Series D
Warrants		Common Stock
Warrants		Embedded Derivative
Liabilities		Contingent
Liabilities		Total
Balance at December 31, 2024$7,882 $10,976 $24,931 $— $43,789 
Change in fair value included in other income (expense), net
(50)11 16,574 — 16,535 
Balance at March 31, 2025$7,832 $10,987 $41,505 $— $60,324 
The Company’s financial liabilities subject to fair value procedures comprised of the following:
•Series D warrants – These warrants were issued to noteholders in connection with the Subordinated Convertible Promissory Notes (the “Convertible Notes”) in 2023. The fair value of these warrants was estimated using the fair value of the Company’s Series D Preferred Stock adjusted for the probability that the Convertible Notes would reach maturity at each measurement date, which are unobservable inputs. The Series D warrants were terminated immediately prior to the closing of the IPO.
•Common stock warrants – These warrants were issued to a lender in connection with a bank loan facility extension in 2018. The fair value of these warrants was estimated using the fair value of the Company’s common stock at each measurement date, which, prior to the IPO, was an unobservable input. Subsequent to the IPO, the fair value of the
Company’s common stock was based on the closing price of the Company's Class A common stock on the valuation date, which is an observable input. The common stock warrants were recorded within warrant liabilities on the condensed consolidated balance sheets and were transferred from Level 3 to Level 1 on the fair value hierarchy subsequent to the IPO in May 2025. The common stock warrants were exercised in full during the year ended December 31, 2025.
•Embedded derivative liabilities – The embedded derivative liabilities represented the embedded features of the Convertible Notes issued in 2023. The Company estimated the fair value of the embedded derivative liabilities using a with-and-without model which compares the estimated fair value of the underlying instrument with the embedded features to the estimated fair value of the underlying instrument without the embedded features, with the difference representing the estimated fair value of the embedded derivative features. The with-and-without model includes significant unobservable inputs including the timing and probability weighting of potential liquidity events, discount rate, illiquidity discount, and expected volatility. Other assumptions used in the model that are not significant unobservable estimates are interest rate and risk-free rate. The embedded derivative liability was extinguished as part of the 2025 Note Conversion Amendment on April 1, 2025.
•Convertible debt – On April 1, 2025, the Company and the holders of the Convertible Notes executed an Omnibus Amendment and Note Conversion Agreement (the "Note Conversion Amendment"). As the terms of the Note Conversion Amendment were determined to be substantially different than the terms of the Convertible Notes prior to the Note Conversion Amendment, the modification was accounted for as a debt extinguishment and the modified Convertible Notes were recorded on the condensed consolidated balance sheets at fair value. The Company estimated the fair value of the Convertible Notes using a scenario-based approach and unobservable inputs including the timing and probability weighting of potential liquidity events, discount for lack of marketability on securities, discount rate, interest rates, expected volatility, and dividend yields. The Convertible Notes were settled in full in connection with the closing of the Company’s IPO.
•Contingent liabilities – The Company issued contingent consideration in connection with its 2021 acquisition of Maximum Effort Marketing. The Company estimates the fair value of its contingent liabilities using a Monte Carlo simulation model. Contingent liabilities are recorded within other non-current liabilities on the condensed consolidated balance sheets. See Note 7, Other Liabilities, for details of the terms and conditions of the contingent liabilities.
The range of assumptions used to calculate the fair value of the Series D Warrants and embedded derivative liabilities as of March 31, 2025 were as follows:
Series D WarrantsEmbedded
Derivative Liability
Interest rate-6.0%
Risk-free rate4.3%
3.9% - 4.3%
Discount rate-40.0%
Illiquidity discount-10.0%
Probability weight10.0%
1.3% - 75.0%
Expected volatility65.0%65.0%
Expected term (years)0.3
0.3 - 2.0