v3.25.4

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2025
Income Tax Disclosure [Abstract] |
Income Taxes | 16. Income Taxes Income (loss) before provision for income taxes was as follows:
|  | Year Ended December 31, |
|  | 2025 |  |  | 2024 |  |  | 2023 |
|  | (in thousands) |
United States |  | $ | 9,496 |  |  | $ | (34,540 | ) |  | $ | (211,528 | )
Foreign |  |  | 59,967 |  |  |  | 63,217 |  |  |  | 60,953 |
Total |  | $ | 69,463 |  |  | $ | 28,677 |  |  | $ | (150,575 | )
The provision for income taxes consists of the following:
|  | Year Ended December 31, |
|  | 2025 |  |  | 2024 |  |  | 2023 |
|  | (in thousands) |
Current income tax expense |  |  |  |  |  |  |  |  |
Federal |  | $ | (4,348 | ) |  | $ | (7,631 | ) |  | $ | (1,162 | )
State |  |  | (1,406 | ) |  |  | (1,640 | ) |  |  | (803 | )
Foreign |  |  | (17,800 | ) |  |  | (12,088 | ) |  |  | (11,420 | )
Total current income tax expense |  |  | (23,554 | ) |  | $ | (21,359 | ) |  | $ | (13,385 | )
Deferred income tax (expense) benefit |  |  |  |  |  |  |  |  |
Federal |  |  | (829 | ) |  |  | (337 | ) |  |  | — |
State |  |  | (777 | ) |  |  | (47 | ) |  |  | — |
Foreign |  |  | 1,608 |  |  |  | (2,306 | ) |  |  | (550 | )
Total deferred income tax benefit (expense) |  |  | 2 |  |  |  | (2,690 | ) |  | $ | (550 | )
Total income tax expense |  | $ | (23,552 | ) |  | $ | (24,049 | ) |  | $ | (13,935 | )
|  | Year Ended December 31, |
|  | 2025 |
|  | (in thousands) |
Net income taxes paid |  |  |
Federal |  | $ | 2,407 |
State |  |  | 2,493 |
Australia |  |  | 2,392 |
Belgium |  |  | 1,793 |
Colombia |  |  | 1,323 |
France |  |  | 1,631 |
Germany |  |  | 2,696 |
Japan |  |  | 1,653 |
United Kingdom |  |  | 1,347 |
Other foreign |  |  | 1,576 |
Total income taxes paid (net of refunds received) |  | $ | 19,311 |
The following reconciles the differences between income taxes computed at the federal statutory rate of 21% and the provision for income taxes for 2025:
|  | Year Ended December 31, 2025 |
|  | (in thousands) |  | % |
U.S. Federal statutory tax rate |  | $ | (14,588 | ) |  | (21 | %)
U.S. State and local income tax, net of federal (national) income tax effect (1) |  |  | 1,082 |  |  | 2 |
Foreign tax effects |  |  |  |  |
Brazil |  |  | (1,145 | ) |  | (2 | )
Canada |  |  | (1,690 | ) |  | (2 | )
Colombia |  |  | (888 | ) |  | (1 | )
France |  |  | (1,569 | ) |  | (2 | )
Germany |  |  | (1,046 | ) |  | (2 | )
Ireland |  |  |  |  |
Statutory tax rate difference between Ireland and United States |  |  | 1,830 |  |  | 3 |
Non-taxable items |  |  | 2,580 |  |  | 4 |
Other |  |  | (188 | ) |  | (0 | )
Singapore |  |  | (866 | ) |  | (1 | )
United Kingdom |  |  | (1,172 | ) |  | (2 | )
Other foreign jurisdictions |  |  | (2,866 | ) |  | (4 | )
Effect of cross-border tax laws |  |  |  |  |
Foreign tax credits |  |  | 2,996 |  |  | 4 |
Tax credits |  |  |  |  |
Research and development credits |  |  | 41,859 |  |  | 60 |
Changes in valuation allowances |  |  | (37,148 | ) |  | (53 | )
Non-taxable or non-deductible items |  |  |  |  |
Executive compensation limit |  |  | (8,263 | ) |  | (12 | )
Stock-based compensation |  |  | 15,240 |  |  | 22 |
Transaction costs |  |  | (5,332 | ) |  | (8 | )
Other |  |  | (1,184 | ) |  | (2 | )
Changes in unrecognized tax benefits |  |  | (12,554 | ) |  | (18 | )
Other adjustments |  |  | 1,360 |  |  | 2 |
Effective tax rate |  | $ | (23,552 | ) |  | (34 | %)
(1) State taxes in Pennsylvania, New York, New Hampshire, New York City, and Texas made up the majority (greater than 50%) of the tax effect in this category. The following reconciles the differences between income taxes computed at the federal statutory rate of 21% and the provision for income taxes for 2024 and 2023:
| Year Ended December 31, |
|  | 2024 |  |  | 2023 |
| (in thousands) |
Expected income tax (expense) benefit at the federal statutory rate |  | $ | (6,123 | ) |  | $ | 37,845 |
State taxes net of federal benefit |  |  | 732 |  |  |  | 9,131 |
Stock-based compensation |  |  | 31,010 |  |  |  | 7,741 |
Executive compensation limitation |  |  | (10,511 | ) |  |  | (4,151 | )
Difference in foreign tax rates |  |  | (2,499 | ) |  |  | (2,614 | )
Non-deductible acquisition costs |  |  | (1,447 | ) |  |  | — |
U.S. tax credits |  |  | 63,124 |  |  |  | 45,274 |
Foreign withholding taxes |  |  | (2,044 | ) |  |  | (1,449 | )
Change in valuation allowance |  |  | (99,229 | ) |  |  | (105,181 | )
Non research and development tax reserves |  |  | (4,276 | ) |  |  | — |
Foreign derived intangible income |  |  | 4,872 |  |  |  | — |
Other U.S. and foreign permanent differences |  |  | 2,342 |  |  |  | (531 | )
Income tax expense |  | $ | (24,049 | ) |  | $ | (13,935 | )
Deferred Tax Assets and Liabilities — Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities were as follows:
|  | Year Ended December 31, |
|  | 2025 |  |  | 2024 |
|  | (in thousands) |
Deferred tax assets: |  |  |  |  |  |
Net operating loss carryforwards |  | $ | 285,126 |  |  | $ | 178,424 |
Research and investment credits |  |  | 224,226 |  |  |  | 181,411 |
Accruals and reserves |  |  | 32,170 |  |  |  | 25,148 |
Lease liability |  |  | 47,711 |  |  |  | 54,028 |
Depreciation |  |  | 1,454 |  |  |  | 552 |
Capitalized software development |  |  | 185,582 |  |  |  | 277,932 |
Stock-based compensation |  |  | 27,977 |  |  |  | 23,145 |
Other assets |  |  | 3,992 |  |  |  | — |
Total deferred tax assets |  |  | 808,238 |  |  |  | 740,640 |
Deferred tax liabilities: |  |  |  |  |  |
Intangible assets |  |  | (5,856 | ) |  |  | (6,635 | )
Convertible debt |  |  | — |  |  |  | (56 | )
Capitalized costs |  |  | (69,778 | ) |  |  | (51,150 | )
Right of use assets |  |  | (35,839 | ) |  |  | (38,871 | )
Depreciation |  |  | (1,365 | ) |  |  | (1,276 | )
Other liabilities |  |  | (5,325 | ) |  |  | (7,446 | )
Total deferred tax liabilities |  |  | (118,163 | ) |  |  | (105,434 | )
Valuation allowance |  |  | (694,085 | ) |  |  | (637,609 | )
Net deferred tax liabilities |  | $ | (4,010 | ) |  | $ | (2,403 | )
The Company reviews all available evidence to evaluate the realizability of its deferred tax assets, including its recent history of accumulated losses over the most recent three years as well as its ability to generate income in future periods. The Company has provided a valuation allowance against its U.S. net deferred tax assets as it is more likely than not that these assets will not be realized given the nature of the assets and the likelihood of future utilization. The valuation allowance increased by $56.5 million in 2025, $101.3 million in 2024 and $127.5 million in 2023. The following summarizes activity related to valuation allowances on deferred tax assets:
|  | Year Ended December 31, |
|  | 2025 |  |  | 2024 |  |  | 2023 |
|  | (in thousands) |
Valuation allowance—beginning of the year |  | $ | 637,609 |  |  | $ | 536,311 |  |  | $ | 408,794 |
Changes to existing valuation allowances—additions to costs and expenses |  |  | 50,249 |  |  |  | 99,229 |  |  |  | 105,181 |
Changes to existing valuation allowances—additions to other accounts (primarily goodwill) |  |  | 6,227 |  |  |  | 2,069 |  |  |  | 22,336 |
Valuation allowance—end of period |  | $ | 694,085 |  |  | $ | 637,609 |  |  | $ | 536,311 |
The Company will continue to maintain a full valuation allowance on its deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of this allowance. However, given the anticipated future earnings of the Company, management believes that there is a reasonable possibility that within the next 12 months, sufficient positive evidence may become available to reach a conclusion that all or a portion of the valuation allowance may no longer be needed. Release of the valuation allowance would result in the recognition of certain deferred tax assets and a decrease to income tax expense for the period the release is recorded. The exact timing and amount of the valuation allowance release are subject to change on the basis of the level of profitability that the Company is able to actually achieve. The Company had federal and state net operating loss carryforwards of $1.1 billion and $866.1 million at December 31, 2025 and $640.0 million and $723.7 million at December 31, 2024. The Company also had international net operating loss carryforwards of $0.7 million at December 31, 2025 and $0.9 million at December 31, 2024. All federal net operating losses have an indefinite carryforward period. State net operating losses will begin to expire in 2027. The Company has net federal research and development credit carryforwards of $198.0 million at December 31, 2025 that begin to expire in 2034. The Company also has state research and investment tax credit carryforwards of $91.5 million that begin to expire in 2026. Under Section 382 of the Internal Revenue Code of 1986, as amended, substantial changes in the Company's ownership may limit the amount of net operating loss carryforwards that could be utilized annually in the future to offset taxable income. Specifically, this limitation may arise in the event of a cumulative change in ownership of the Company of more than 50% within a three-year period. Any such annual limitation may significantly reduce the utilization of net operating loss carryforwards before they expire. Uncertain Tax Positions — The Company accounts for uncertainty in income taxes using a two-step process. The Company first determines whether it is more likely than not that a tax position will be sustained upon examination by a tax authority, including resolutions of any related appeals or litigation processes, based on technical merit. If a tax position meets the more-likely-than-not recognition threshold it is then measured to determine the amount of benefit to recognize in the financial statements. The tax position is measured as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. The following summarizes activity related to unrecognized tax benefits:
|  | Year Ended December 31, |
|  | 2025 |  |  | 2024 |  |  | 2023 |
|  | (in thousands) |
Unrecognized benefit—beginning of the year |  | $ | 38,327 |  |  | $ | 20,469 |  |  | $ | 16,888 |
Gross increases—current period positions |  |  | 14,239 |  |  |  | 13,974 |  |  |  | 8,071 |
Gross increases—current period business acquisitions |  |  | — |  |  |  | — |  |  |  | 1,381 |
Gross increase (decrease)—prior period positions |  |  | 612 |  |  |  | 3,884 |  |  |  | (5,871 | )
Unrecognized benefit—end of period |  | $ | 53,178 |  |  | $ | 38,327 |  |  | $ | 20,469 |
The majority of the gross unrecognized tax benefits represent a reduction to the research and development tax credit carryforward. The majority of the unrecognized tax benefits decrease deferred tax assets with a corresponding decrease to the valuation allowance. The Company has elected to recognize interest and penalties related to uncertain tax positions as a component of income tax expense. Interest and penalties recognized during the year and cumulatively have been immaterial. The Company files tax returns in the United States and various jurisdictions throughout the world where the Company has operations or has established a taxable presence. All of the Company’s tax years remain open to examination in the United States, as carryforward attributes generated in past years may still be adjusted upon examination by the Internal Revenue Service or state tax authorities if they have or will be used in future periods. The Company is no longer subject to examination for years prior to 2019 in various significant tax jurisdictions and continues to be routinely examined by various taxing authorities.

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