v3.26.3
Fair Value of Financial Instruments
 9 Months Ended
Sep. 30, 2026
Fair Value Disclosures [Abstract]  
Fair Value of Financial Instruments Fair Value of Financial Instruments
Financial instruments measured at fair value on a recurring basis
The following tables present the Company's financial assets and liabilities that are measured at estimated fair value on a recurring basis as of September 30, 2026, and December 31, 2025:
Fair value measurements as of September 30, 2026
(in thousands)
Carrying valueLevel 1Level 2Level 3
Financial assets:
Cash equivalents:
Money market funds9,758 9,758 — — 
Total$9,758 $9,758 $— $— 
Liabilities:
Contingent consideration710 — — 710 
Derivative liability3,224 — — 3,224 
Total
$3,934 $— $— $3,934 
Fair value measurements as of December 31, 2025
(in thousands)
Carrying valueLevel 1Level 2Level 3
Financial assets:
Cash equivalents:
Money market funds161 161 — — 
Total161 161 — — 
Available-for-sale marketable securities:
U.S. government agencies securities1,018 — 1,018 — 
Total1,018 — 1,018 — 
Total$1,179 $161 $1,018 $— 
Liabilities:
Contingent consideration1,741 — — 1,741 
Total
$1,741 $— $— $1,741 
The Company's level 1 financial assets were valued using quoted prices in active markets for identical assets as of September 30, 2026, and December 31, 2025. The Company’s level 2 financial assets were determined based on third-party inputs which are either directly or indirectly observable, such as reported trades and broker or dealer quotes. The Company's marketable securities have an amortized cost that approximates fair value.
Pursuant to the Company’s stock purchase agreement, as amended, for Tech-X in April 2025, the selling shareholders are entitled to earn-out consideration based on technical achievements, of which certain consideration is payable in shares of the Company’s common stock. Refer to Note 4. Acquisitions for additional information. As the Company has an obligation to issue a variable number of shares of common stock, the liability is recorded at its fair value and revalued period to period with any changes recorded to Interest and other income (expense), net in the condensed consolidated statements of operations. The amendment does not limit the number of shares that the Company could be required to issue.
The Company's contingent consideration is valued using a discounted cash flow model, and the assumptions used in preparing the discounted cash flow model include estimates for interest rates and the amount of cash flows, in addition to the expected probability of technical achievement.
The following is a reconciliation of changes in the liability related to contingent consideration during the nine months ended September 30, 2026 and the year ended December 31, 2025 (in thousands):
Fair value as of January 1, 2025
$11 
Change in fair value94 
Earn-out payments in cash(46)
Acquisition1,682 
Fair value as of December 31, 2025
$1,741 
Change in fair value204 
Earn-out payments in cash(104)
Earn-out payments in shares of common stock(1,131)
Fair value as of September 30, 2026$710 
The embedded derivative liability is classified within Level 3 of the fair value hierarchy because its valuation uses significant unobservable inputs. The Company estimates fair value using a probability-weighted Monte Carlo simulation that reflects the contractual conversion, adjustments to the conversion rate, and change of control scenarios.
The significant unobservable inputs used to estimate the fair value of the embedded derivative include the Company’s equity volatility, the probability of each contractual outcome, expected timing of conversion, and the discount rate, which includes the risk-free rate and the credit spread. As of September 30, 2026, the valuation used a 50.0% volatility assumption, a 90.3% conversion probability, a 4.8% conversion rate adjustment probability, a 5.0% change-of-control probability, a 4.8% risk-free rate, and a 27.7% credit spread.
The following table provides a roll-forward of the derivative liability measured at fair value on a recurring basis using unobservable level 3 inputs for the period ended September 30, 2026, as follows:
Fair value at issuance3,205 
Change in fair value19 
Fair value as of September 30, 2026$3,224