Fair Value Measurements
 3 Months Ended
Nov. 30, 2021
Fair Value Disclosures [Abstract]  
Fair Value Measurements

(4)

Fair Value Measurements

Available-for-sale investments within cash equivalents and short-term investments consist of the following (in thousands):

 

 

November 30, 2021

 

 

 

Amortized Cost

 

 

Unrealized Gains

 

 

Unrealized Losses

 

 

Estimated Fair Value

 

Money market funds - presented in cash and cash equivalents

 

$

124,059

 

 

$

—

 

 

$

—

 

 

$

124,059

 

U.S. Government agency securities - presented in short-term investments

 

 

95,945

 

 

 

51

 

 

 

—

 

 

 

95,996

 

Total

 

$

220,004

 

 

$

51

 

 

$

—

 

 

$

220,055

 

 

 

The Company has recorded the securities at fair value in its consolidated balance sheet and unrealized gains and losses are reported as a component of accumulated other comprehensive income (loss). The amount of realized gains and losses reclassified into earnings are based on the specific identification of the securities sold or securities that reached maturity date. There were no sales, two purchases within cash and cash equivalents, and three maturities of securities during the three months ended November 30, 2021.

Fair Value

The Company measures certain financial assets and liabilities at fair value. Fair value is determined based upon the exit price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants, as determined by either the principal market or the most advantageous market.

Inputs used in the valuation techniques to derive fair values are classified based on a three-level hierarchy, as follows:

 

•

Level 1 Inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date.

 

•

Level 2 Inputs: Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability.

 

•

Level 3 Inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date.

The following tables present the Company’s financial assets and liabilities measured and recorded at fair value on a recurring basis using the above input categories as of November 30, 2021 and August 31, 2021:

 

 

 

November 30, 2021

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds - presented in cash and cash equivalents

 

$

124,059

 

 

$

—

 

 

$

—

 

 

$

124,059

 

U.S. Government agency securities - presented in short-term investments

 

 

—

 

 

 

95,996

 

 

 

—

 

 

 

95,996

 

Total assets

 

$

124,059

 

 

$

95,996

 

 

$

—

 

 

$

220,055

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liability classified awards

 

$

918

 

 

$

—

 

 

$

596

 

 

$

1,514

 

Total liabilities

 

$

918

 

 

$

—

 

 

$

596

 

 

$

1,514

 

 

 

 

August 31, 2021

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government agency securities - presented in short-term investments

 

$

—

 

 

$

191,981

 

 

$

—

 

 

$

191,981

 

Total assets

 

$

—

 

 

$

191,981

 

 

$

—

 

 

$

191,981

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liability classified awards

 

$

1,448

 

 

$

—

 

 

$

1,588

 

 

$

3,036

 

Contingent earnout liability

 

 

—

 

 

 

—

 

 

 

5,462

 

 

 

5,462

 

Total liabilities

 

$

1,448

 

 

$

—

 

 

$

7,050

 

 

$

8,498

 

 

 

The contingent earnout liability related to business combinations is recorded at fair value on the acquisition date and is adjusted each reporting period for changes in fair value, which can result from changes in anticipated payments and changes in assumed discount periods and rates.  These inputs are unobservable in the market and therefore categorized as level 3 inputs as defined above.  Quoted prices for liability classified stock appreciation rights are not readily available.  Accordingly, the Company uses a Black-Scholes model to estimate the fair value of these awards, which utilizes level three inputs. The following table summarizes the changes in the estimated fair value of the Company’s level 3 categorized liability classified awards for the three months ended November 30, 2021:

 

 

Balance as of August 31, 2021

 

$

1,588

 

Additions due to new awards

 

 

—

 

Net change in the fair value

 

 

(992

)

Cash settlement of awards

 

 

—

 

Balance as of November 30, 2021

 

$

596