v3.26.1
FAIR VALUE MEASUREMENTS
 3 Months Ended
Mar. 31, 2026
Fair Value Disclosures [Abstract]  
FAIR VALUE MEASUREMENTS

NOTE 13 — FAIR VALUE MEASUREMENTS

The liabilities recorded at fair value and measured on a recurring basis are all Level 3 measurements as of March 31, 2026 and December 31, 2025.

Rollforward of Level 3 Measurements

A roll forward of the Level 3 measurements is as follows (in thousands):

 

 

 

June 2022 Warrants

 

 

2024 Warrants

 

Beginning balance as of January 1, 2026

 

$

10,776

 

 

$

263,390

 

Exercises/Settlements

 

 

—

 

 

 

(365,166

)

Change in fair value recognized in Other income (expense), net

 

 

7,123

 

 

 

101,776

 

Ending balance as of March 31, 2026

 

$

17,899

 

 

$

—

 

 

 

 

June 2022 Warrants

 

 

December 2022 Warrants

 

 

C-2 Notes

 

 

2024 Warrants

 

Beginning balance as of January 1, 2025

 

$

3,636

 

 

$

1,394

 

 

$

18,537

 

 

$

45,604

 

Change in fair value recognized in Other income (expense), net

 

 

(543

)

 

 

(62

)

 

 

387

 

 

 

(10,363

)

Change in fair value attributable to instrument-specific credit risk recognized in Other comprehensive income(1)

 

 

—

 

 

 

—

 

 

 

(153

)

 

 

—

 

Ending balance as of March 31, 2025

 

$

3,093

 

 

$

1,332

 

 

$

18,771

 

 

$

35,241

 

__________

(1)
As the fair value option was elected for the C-2 Notes, the change in fair value attributable to instrument-specific credit risk associated with each instrument is recorded within Other comprehensive income (loss), and the remaining change in fair value is recorded within Other income (expense), net on the condensed consolidated statements of operations and comprehensive loss. The change in instrument specific credit risk is estimated based on the option adjusted spread of comparable companies and the option adjusted spread of the U.S. high yield index for companies with similar credit ratings.

Valuation Techniques and Significant Unobservable Inputs

A significant increase or decrease in any of the significant unobservable inputs used in the fair value measurement of the warrant liabilities or C-2 Notes could result in a significantly higher or lower fair value measurement. The quantitative inputs and assumptions used for items categorized in Level 3 of the fair value hierarchy as of March 31, 2026 and 2025 are summarized below:

2024 Warrants

The fair value of the 2024 Warrants is based on an option pricing method of allocation. The 2024 Warrants were exercised on March 18, 2026. The significant inputs, including significant unobservable inputs, used in the recurring Level 3 fair value measurements of the 2024 Warrants are as follows:

 

 

 

 

 

 

 

 

Significant Inputs

 

March 18, 2026

 

 

March 31, 2025

 

Expected term (years)

 

N/A

 

 

 

1.0

 

Equity volatility

 

 

90.0

%

 

 

57.0

%

Risk-free rate

 

 

3.7

%

 

 

4.0

%

June 2022 Warrants

In conjunction with a guarantee to the Bank of New York Credit Facility, the Company issued $10.0 million of warrants (the “June 2022 Warrants”) to Ghaffarian Enterprises, a related party, on June 30, 2022. The fair value of the June 2022 Warrants is based on an option pricing method of allocation. The significant inputs, including significant unobservable inputs, used in the recurring Level 3 fair value measurements of the June 2022 Warrants are as follows:

 

 

 

 

 

 

 

 

Significant Inputs

 

March 31, 2026

 

 

March 31, 2025

 

Expected term (years)

 

1.9

 

 

2.9

 

Equity volatility

 

 

90.0

%

 

 

57.0

%

Risk-free rate

 

 

3.8

%

 

 

3.8

%

December 2022 Warrants

On December 5, 2022, the Company issued 444,444 warrants (the “December 2022 Warrants”) to purchase common units of the Company. The December 2022 Warrants had an exercise price of $0.01 per unit, were not exercisable until 36 months following the issuance of the C-2 Notes, subject to the achievement of certain business requirements, and were liability classified. As of December 31, 2025, the December 2022 Warrants expired as business requirements of the holder were not met.

The fair value was determined based on an option pricing method of allocation using the contractual strike price per the warrant agreement, and an estimate of the per unit value of the warrants. The significant inputs, including significant unobservable inputs, used in the recurring Level 3 fair value measurements of the December 2022 Warrants were as follows:

 

Significant Inputs

 

March 31, 2025

 

Expected term (years)

 

2.9

 

Equity volatility

 

 

57.0

%

Discount for lack of marketability

 

 

27.0

%

Risk-free rate

 

 

3.8

%

C-2 Notes

As of December 31, 2025, all C-2 Notes had converted into Series C Preferred Units. Refer to Note 7 — Debt for further information.

The fair value of the C-2 Notes was based on the binomial lattice model, which is considered to be a Level 3 fair value measurement. The significant inputs, including significant unobservable inputs, used in the recurring Level 3 fair value measurements of the C-2 Notes were as follows:

 

Significant Inputs

 

March 31, 2025

 

Discount rate

 

 

13.2

%

Credit spread

 

 

9.0

%

Equity volatility

 

 

57.0

%

Risk-free rate

 

 

4.2

%

 

Held-to-Maturity Securities—Amortized Cost and Fair Value

The estimated fair values of the Company’s financial instruments that are not measured at fair value on a recurring basis, categorized based upon the fair value hierarchy, are as follows (in thousands):

 

 

 

 

 

 

Fair Value

 

 

 

Carrying Value

 

 

Level 1

 

 

Level 2

 

March 31, 2026

 

 

 

 

 

 

 

 

 

Cash equivalents

 

 

 

 

 

 

 

 

 

Money market fund

 

$

89,645

 

 

$

89,645

 

 

$

—

 

Total in cash and cash equivalents

 

$

89,645

 

 

$

89,645

 

 

$

—

 

Short-term investments

 

 

 

 

 

 

 

 

 

Corporate bonds

 

$

271,166

 

 

$

—

 

 

$

270,705

 

Government treasury bills

 

 

88,944

 

 

 

88,918

 

 

 

—

 

Commercial paper and certificates of deposit

 

 

65,022

 

 

 

—

 

 

 

64,939

 

Foreign issuer debt securities

 

 

24,377

 

 

 

—

 

 

 

24,338

 

Total in short-term investments

 

$

449,509

 

 

$

88,918

 

 

$

359,982

 

Long-term investments

 

 

 

 

 

 

 

 

 

Corporate bonds

 

$

204,548

 

 

$

—

 

 

$

203,916

 

Government treasury bills

 

 

49,848

 

 

 

49,679

 

 

 

—

 

Foreign issuer debt securities

 

 

16,042

 

 

 

—

 

 

 

16,007

 

Total in long-term investments

 

$

270,438

 

 

$

49,679

 

 

$

219,923

 

December 31, 2025

 

 

 

 

 

 

 

 

 

Cash equivalents

 

 

 

 

 

 

 

 

 

Money market fund

 

$

152,951

 

 

$

152,951

 

 

$

—

 

Commercial paper and certificates of deposit

 

 

45,430

 

 

 

—

 

 

 

45,432

 

Corporate bonds

 

 

36,021

 

 

 

—

 

 

 

36,022

 

Foreign issuer debt securities

 

 

1,191

 

 

 

—

 

 

 

1,191

 

Total in cash and cash equivalents

 

$

235,593

 

 

$

152,951

 

 

$

82,645

 

Short-term investments

 

 

 

 

 

 

 

 

 

Corporate bonds

 

$

163,331

 

 

$

—

 

 

$

163,335

 

Government treasury bills

 

 

88,154

 

 

 

88,206

 

 

 

—

 

Commercial paper and certificates of deposit

 

 

35,717

 

 

 

—

 

 

 

35,726

 

Foreign issuer debt securities

 

 

17,706

 

 

 

—

 

 

 

17,708

 

Total in short-term investments

 

$

304,908

 

 

$

88,206

 

 

$

216,769

 

Long-term investments

 

 

 

 

 

 

 

 

 

Corporate bonds

 

$

208,419

 

 

$

—

 

 

$

208,482

 

Government treasury bills

 

 

43,468

 

 

 

43,540

 

 

 

—

 

Foreign issuer debt securities

 

 

9,571

 

 

 

—

 

 

 

9,573

 

Total in long-term investments

 

$

261,458

 

 

$

43,540

 

 

$

218,055

 

 

 

 

 

 

 

 

 

 

 

The following table summarizes the carrying values and fair values of the Company’s financial instruments that were not carried at fair value on the condensed consolidated balance sheets (in thousands):
 

March 31, 2026

 

Amortized
Cost Basis

 

 

Allowance
for Credit
Losses

 

 

Net carrying
amount

 

 

Gross
Unrealized
Gains

 

 

Gross
Unrealized
Losses

 

 

Aggregate Fair Value

 

U.S. Government securities

 

$

138,791

 

 

$

—

 

 

$

138,791

 

 

$

—

 

 

$

(194

)

 

$

138,597

 

Corporate securities

 

 

540,736

 

 

 

—

 

 

 

540,736

 

 

 

6

 

 

 

(1,181

)

 

 

539,561

 

Foreign securities

 

 

40,420

 

 

 

—

 

 

 

40,420

 

 

 

1

 

 

 

(76

)

 

 

40,345

 

Total held to maturity securities

 

$

719,947

 

 

$

—

 

 

$

719,947

 

 

$

7

 

 

$

(1,451

)

 

$

718,503

 

 

December 31, 2025

 

Amortized
Cost Basis

 

 

Allowance
for Credit
Losses

 

 

Net carrying
amount

 

 

Gross
Unrealized
Gains

 

 

Gross
Unrealized
Losses

 

 

Aggregate Fair Value

 

U.S. Government securities

 

$

131,623

 

 

$

—

 

 

$

131,623

 

 

$

123

 

 

$

—

 

 

$

131,746

 

Corporate securities

 

 

407,466

 

 

 

—

 

 

 

407,466

 

 

 

105

 

 

 

(28

)

 

 

407,543

 

Foreign securities

 

 

27,277

 

 

 

—

 

 

 

27,277

 

 

 

5

 

 

 

(1

)

 

 

27,281

 

Total held to maturity securities

 

$

566,366

 

 

$

—

 

 

$

566,366

 

 

$

233

 

 

$

(29

)

 

$

566,570

 

 

The amortized cost and estimated fair value of held to maturity securities by contractual maturity are shown below (in thousands):

 

March 31, 2026

 

Amortized
Cost Basis

 

 

Fair Value

 

Due in less than one year

 

$

449,509

 

 

$

448,900

 

Due after one year through five years

 

 

270,438

 

 

 

269,603

 

Total

 

$

719,947

 

 

$

718,503

 

December 31, 2025

 

 

 

 

 

 

Due in less than one year

 

$

304,908

 

 

$

304,975

 

Due after one year through five years

 

 

261,458

 

 

 

261,595

 

Total

 

$

566,366

 

 

$

566,570

 

 

 

 

 

 

 

 

Expected maturities may differ from contractual maturities because borrowers have the right to call or prepay obligations with or without call or prepayment penalties.