Fair Value Measurements
 12 Months Ended
Dec. 31, 2013
Fair Value Measurements  
Fair Value Measurements

3. Fair Value Measurements

        The Company's financial instruments that are measured at fair value on a recurring basis consist of money market funds and redeemable preferred stock warrants. The following three levels of inputs are used to measure the fair value of financial instruments:

  •         Level 1: Quoted prices in active markets for identical assets or liabilities. The Company classifies its money market funds as Level 1 instruments as they are traded in active markets with sufficient volume and frequency of transactions.

            Level 2: Observable prices that are based on inputs not quoted on active markets, but corroborated by market data. The Company did not have any Level 2 instruments during the reported periods.

            Level 3: Unobservable inputs are used when little or no market data is available. The Company utilized a Black-Scholes option-pricing model in order to determine the fair value of the redeemable preferred stock warrant, with such value determined on an as-converted basis. Certain inputs used in the model are unobservable.

        The fair market value of the Company's common stock was used to value the warrant liability. The fair value of the warrants was calculated using the income approach and is based on the following assumptions:

 
   December 31,
2012		  

Dividend yield

     0 %

Expected volatility

     54 %

Risk-free interest rate

     0.16 %

Remaining contractual term (in years)

     1.5  

        The fair values of these financial assets and the redeemable preferred stock warrants were as follows (in thousands):

 
   Fair value measurements at
December 31, 2012 using		  
 
   Level 1   Level 2   Level 3   Total  

Cash equivalents:

                          

Money market funds

   $ 15,554   $ —   $ —   $ 15,554  

Other liabilities:

                          

Redeemable preferred stock warrants

     —     —     601     601  


 

 
   Fair value measurements at
December 31, 2013 using		  
 
   Level 1   Level 2   Level 3   Total  

Cash equivalents:

                          

Money market funds

   $ 79,013   $ —   $ —   $ 79,013  

Other liabilities:

                          

Redeemable preferred stock warrants

     —     —     —     —  

        During the years ended December 31, 2012 and 2013, the change in fair value for the redeemable preferred stock warrant liability of $0.3 million and $0.7 million were recorded to other expense. Upon the closing of the Company's initial public offering, the warrants to purchase shares of the Company's redeemable convertible preferred stock were net exercised. The then-current aggregate fair value of the warrant liability of $1.3 million was reclassified from long-term liabilities to additional paid-in capital, a component of stockholders' equity, and the Company ceased to record any further periodic fair value adjustments relating to the warrant liability.