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Derivative Financial Instruments | 6 Months Ended
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Jun. 30, 2025
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Financial Instruments | Note 10. Derivative Financial Instruments The Company’s earnings and cash flows are subject to market risks as a result of foreign currency exchange rate and interest rate fluctuations. The Company uses derivative financial instruments to manage its exposure to foreign currency exchange rate and interest rate fluctuations which is inherent to its ongoing business operations. The Company and its subsidiaries do not enter into derivative contracts for speculative purposes. Foreign Exchange Forward Contracts The Company enters into foreign exchange forward contracts in an attempt to reduce the impact of foreign currency exchange rate fluctuations and designates these contracts as cash flow hedges at inception. The objective is to reduce the volatility of forecasted cash flows and expenses caused by movements in foreign currency exchange rates, in particular the Indian rupee. The Company is currently using foreign exchange forward contracts to hedge the anticipated foreign currency expenses of its subsidiary in India. The Company recognizes in earnings amounts related to its designated cash flow hedges accumulated in other comprehensive income during the same period in which the corresponding underlying hedged transaction affects earnings. As of June 30, 2025, a net unrealized gain of approximately $0.3 million accumulated in other comprehensive income (loss) is expected to be reclassified into earnings within approximately the next twelve months. The Company has forecasted the amount of its anticipated foreign currency expenses based on its historical performance and projected financial plan. As of June 30, 2025, the remaining open foreign exchange contracts, carried at fair value, are hedging Indian rupee expenses and have a maturity of twelve months or less. These foreign exchange contracts mature monthly as the foreign currency denominated expenses are paid and any gain or loss is offset against operating expense. Once the hedged item is recognized, the cash flow hedge is de-designated and subsequent changes in value are recognized in other (expense) income, net, to offset changes in the value of the resulting non-functional currency monetary assets or liabilities. The notional amounts of these foreign exchange forward contracts in U.S. dollar equivalents were to buy $99.7 million and $94.0 million of Indian rupe es as of June 30, 2025 and December 31, 2024, respectively. Cross-Currency Swap Contracts Cross-currency swap contracts designated as net investment hedges are used to hedge a portion of the Company's net investment in its European operations. Gains and losses on net investment hedges are recorded in other comprehensive income (loss) and will remain there until either the sale or substantially complete liquidation of the hedged operations. The components excluded from the assessment of effectiveness are recognized in interest expense, net on the condensed consolidated statement of operations. The Company performed quantitative testing at inception and results proved that the hedge relationship was highly effective. The Company, on quarterly basis, performs qualitative testing validating that hedge relationship remains highly effective, unless quantitative testing is required. The notional amounts of these cross-currency swap contracts in U.S. dollar equivalents were to sell €300 million of Euro as of June 30, 2025 and December 31, 2024. Balance Sheet Hedges Balance Sheet hedges consist of cash flow hedge contracts that have been de-designated and non-designated balance sheet hedges. These foreign exchange contracts are carried at fair value and either did not or no longer qualify for hedge accounting treatment and are not designated as hedging instruments. Changes in the value of the foreign exchange contracts are recognized in other (expense) income, net and offset the foreign currency gain or loss on the underlying net monetary assets or liabilities. The notional amounts of foreign currency purchase contracts open in U.S. dollar equivalents were to buy $11.9 million and $11.8 million of Indian rupees at June 30, 2025 and December 31, 2024, respectively. There were no open foreign currency contracts to sell at June 30, 2025 and December 31, 2024, respectively. The following table reflects the fair value amounts for designated and non-designated hedging instruments at June 30, 2025 and December 31, 2024 (in thousands):
| June 30, 2025 |  | December 31, 2024
Fair Value Derivative Assets(i) |  | Fair Value Derivative Liabilities(ii) |  | Fair Value Derivative Assets(i) |  | Fair Value Derivative Liabilities(ii)
Designated hedging instruments |  |  |  |  |  |  |
Foreign currency forward contracts | $ | 734 |  |  | $ | 297 |  |  | $ | — |  |  | $ | 2,059 |
Cross currency swap contracts | 5,167 |  |  | 31,777 |  |  | 16,147 |  |  | — |
Non-designated hedging instruments |  |  |  |  |  |  |
Foreign currency forward contracts | 57 |  |  | 105 |  |  | — |  |  | 146 |
Total fair value of hedging instruments | $ | 5,958 |  |  | $ | 32,179 |  |  | $ | 16,147 |  |  | $ | 2,205 |
_____________ (i)Included in prepaid expenses and other current assets, and other assets on the condensed consolidated balance sheets. (ii)Included in accrued liabilities and other liabilities on the condensed consolidated balance sheets. The Company presents its derivative assets and derivative liabilities at gross fair values in the condensed consolidated balance sheets. However, under the master netting agreements with the respective counterparties of the foreign exchange contracts, subject to applicable requirements, the Company is allowed to net settle transactions of the same currency with a single net amount payable by one party to the other. The derivatives held by the Company are not subject to any credit contingent features negotiated with its counterparties. The Company is not required to pledge nor is entitled to receive cash collateral related to the above contracts. As of June 30, 2025 and December 31, 2024, there were no derivative assets or liabilities that were net settled under the master netting agreements. The Company evaluates prospectively as well as retrospectively the effectiveness of its hedge programs using statistical analysis. The before-tax effects of derivative instruments designated as cash flow hedges on the accumulated other comprehensive loss and condensed consolidated statements of operations for the periods indicated below are as follows (in thousands):
| Three Months Ended June 30, |  | Six months ended June 30,
| 2025 |  | 2024 |  | 2025 |  | 2024
Gain related to foreign exchange forward contracts | $ | 728 |  |  | $ | 176 |  |  | $ | 1,829 |  |  | $ | 533 |
Amount of gain recognized in other comprehensive income (loss) | $ | 728 |  |  | $ | 176 |  |  | $ | 1,829 |  |  | $ | 533 |
(Loss) gain included in cost of service revenue | $ | (13) |  |  | $ | 21 |  |  | $ | (147) |  |  | $ | 94 |
(Loss) gain included in operating expenses (primarily research and development) | (48) |  |  | 76 |  |  | (519) |  |  | 307 |
Amount of (loss) gain related to foreign exchange forward contracts reclassified from accumulated other comprehensive income (loss) into income | $ | (61) |  |  | $ | 97 |  |  | $ | (666) |  |  | $ | 401 |
Gains recognized in interest expense, net, in the condensed consolidated statements of operations for the portion of the net investment hedges excluded from the assessment of hedge effectiveness were $1.6 million for the three months ended June 30, 2025 and $3.1 million for the six months ended June 30, 2025. There was none for the three and six months ended June 30, 2024. The before-tax (loss) gain recognized in other (expense) income, net for non-designated foreign currency forward contracts for the periods indicated below are as follows (in thousands):
| Three Months Ended June 30, |  | Six months ended June 30,
| 2025 |  | 2024 |  | 2025 |  | 2024
(Loss) gain recognized in other (expense) income, net | $ | (20) |  |  | $ | (6) |  |  | $ | 67 |  |  | $ | (31) |
See Note 5. Fair Value Measurements, and Note 14. Commitments and Contingencies in the Notes to Condensed Consolidated Financial Statements of this Report for a further discussion.

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- Definition The entire disclosure for financial instruments. This disclosure includes, but is not limited to, fair value measurements of short and long term marketable securities, international currencies forward contracts, and auction rate securities. Financial instruments may include hedging and non-hedging currency exchange instruments, derivatives, securitizations and securities available for sale at fair value. Also included are investment results, realized and unrealized gains and losses as well as impairments and risk management disclosures. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 825 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/825/tableOfContent + Details
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