v3.25.4
Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The components of income (loss) before income taxes were as follows:
Years Ended December 31,
202520242023
(in thousands)
United States$(43,529)$(93,691)$(81,208)
Foreign1,224 576 825 
$(42,305)$(93,115)$(80,383)
The components of income tax expense were as follows:
Years Ended December 31,
202520242023
(in thousands)
Current Provision:
Federal$— $— $— 
State(1)(1)(1)
Foreign(597)(485)(151)
Total current provision(598)(486)(152)
Total deferred provision— — — 
Total income tax provision$(598)$(486)$(152)
The material components of the deferred tax assets and liabilities consisted of net operating loss carry-forwards, capitalized research and development costs, and tax credit carry-forwards.
Years Ended December 31,
202520242023
(in thousands)
Deferred tax assets (liabilities):
Deferred tax assets:
Accrual, write-down and other$11,560 $12,863 $9,169 
Acquired assets6,161 4,623 1,650 
Capitalized research and development35,673 46,495 37,706 
Credits5,657 5,657 5,657 
Net operating loss and credits carry forwards78,252 58,689 54,212 
Gross deferred tax assets$137,303 $128,327 $108,394 
Deferred tax liabilities:
Depreciation and amortization$(909)$(2,277)$(2,622)
Gross deferred tax liabilities$(909)$(2,277)$(2,622)
Total gross deferred tax assets$136,394 $126,050 $105,772 
Valuation allowance(136,394)(126,050)(105,772)
Total net deferred tax assets$— $— $— 
The net valuation allowance increased by $10.3 million and $20.3 million for the year ended December 31, 2025 and 2024 respectively.
Beginning in 2025 annual reporting period, we adopted ASU 2023-09 prospectively. A reconciliation of the U.S. federal statutory income tax rate to our effective tax rate pursuant to the disclosure requirements of ASU 2023-09 for the year ended December 31, 2025 is as follows:
Year Ended December 31,
2025
(in thousands)%
U.S. federal statutory income tax rate$(8,884)(21.0)%
Change in valuation allowance10,341 24.4 %
Nontaxable or Nondeductible items
Excess tax expense from share-based compensation(13,469)(31.8)%
Non-deductible executive compensation9,240 21.8 %
Non-deductible non-U.S. equity compensation2,756 6.5 %
Other Adjustments
Other614 1.5 %
Effective tax rate$598 1.4 %
A reconciliation of the Company’s effective tax rate to the statutory U.S. federal rate for the prior years is as follows:
Years Ended December 31,
20242023
US Federal rate benefit(21.0)%(21.0)%
RSU excess tax benefit(15.5)(12.9)
Section 162(m) limitation10.4 — 
Permanent differences and others5.0 7.0 
Change in valuation allowance21.6 27.1 
Net tax expense0.5 %0.2 %
The reported amount of income tax expense differs from an expected amount based on statutory rates primarily due to the Company’s valuation allowance, the stock-based compensation windfall, and the disallowed executive compensation.
Cash paid for income taxes, net of refunds received, by jurisdiction, pursuant to the disclosure requirements of ASU 2023-09 for the year ended December 31, 2025 is as follows:
Year Ended December 31,
2025
(in thousands)
Foreign
India$221 
Japan80 
Ukraine39 
Malaysia23 
Other39 
Cash paid for income taxes, net of refunds received$402 
As of December 31, 2025 and 2024, based on the available objective evidence, management believes it is more likely than not that the net deferred tax assets will not be realized. Accordingly, management has applied a full valuation allowance against its net deferred tax assets at December 31, 2025 and 2024.
At December 31, 2025 and 2024, the Company has federal net operating loss carry-forwards of approximately $344.3 million and $250.7 million, respectively, and state net operating loss carry-forwards of approximately $85.1 million and $84.5 million, respectively. At December 31, 2025 and 2024, the Company has net operating loss carryforwards for foreign income tax purposes of approximately $0.2 million and $2.0 million, respectively. These federal, state, and foreign net operating loss carry-forwards will expire beginning in 2028.
At December 31, 2025 and 2024, the Company also has federal research and development tax credit carry-forwards of approximately $3.9 million and $3.9 million, respectively, and state research and development tax credit carry-forwards of approximately $3.6 million and $3.6 million, respectively. The federal tax credits begin to expire in 2025, and the California tax credits carry forward indefinitely.
As of December 31, 2025 and 2024, the Company had $2.5 million and $2.5 million of total unrecognized tax benefits. The Company currently has a full valuation allowance against its net deferred tax assets which would impact the timing of the effective tax rate benefit should any of these uncertain tax positions be favorably settled in the future. If the Company is able to eventually recognize these uncertain tax positions, none of the unrecognized benefit would reduce the Company’s effective tax rate due to full valuation allowance of the Company’s deferred tax assets. The Company’s policy is to record interest and penalties related to unrecognized tax benefits as income tax expense. During the years ended December 31, 2025 and 2024, the Company had immaterial amounts related to the accrual of interest and penalties.
A reconciliation of the beginning and ending unrecognized tax benefit amount is as follows:
December 31,
20252024
(in thousands)
Beginning balance$2,505 $2,271 
Increase in balance related to tax position taken during prior periods30 259 
Decrease in balance related to tax position taken during the current period— (25)
Ending balance$2,535 $2,505 
These amounts are related to certain deferred tax assets with a corresponding valuation allowance.
The Company files tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examination by federal, state, local, and foreign jurisdictions, where
applicable. Due to the Company’s net losses, its federal, state and local, and foreign tax returns since inception are subject to audit.