NOTE 11: DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

During the nine months ended September 30, 2024, the Company instituted a foreign currency cash flow hedging program to reduce the risk of a forecasted increase in the value of foreign currency cash flows, resulting from payment of salaries in Israeli currency, the New Israeli Shekels (“NIS”). The Company hedges portions of the anticipated payroll denominated in NIS for a period of one to nine months with hedging contracts. These hedging contracts are designated as cash flow hedges, as defined by ASC 815 and are all effective hedges.

As of September 30, 2024, the Company entered into forward contracts and put and call options to sell U.S. dollars (“USD”) both, in the amounts of NIS 148 million.

In addition to the above-mentioned cash flow hedge transactions, the Company occasionally enters into derivative instrument arrangements to hedge the Company’s exposure to currencies other than USD. These derivative instruments are not designated as cash flow hedges, as defined by ASC 815, and therefore all gains and losses, resulting from fair value remeasurement, were recorded immediately in the statement of income (loss), under "Financial income (expense), net".

The Company classifies cash flows related to its hedging as operating activities in its condensed consolidated statement of cash flows.

The fair values of outstanding derivative instruments were as follows:

	Balance sheet location	September 30, 2024		December 31, 2023
Derivative assets of options and forward contracts:
Designated cash flow hedges	Prepaid expenses and other current assets	$	1,102	$	4,477
Non-designated hedges	Prepaid expenses and other current assets		-		410
Total derivative assets		$	1,102	$	4,887

Gains (losses) on derivative instruments are summarized below:

		Three Months Ended September 30,					Nine Months Ended September 30,
	Affected line item	2024		2023			2024			2023
Foreign exchange contracts
Non Designated Hedging Instruments	Condensed Consolidated Statements of Income (loss) - Financial income (expense), net	$	-	$	5,841		$	802		$	5,841
Designated Hedging Instruments	Condensed Consolidated Statements of Comprehensive Income (loss) - Cash flow hedges	$	1,131	$	(2,713	)	$	(1,426	)	$	(6,861	)

See Note 19 for information regarding losses from designated hedging instruments reclassified from accumulated other comprehensive loss.