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v3.25.4

Income Taxes | 12 Months Ended
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Dec. 31, 2025
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes Income before the provision for (benefit from) income taxes consisted of the following:
(in millions) |  |  |  |  |  |
Year Ended December 31, |  | 2025 |  | 2024 |  | 2023
Domestic |  | $ | 69.8 |  |  | $ | 7.7 |  |  | $ | 9.7 |
Foreign |  | (1.6) |  |  | (2.7) |  |  | (3.4) |
Total |  | $ | 68.2 |  |  | $ | 5.0 |  |  | $ | 6.3 |
The components of the provision for (benefit from) income taxes are as follows:
(in millions) |  |  |  |  |  |
Year Ended December 31, |  | 2025 |  | 2024 |  | 2023
Current: |  |  |  |  |  |
Federal |  | $ | 0.6 |  |  | $ | 17.8 |  |  | $ | 13.8 |
State |  | 2.9 |  |  | 2.9 |  |  | 4.8 |
Total |  | 3.5 |  |  | 20.7 |  |  | 18.6 |
Deferred: |  |  |  |  |  |
Federal |  | 15.2 |  |  | (39.5) |  |  | — |
State |  | 1.1 |  |  | (6.1) |  |  | — |
Foreign |  | (0.3) |  |  | (0.5) |  |  | (0.5) |
Total |  | 16.0 |  |  | (46.1) |  |  | (0.5) |
Provision for (benefit from) income taxes |  | $ | 19.5 |  |  | $ | (25.4) |  |  | $ | 18.1 |
The reconciliation of the statutory federal income tax rate to the Company’s effective tax rate is as follows:
(in millions) |  |  |  |  |  |
Year Ended December 31, |  | 2025 |  | 2024 |  | 2023
Tax at federal statutory rate |  | $ | 14.3 |  |  | $ | 1.1 |  |  | $ | 1.3 |
Permanent items |  | (0.5) |  |  | (0.5) |  |  | (0.6) |
Foreign rate differential |  | — |  |  | 0.6 |  |  | 0.3 |
Stock-based compensation |  | 2.3 |  |  | 1.3 |  |  | 1.2 |
Tax credits |  | (2.1) |  |  | (4.7) |  |  | (8.0) |
Change in U.S. valuation allowance |  | (0.2) |  |  | (26.3) |  |  | 20.0 |
Tax contingency and interest |  | 1.1 |  |  | 1.5 |  |  | 1.9 |
State taxes |  | 4.8 |  |  | 1.7 |  |  | 2.2 |
Other |  | (0.2) |  |  | (0.1) |  |  | (0.2) |
Tax at effective tax rate |  | $ | 19.5 |  |  | $ | (25.4) |  |  | $ | 18.1 |
On July 4, 2025, the United States enacted tax reform legislation through An Act to Provide for Reconciliation Pursuant to Title II of H. Con. Res. 14, commonly known as the One Big Beautiful Bill Act. Included in this legislation are provisions that allow for the immediate expensing of domestic U.S. research and development expenses, immediate expensing of certain capital expenditures, and other changes to the U.S. taxation of profits derived from foreign operations. The Company has incorporated the new legislation into its income tax provision, as applicable, and determined that there was no material impact on the Company’s tax provision for 2025. 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 Company’s deferred tax assets and liabilities are as follows:
(in millions) |  |  |  |
As of December 31, |  | 2025 |  | 2024
Deferred tax assets: |  |  |  |
Accruals and reserves |  | $ | 2.0 |  |  | $ | 1.6 |
Tax credits |  | 12.7 |  |  | 12.1 |
Stock-based compensation |  | 3.4 |  |  | 3.9 |
Capitalized research and development expenses |  | 30.4 |  |  | 55.5 |
Net operating loss carryforwards |  | 5.5 |  |  | 3.2 |
Lease liabilities |  | 2.0 |  |  | 1.6 |
Other |  | 0.4 |  |  | 0.4 |
Total gross deferred tax assets |  | 56.4 |  |  | 78.3 |
Deferred tax liabilities: |  |  |  |
Prepaid expenses and other |  | (0.5) |  |  | (0.4) |
ROU assets |  | (1.8) |  |  | (1.3) |
Basis difference for fixed assets and intangibles |  | (10.3) |  |  | (17.1) |
Total gross deferred tax liabilities |  | (12.6) |  |  | (18.8) |
Valuation allowance for deferred tax assets |  | (14.4) |  |  | (14.1) |
Net deferred tax asset |  | $ | 29.4 |  |  | $ | 45.4 |
Net deferred tax assets are recorded as a noncurrent asset, and net deferred tax liabilities are recorded in other liabilities—noncurrent, on the Company’s consolidated balance sheet. The valuation allowance for deferred tax assets increased $0.3 million in 2025, decreased $26.0 million in 2024, and increased $20.8 million in 2023, with changes in the valuation allowance recognized as an income tax provision (benefit) in the consolidated statements of operations. As of December 31, 2025, the Company has federal net operating loss carryforwards (NOLs) of $8.5 million, substantially all of which can be carried forward indefinitely, state NOLs of $15.5 million, the majority of which, if not utilized, will begin to expire on various dates beginning in 2034, and foreign NOLs of $10.0 million which can be carried forward indefinitely. As of December 31, 2025, the Company has $0.8 million of federal research and development credit carryforwards, which can be carried forward to 2046, and $20.4 million of California research and development credit carryforwards which can be carried forward indefinitely. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. Utilization of the Company’s federal and state NOLs and tax credit carryforwards, as well as of other temporary differences, is dependent upon the generation of sufficient taxable income in future periods. In the Company’s ongoing assessment of all available evidence, both positive and negative, the Company considers the scheduled reversal of deferred tax liabilities, the Company’s future operating model and the expected impacts on future profitability, and prudent and feasible tax-planning strategies. The Company had previously maintained a valuation allowance against these net U.S. deferred tax assets as of December 31, 2023. During the three months ended December 31, 2024, the Company concluded that it was more likely than not that the Company will be able to fully realize its net U.S. Federal and majority state deferred tax assets, with a significant improvement in the Company’s profitability, coupled with anticipated future earnings, deemed to provide positive evidence to support sufficient taxable income in future periods, and accordingly recorded a valuation allowance release of $27.2 million. The Company continues to maintain a valuation allowance on its California deferred tax assets, which consist primarily of tax credits, as of December 31, 2025. The valuation allowance for deferred tax assets was $14.4 million and $14.1 million as of December 31, 2025 and 2024, respectively. The Company’s judgment regarding the likelihood of realization of these deferred tax assets could change in future periods, which could result in a material impact to the Company’s income tax provision in the period of change. A reconciliation of unrecognized tax benefits, excluding accrued interest and penalties, are as follows:
(in millions) |  |  |  |  |  |
Year Ended December 31, |  | 2025 |  | 2024 |  | 2023
Balance as of beginning of year |  | $ | 13.6 |  |  | $ | 11.9 |  |  | $ | 9.9 |
Increases related to prior year tax positions |  | — |  |  | 0.5 |  |  | 0.5 |
Decreases related to prior year tax positions |  | — |  |  | — |  |  | (1.1) |
Expiration of statute of limitations |  | — |  |  | (0.1) |  |  | (0.4) |
Current year increases |  | 0.6 |  |  | 1.3 |  |  | 3.0 |
Balance as of end of year |  | $ | 14.2 |  |  | $ | 13.6 |  |  | $ | 11.9 |
Interest and penalties were $1.1 million for 2025, $0.5 million for 2024, and not material for 2023. As of December 31, 2025, unrecognized tax benefits of $9.8 million, including accrued interest and penalties, would affect the Company’s provision for income taxes if recognized. The Company does not anticipate that its total unrecognized tax benefits will significantly change due to settlement of examination or the expiration of statute of limitations during the next 12 months. The Company files income tax returns in the U.S. federal and various state jurisdictions. The Company’s tax years for 2015 and forward are subject to examination by U.S. and various state tax authorities due to certain acquired attribute carryforwards.

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