XML 42 R26.htm IDEA: XBRL DOCUMENT
v3.25.4

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2025
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The following are domestic and foreign components of the Company’s income (loss) before income taxes (in thousands):
| Year Ended December 31,
| 2025 |  | 2024 |  | 2023
Domestic | $ | (31,096) |  |  | $ | (5,205) |  |  | $ | 67,643 |
Foreign | 478 |  |  | (1,292) |  |  | 2,907 |
Income (loss) before income taxes | $ | (30,618) |  |  | $ | (6,497) |  |  | $ | 70,550 |
The components of the Company's income tax expense are as follows (in thousands):
| Year Ended December 31,
| 2025 |  | 2024 |  | 2023
Current: |  |  |  |  |
Federal | $ | 305 |  |  | $ | 17,461 |  |  | $ | 30,124 |
State and local | 1,940 |  |  | 3,448 |  |  | 8,498 |
Foreign | 1,974 |  |  | 1,250 |  |  | 801 |
Total current income tax expense | 4,219 |  |  | 22,159 |  |  | 39,423 |
Deferred: |  |  |  |  |
Federal | (1,561) |  |  | (15,054) |  |  | (14,866) |
State and local | (707) |  |  | (2,126) |  |  | (2,414) |
Foreign | 425 |  |  | 1,378 |  |  | (691) |
Total deferred income tax benefit | (1,843) |  |  | (15,802) |  |  | (17,971) |
Total income tax expense | $ | 2,376 |  |  | $ | 6,357 |  |  | $ | 21,452 |
A reconciliation of the income taxes computed at the U.S. federal statutory tax rate of 21% to the income tax expense for the year ended December 31, 2025 subsequent to the adoption of ASU 2023-09 is as follows (in thousands): See Note 2 for further information on the Company’s prospective adoption of ASU 2023-09.
| Year Ended December 31,
| 2025
| $ |  | %
U.S. federal statutory income tax rate | $ | (6,435) |  |  | 21.0 | %
State and local income taxes, net of federal income tax effect (1) | 113 |  |  | (0.4) |
Foreign tax effects |  |  |
Israel |  |  |
Tax audit adjustments | (357) |  |  | 1.2 |
Stock-based compensation | 1,140 |  |  | (3.7) |
Change in valuation allowance | 1,616 |  |  | (5.3) |
Other | 127 |  |  | (0.4) |
United Kingdom |  |  |
Deferred tax adjustment | 1,943 |  |  | (6.3) |
Change in valuation allowance | (1,943) |  |  | 6.3 |
Other | 154 |  |  | (0.5) |
Other foreign | 398 |  |  | (1.3) |
Effects of cross-border tax laws |  |  |
Foreign derived intangible income deduction | 398 |  |  | (1.3) |
Other | (19) |  |  | 0.1 |
Tax credits |  |  |
Research & development credits | (3,742) |  |  | 12.2 |
Non-taxable or non-deductible items |  |  |
Stock-based compensation | 3,859 |  |  | (12.6) |
Officers compensation limitation | 2,291 |  |  | (7.5) |
Other non-deductible expenses | 949 |  |  | (3.1) |
Changes in unrecognized tax benefits | 2,304 |  |  | (7.5) |
Other | (420) |  |  | 1.3 |
Income tax expense | $ | 2,376 |  |  | (7.8) | %
____________ (1) State taxes in California, Illinois, New Hampshire, New Jersey, and New York made up the majority (greater than 50%) of the tax effect in this category. A reconciliation of the income taxes computed at the U.S. federal statutory tax rate of 21% to the income tax expense for the years ended December 31, 2024 and 2023 prior to the adoption of ASU 2023-09, and as previously disclosed in prior years, is as follows (in thousands):
| Year Ended December 31,
| 2024 |  | 2023
U.S. federal statutory income tax rate | $ | (1,380) |  |  | $ | 14,816 |
State and local income taxes, net of federal benefit | 1,669 |  |  | 5,002 |
Foreign derived intangible income deduction | (645) |  |  | (1,110) |
Foreign rate differential | (21) |  |  | (1,872) |
Stock-based compensation | 6,266 |  |  | 7,931 |
Officers compensation limitation | 1,322 |  |  | 2,356 |
Non-deductible expenses | 974 |  |  | 909 |
Tax credits | (6,635) |  |  | (9,189) |
Uncertain tax positions | 793 |  |  | 1,449 |
Change in valuation allowance | 3,519 |  |  | 2,282 |
Return to provision | (154) |  |  | (1,532) |
Other | 649 |  |  | 410 |
Income tax expense | $ | 6,357 |  |  | $ | 21,452 |
During the year ended December 31, 2023, the Israeli Innovation Authority approved the Company’s application to be considered a Preferred Enterprise, as defined under the Law of Encouragement of Capital Investments, for the tax years ended December 31, 2023, 2022, 2021, and 2020. This approval resulted in a reduction in the statutory tax rate applied to the Company’s preferred income, as defined under the Law of Encouragement of Capital Investments, during those years from 23% to 16%. As a result, the Company recognized a cumulative benefit of $2.0 million during the year ended December 31, 2023, representing a $0.02 and $0.01 benefit to basic and diluted net income per share, respectively. The approval expired as of the end of the tax year ended December 31, 2023. The components of deferred tax assets and liabilities are as follows (in thousands):
| Year Ended December 31,
| 2025 |  | 2024 |  |
Deferred income tax assets: |  |  |  |  |
Net operating loss carryforwards | $ | 41,104 |  |  | $ | 2,659 |  |  |
Stock-based compensation | 2,772 |  |  | 3,517 |  |  |
Accrued expenses | 6,476 |  |  | 5,225 |  |  |
Tax credit carryforwards | 21,093 |  |  | 17,421 |  |  |
Capitalized development | 26,451 |  |  | 65,678 |  |  |
Operating lease liabilities | 3,298 |  |  | 2,281 |  |  |
Total deferred tax assets | 101,194 |  |  | 96,781 |  |  |
Less valuation allowance | (20,215) |  |  | (18,792) |  |  |
Net deferred tax assets | 80,979 |  |  | 77,989 |  |  |
Deferred tax liabilities: |  |  |  |  |
Property and equipment | (522) |  |  | (357) |  |  |
Operating lease right-of-use assets | (2,477) |  |  | (1,502) |  |  |
Intangible assets and goodwill | (1,226) |  |  | (1,337) |  |  |
Unremitted earnings of foreign subsidiaries | (1,260) |  |  | (1,047) |  |  |
Deferred commissions | (1,715) |  |  | (1,823) |  |  |
Other | (131) |  |  | (118) |  |  |
Total deferred tax liabilities | (7,331) |  |  | (6,184) |  |  |
Total net deferred tax assets | $ | 73,648 |  |  | $ | 71,805 |  |  |
The Company regularly assesses the need for a valuation allowance against its deferred tax assets as prescribed by ASC 740, Income Taxes. In making that assessment, the Company considers both positive and negative evidence related to the likelihood of realization of the deferred tax assets to determine, based on the weight of available evidence, which includes historical operating performance and the Company’s ability to generate sufficient taxable income in the future, whether it is more likely than not that some or all the deferred tax assets will not be realized. During the year ended December 31, 2025, the Company continued to maintain a valuation allowance against the deferred tax asset associated with carried forward California Research and Development Credits as the Company believes that it is more likely than not that it will not generate sufficient California sourced taxable income in future years to utilize that deferred tax asset and additionally established a valuation allowance against certain deferred tax assets of foreign entities. These valuation allowances totaled $20.2 million and $18.8 million as of December 31, 2025 and 2024, respectively. The change in the valuation allowance was comprised of the following (in thousands):
| Year Ended December 31,
| 2025 |  | 2024 |  | 2023
Valuation allowance, at beginning of year | $ | 18,792 |  |  | $ | 14,935 |  |  | $ | 12,748 |
Increase in valuation allowance recorded through earnings | 3,366 |  |  | 3,520 |  |  | 2,281 |
Decrease in valuation allowance recorded through earnings | (1,943) |  |  | — |  |  | — |
Increase in valuation allowance recorded through purchase accounting | — |  |  | 337 |  |  | — |
Decrease in valuation allowance recorded through other comprehensive income | — |  |  | — |  |  | (94) |
Valuation allowance, at end of year | $ | 20,215 |  |  | $ | 18,792 |  |  | $ | 14,935 |
As of December 31, 2025, the Company had $179.8 million gross U.S. federal operating loss carryforwards, $57.8 million of gross state operating loss carryforwards, and no gross foreign operating loss carryforwards. The gross state operating loss carryforwards as of December 31, 2025 will expire at various dates beginning in the year ending December 31, 2030, if not utilized, while the U.S. federal operating losses do not expire. As of December 31, 2024, the Company had no gross U.S. federal operating loss carryforwards, $5.3 million of gross state operating loss carryforwards, and $9.7 million of gross foreign operating loss carryforwards. Additionally, as of December 31, 2025, the Company had U.S. federal credit carryforwards of $2.6 million. The Company had no U.S. federal credit carryforwards as of December 31, 2024. As of December 31, 2025 and 2024, the Company had state credit carryforwards of $29.1 million and $26.4 million, respectively. These amounts differ from the listing of deferred taxes above due to the federal detriment of state benefits, and unrecognized tax benefits recorded against the deferred tax. The federal credit carryforwards expire in 2045 while the majority of gross state credit carryforwards are not subject to expiration. Utilization of domestic net operating loss and credit carryforwards may be subject to an annual limitation provided for in the Internal Revenue Code and similar state codes. Such annual limitation could result in the expiration of net operating loss and credit carryforwards before utilization. The Company does not believe that such limitation rules will have a material impact on the consolidated financial statements. The following is a reconciliation of the total amounts of unrecognized tax benefits (in thousands):
| Year Ended December 31,
| 2025 |  | 2024 |  | 2023
Unrecognized tax benefit, beginning of year: | $ | 26,787 |  |  | $ | 24,330 |  |  | $ | 17,077 |
Gross increases - tax positions in prior year | 563 |  |  | 1,075 |  |  | 3,912 |
Gross increases - tax positions in current year | 1,881 |  |  | 2,056 |  |  | 3,341 |
Gross decreases - tax positions in prior year | (666) |  |  | (674) |  |  | — |
Gross decreases - settlements in current year | (640) |  |  | — |  |  | — |
Unrecognized tax benefit, end of year | $ | 27,925 |  |  | $ | 26,787 |  |  | $ | 24,330 |
For the years ended December 31, 2025 and 2024, the Company had gross unrecognized tax benefits of $27.9 million and $26.8 million, respectively. If recognized, $25.8 million, or $17.8 million net of existing valuation allowances, of unrecognized tax benefits would impact the Company’s effective tax rate. The Company has accrued $2.1 million and $0.9 million of interest and penalties related to unrecognized tax benefits reflected in the consolidated financial statements during the years ended December 31, 2025 and 2024, respectively. The Company did not accrue interest and penalties related to unrecognized tax benefits reflected in the consolidated financial statements during the year ended December 31, 2023. In the normal course of business, the Company is subject to taxation in and is regularly audited by federal, state, and foreign tax authorities. Due to the Company’s historic net operating loss and tax credit carryforwards, the Company’s domestic income tax returns are open to examination by the Internal Revenue Service beginning with tax year 2013 and by state taxing authorities beginning with tax year 2014. As of December 31, 2025, the Company is undergoing routine tax examinations in various state and foreign taxing jurisdictions in which the Company has operated. These examinations cover various tax years and are in various stages of finalization. The Company believes that any income taxes ultimately assessed by any taxing authorities will not materially exceed amounts for which the Company has already provided. On July 4, 2025, the U.S. enacted H.R. 1, commonly known as the One Big Beautiful Bill Act, which contains several provisions related to corporate taxes, including modifications to the capitalization of domestic research and development expenses. These modifications were included in the Company’s income tax provision for the year ended December 31, 2025. The result of their inclusion was a decrease in both the Company’s deferred tax assets for capitalized development and current taxes payable and an increase in deferred tax assets for net operating loss carryforwards. The new legislation did not have a material impact on the Company’s effective tax rate for the year ended December 31, 2025. The realizability of the Company’s deferred tax assets is dependent on generating sufficient future taxable income. Should estimates of future taxable income decline or if sustained cumulative losses emerge, it is possible the amount of the deferred tax asset considered realizable may be reduced. Any future reduction in the realizability of the Company’s deferred tax assets would necessitate an increase to the valuation allowance, resulting in a non-cash income tax expense recognized in the Consolidated Statements of Operations. As of December 31, 2025, the Company does not consider the available cash balances related to undistributed earnings of its foreign subsidiaries to be indefinitely reinvested.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for income tax. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 942 -SubTopic 740 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147477617/942-740-50-1 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 235 -SubTopic 10 -Name Accounting Standards Codification -Section S50 -Paragraph 1 -Publisher FASB -URI https://asc.fasb.org/1943274/2147480738/235-10-S50-1 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 944 -SubTopic 740 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147478822/944-740-50-1 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-12 Reference 5: http://www.xbrl.org/2003/role/exampleRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 55 -Paragraph 231 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482663/740-10-55-231 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12C -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-12C Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12B -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-12B Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 270 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Publisher FASB -URI https://asc.fasb.org/1943274/2147477891/740-270-50-1 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SAB Topic 6.I.5.Q1) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479360/740-10-S99-1 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 946 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 13 -Publisher FASB -URI https://asc.fasb.org/1943274/2147480990/946-20-50-13 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Topic 235 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480678/235-10-S99-1 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/740/tableOfContent Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 14 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-14 Reference 14: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 21 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-21 Reference 15: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 17 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-17 Reference 16: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479360/740-10-S99-2 Reference 17: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 30 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482603/740-30-50-2 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration