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Income Taxes | 12 Months Ended
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Dec. 31, 2025
Income Tax Disclosure [Abstract] |
Income Taxes | 14. Income Taxes Ordinary taxable income in Israel is subject to a corporate tax rate of 23%. The Company applies various benefits allotted to it under the revised Investment Law as per Amendment 73, which includes a number of changes to the Investment Law regimes through regulations that have come into effect from January 1, 2017. Applicable benefits under the new regime include: • Introduction of a benefit regime for “Preferred Technology Enterprises” (“PTE”), granting a 12% tax rate in central Israel on income deriving from Benefited Intangible Assets, subject to a number of conditions being fulfilled, including a minimal amount or ratio of annual R&D expenditure and R&D employees, as well as having at least 25% of annual income derived from exports to large markets. • A 12% capital gains tax rate on the sale of a preferred intangible asset to a foreign affiliated enterprise, provided that the asset was initially purchased from a foreign resident at an amount of NIS 200 million or more. • A withholding tax rate of 20% for dividends paid from PTE income (with an exemption from such withholding tax applying to dividends paid to an Israeli com pany) may be reduced to 4% on dividends paid to a foreign resident company, subject to certain conditions regarding percentage of foreign ownership of the distributing entity. The Company adopted the PTE status since 2017 and believes it is eligible for its tax benefits. The Company may also receive benefits pursuant to the Law for the Encouragement of Knowledge Intensive Industry (Temporary Provision), 2023 (the “Angel’s Law”), which was enacted on July 31, 2023. The Angel’s Law provides certain benefits to entities that qualify as PTE, including special deductions in connection with acquisitions where certain criteria are met. The Company’s subsidiaries are separately taxed under the domestic tax laws of the jurisdiction of incorporation of each entity. The components of the net loss before income taxes were as follows:
|  | Year Ended December 31, |
|  | 2025 |  |  | 2024 |  |  | 2023 |
|  | (in thousands) |
Israel |  | $ | (96,672 | ) |  | $ | (89,367 | ) |  | $ | (73,560 | )
Foreign |  |  | 30,635 |  |  |  | 23,547 |  |  |  | 19,044 |
Total |  | $ | (66,037 | ) |  | $ | (65,820 | ) |  | $ | (54,516 | )
Income tax expense was as follows:
|  | Year Ended December 31, |
|  | 2025 |  |  | 2024 |  |  | 2023 |
|  | (in thousands) |
Current: |  |  |  |  |  |  |  |  |
Israel |  | $ | — |  |  | $ | — |  |  | $ | — |
Foreign |  |  | 4,639 |  |  |  | 4,810 |  |  |  | 5,753 |
Total current income tax expense |  |  | 4,639 |  |  |  | 4,810 |  |  |  | 5,753 |
Deferred: |  |  |  |  |  |  |  |  |
Israel |  |  | — |  |  |  | (4,376 | ) |  |  | — |
Foreign |  |  | 1,143 |  |  |  | 2,982 |  |  |  | 987 |
Total deferred income tax expense (benefit) |  |  | 1,143 |  |  |  | (1,394 | ) |  |  | 987 |
Income tax expense |  | $ | 5,782 |  |  | $ | 3,416 |  |  | $ | 6,740 |
A reconciliation of the Company’s statutory income tax rate to effective income tax rate is as follows:
|  | Year Ended December 31, |
|  | 2025 |  |  | 2024 |  |  | 2023 |
|  | (in thousands, except percentages) |
Tax at Israel statutory rate |  | $ | (15,189 | ) |  |  | 23.0 | % |  | $ | (15,138 | ) |  |  | 23.0 | % |  | $ | (12,539 | ) |  |  | 23.0 | %
Foreign tax effects: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S.: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Statutory tax rate difference between U.S. and Israel |  |  | (461 | ) |  |  | 0.7 |  |  |  | (362 | ) |  |  | 0.5 |  |  |  | (287 | ) |  |  | 0.5 |
State taxes, net of federal income tax effect |  |  | 338 |  |  |  | (0.5 | ) |  |  | 426 |  |  |  | (0.6 | ) |  |  | (226 | ) |  |  | 0.4 |
Share-based compensation |  |  | (2,082 | ) |  |  | 3.1 |  |  |  | 1,010 |  |  |  | (1.5 | ) |  |  | 1,689 |  |  |  | (3.1 | )
Other |  |  | 527 |  |  |  | (0.8 | ) |  |  | 320 |  |  |  | (0.5 | ) |  |  | 396 |  |  |  | (0.7 | )
Other foreign jurisdictions |  |  | 132 |  |  |  | (0.2 | ) |  |  | 704 |  |  |  | (1.1 | ) |  |  | 343 |  |  |  | (0.6 | )
Change in valuation allowances |  |  | 12,038 |  |  |  | (18.2 | ) |  |  | 4,400 |  |  |  | (6.7 | ) |  |  | 8,116 |  |  |  | (14.9 | )
Nontaxable or nondeductible items: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Business combination |  |  | 858 |  |  |  | (1.3 | ) |  |  | 415 |  |  |  | (0.6 | ) |  |  | 639 |  |  |  | (1.2 | )
Share-based compensation |  |  | 1,726 |  |  |  | (2.6 | ) |  |  | 873 |  |  |  | (1.3 | ) |  |  | (601 | ) |  |  | 1.1 |
Change in unrecognized tax benefits |  |  | 1,748 |  |  |  | (2.6 | ) |  |  | 956 |  |  |  | (1.5 | ) |  |  | 691 |  |  |  | (1.3 | )
Other: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Effect of PTE |  |  | 10,634 |  |  |  | (16.1 | ) |  |  | 9,830 |  |  |  | (14.9 | ) |  |  | 8,092 |  |  |  | (14.8 | )
Angel’s Law special deduction |  |  | (4,522 | ) |  |  | 6.8 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Other |  |  | 35 |  |  |  | (0.1 | ) |  |  | (18 | ) |  |  | 0.0 |  |  |  | 427 |  |  |  | (0.8 | )
Effective tax rate |  | $ | 5,782 |  |  |  | (8.8 | )% |  | $ | 3,416 |  |  |  | (5.2 | )% |  | $ | 6,740 |  |  |  | (12.4 | )%
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The following table presents the significant components of the Company’s deferred tax assets and liabilities:
|  | December 31, |
|  | 2025 |  |  | 2024 |
|  | (in thousands) |
Deferred tax assets: |  |  |  |  |  |
Net operating loss carryforwards |  | $ | 32,303 |  |  | $ | 24,082 |
Research and development expenses |  |  | 7,403 |  |  |  | 7,698 |
Accruals and reserves |  |  | 1,888 |  |  |  | 1,889 |
Share-based compensation |  |  | 19,371 |  |  |  | 18,745 |
Deferred revenue |  |  | 4,128 |  |  |  | 1,542 |
Operating lease liabilities |  |  | 1,967 |  |  |  | 997 |
Gross deferred tax assets |  |  | 67,060 |  |  |  | 54,953 |
Valuation allowance |  |  | (49,521 | ) |  |  | (37,347 | )
Total deferred tax assets |  |  | 17,539 |  |  |  | 17,606 |
Deferred tax liabilities: |  |  |  |  |  |
Intangible assets |  |  | (4,788 | ) |  |  | (7,289 | )
Deferred contract acquisition costs |  |  | (10,082 | ) |  |  | (7,530 | )
Operating lease ROU assets |  |  | (1,904 | ) |  |  | (984 | )
Share-based compensation |  |  | (1,300 | ) |  |  | (1,168 | )
Property and equipment |  |  | (53 | ) |  |  | (40 | )
Gross deferred tax liabilities |  |  | (18,127 | ) |  |  | (17,011 | )
Net deferred tax assets (liabilities) |  | $ | (588 | ) |  | $ | 595 |
A valuation allowance is provided when it is more likely than not that the deferred tax assets will not be realized. The Company has established a valuation allowance to offset certain deferred tax assets as of December 31, 2025 and 2024 due to the uncertainty of realizing future tax benefits from its net operating loss carryforwards and other deferred tax assets. The net change in the total valuation allowance for the years ended December 31, 2025, 2024, and 2023 was an increase of $12.2 million, $5.8 million and $8.9 million, respectively. For the year ended December 31, 2024, the Company recognized a discrete tax benefit of $4.4 million in Israel attributable to the release of valuation allowance as a result of recognizing deferred tax liabilities associated with the Qwak acquisition. As of December 31, 2025, the Company had $239.7 million in net operating loss carryforwards in Israel, which can be carried forward indefinitely. As of December 31, 2025, the U.S. subsidiary had state net operating loss carryforwards of $76.5 million available to offset future taxable income, which will expire between 2034 and 2044, if not utilized. The U.S. subsidiary had an immaterial federal net operating loss carryforward as of December 31, 2025. As of December 31, 2025, certain foreign subsidiaries of the Company had undistributed earnings of $25.9 million, which were designated as indefinitely reinvested. If these earnings were repatriated to Israel, it would be subject to income taxes and to an adjustment for foreign tax credits and foreign withholding taxes. The Company has estimated the amount of unrecognized deferred tax liability related to these earnings to be approximately $2.0 million. Cash paid for i ncome taxes, net of refunds was as follows:
|  | Year Ended December 31, |
|  | 2025 |  |  | 2024 |  |  | 2023 |
|  | (in thousands) |
Israel |  | $ | 65 |  |  | $ | 51 |  |  | $ | 33 |
Foreign: |  |  |  |  |  |  |  |  |
France |  |  | 1,398 |  |  |  | 431 |  |  |  | 325 |
India |  |  | 1,270 |  |  |  | 884 |  |  |  | 829 |
U.S. |  |  | 5,038 |  |  |  | 2,851 |  |  |  | 3,791 |
All other foreign |  |  | 173 |  |  |  | 23 |  |  |  | 20 |
Total |  | $ | 7,944 |  |  | $ | 4,240 |  |  | $ | 4,998 |
A reconciliation of the beginning and ending balance of total unrecognized tax benefits is as follows:
|  | Unrecognized Tax Benefits |
|  | (in thousands) |
Balance - December 31, 2022 |  | $ | 4,823 |
Increase related to prior years’ tax positions |  |  | 149 |
Decrease related to prior years’ tax positions |  |  | (24 | )
Increase related to current year’s tax positions |  |  | 464 |
Decrease due to lapse of statutes of limitations |  |  | (13 | )
Balance - December 31, 2023 |  |  | 5,399 |
Increase related to current year’s tax positions |  |  | 677 |
Balance - December 31, 2024 |  |  | 6,076 |
Increase related to prior years’ tax positions |  |  | 22 |
Decrease related to prior years’ tax positions |  |  | (66 | )
Increase related to current year’s tax positions |  |  | 1,528 |
Balance - December 31, 2025 |  | $ | 7,560 |
As of December 31, 2025, the total amount of gross unrecognized tax benefits was $7.6 million, of which, $4.1 milli on, if recognized, would favorably affect the Company’s effective tax rate. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2025 and 2024, accrued interest and penalties related to uncertain tax positions were immaterial. The Company has net operating losses from prior tax periods which may be subjected to examination in future periods. As of December 31, 2025, the Company’s tax years after 2020 are open to examination in Israel. Its U.S. subsidiary’s tax filings for tax years after 2021 are open to examinations by U.S. federal tax authorities and tax years after 2022 are open to examinations by U.S. state tax authorities. In addition, the U.S. federal tax returns were settled through 2018 except for any adjustments which might be made as a result of the carryback of net operating losses. As of December 31, 2025, the Company’s subsidiary in France is under examination by the local tax authorities for the 2023 tax year. The Company does not expect the results of the examination to have a material impact on its consolidated financial statements. The Company currently does not expect uncertain tax positions to change significantly over the next 12 months, except in the case of settlements with tax authorities, the likelihood and timing of which is difficult to estimate. On July 4, 2025, the “One Big Beautiful Bill Act” (“OBBBA”) was enacted into law. The OBBBA includes significant changes to the U.S. tax law, including the extension and modification of several key provisions of the Tax Cuts & Jobs Act. For the year ended December 31, 2025, OBBBA did not have a material impact on the Company’s consolidated financial statements. In addition, the Company does not expect the provisions of the OBBBA that become effective in future years to have a material impact on its consolidated financial statements.

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