v3.25.2
Derivative Instruments and Hedging
 6 Months Ended
Jun. 30, 2025
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Instruments and Hedging Derivative Instruments and Hedging
The Company enters into foreign currency forward contracts with certain financial institutions to mitigate the impact of foreign currency fluctuations on future cash flows and earnings. Derivative instruments that hedge the exposure to variability in expected future cash flows are designated as cash flow hedges. The Company records changes in the fair value of these derivatives as a component of accumulated other comprehensive income (loss) (“AOCI”) and subsequently reclassifies the related gains or losses into cost of revenue or operating expense in the same period, or periods, during which the hedged transaction affects earnings. The Company classifies cash flows related to its cash flow hedges as operating activities in its condensed consolidated statements of cash flows.
Derivative instruments used to hedge exposures to fair value changes in assets or liabilities, or to hedge foreign currency exposures in certain non-USD denominated monetary assets and liabilities, are not designated as hedges for financial reporting purposes. The Company records changes in the fair value of these derivatives in other income (expense), net in the condensed consolidated statements of operations. The Company classifies cash flows related to these derivatives as operating activities in its condensed consolidated statements of cash flows.
The following table summarizes the notional amounts of the Company’s derivative instruments (in thousands):
June 30, 2025December 31, 2024
Foreign currency forward contracts designated as hedging instruments$194,706 $180,754 
Foreign currency forward contracts not designated as hedging instruments173,304 95,191 
Total derivative instruments$368,010 $275,945 
The Company has master netting agreements with each of its counterparties, which permit net settlement of multiple, separate derivative contracts with a single payment. The Company does not have collateral requirements with any of its counterparties. Although the Company is allowed to present the fair value of derivative instruments on a net basis according to master netting arrangements, the Company has elected to present its derivative instruments on a gross basis in its condensed consolidated financial statements. The Company’s derivative instruments generally have maturities of 18 months or less. The Company does not use derivative instruments for trading or speculative purposes. The following table summarizes the fair value of the Company’s derivative instruments on the condensed consolidated balance sheets (in thousands):
Balance Sheet LocationJune 30, 2025December 31, 2024
Derivative Assets:
Foreign currency forward contracts designated as hedging instrumentsPrepaid expenses and other current assets$6,280 $205 
Foreign currency forward contracts not designated as hedging instrumentsPrepaid expenses and other current assets3,650 716 
Foreign currency forward contracts designated as hedging instrumentsOther assets, non-current1,883 141 
Total derivative assets$11,813 $1,062 
Derivative Liabilities:
Foreign currency forward contracts designated as hedging instrumentsAccrued expenses and other liabilities$125 $3,829 
Foreign currency forward contracts not designated as hedging instrumentsAccrued expenses and other liabilities1,451 1,368 
Foreign currency forward contracts designated as hedging instrumentsOther liabilities, non-current7 717 
Total derivative liabilities$1,583 $5,914 
The following table presents the activity of foreign currency forward contracts designated as hedging instruments and the impact of these derivatives on AOCI (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2025202420252024
Beginning balance$559 $543 $(4,200)$2,280 
Net gain (loss) recognized in other comprehensive income (loss), net of tax8,692 675 12,489 (937)
Net gain reclassified from AOCI to earnings(1,220)(169)(258)(294)
Ending balance$8,031 $1,049 $8,031 $1,049 
As of June 30, 2025, $8.0 million of net unrealized gains were included in the balance of accumulated other comprehensive income (loss) related to foreign currency forward contracts designated as hedging instruments. The Company expects to reclassify $6.2 million of net unrealized gains from accumulated other comprehensive income (loss) into earnings over the next 12 months.
The following table summarizes the effect of foreign currency forward contracts on the condensed consolidated statements of operations (in thousands):
Derivatives Designated as Hedging InstrumentsDerivatives Not Designated as Hedging Instruments
Three Months Ended June 30,Six Months Ended June 30,Three Months Ended June 30,Six Months Ended June 30,
20252024202520242025202420252024
Cost of revenue - subscription$114 $30 $40 $54 $— $— $— $— 
Cost of revenue - services92 11 37 19 — — — — 
Research and development233 33 (121)64 — — — — 
Sales and marketing679 66 116 99 — — — — 
General and administrative102 29 25 58 — — — — 
Other income (expense), net— — — — 2,932 (242)4,190 (1,049)
Total gain (loss) recognized in earnings$1,220 $169 $97 $294 $2,932 $(242)$4,190 $(1,049)