v3.25.4
Derivatives
 12 Months Ended
Dec. 31, 2025
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivatives

15. Derivatives

Cash flow hedges

The Company enters into foreign currency forward contracts to reduce the risk of variability in future cash flow due to foreign currency exchange rate fluctuation from certain forecasted revenue transactions billed in currencies other than the U.S. Dollar. These transactions are designated as cash flow hedges. The foreign currency forward contracts have maturities of 12 months or less. Hedge effectiveness is assessed at inception and at each reporting period utilizing statistical regression analysis. The Company is subject to master netting arrangements with certain counterparties of the contracts, under which the Company is allowed to net settle transactions of the same currency. The Company's policy is to present the derivatives on a gross basis on the consolidated balance sheets. Unrealized foreign exchange gains or losses related to those designated cash flow hedge contracts are recorded in accumulated other comprehensive income ("AOCI") and are reclassified into revenues in the same periods when the hedged transactions are recognized in earnings. Cash flows from the settlement of these forward contracts are classified as operating activities on the consolidated statements of cash flows. As of December 31, 2025, the Company had designated cash flow hedge forward contracts with notional amounts equivalent to $42.4 million.

Balance sheet hedges

The Company also enters into foreign currency forward contracts to hedge certain foreign currency denominated monetary assets or liabilities, which are not designated as cash flow hedges. These contracts have maturities of 12 months or less. Changes in the value of the foreign exchange contracts are recognized in other (expense) income, net and are designed to offset the foreign exchange gain or loss on the underlying net monetary assets or liabilities. Cash flows from the settlement of these forward contracts are classified as operating activities on the consolidated statements of cash flows. As of December 31, 2025, the Company had non-designated forward contracts with notional amounts of $42.8 million.

The following summarizes the fair value of derivative financial instruments as of December 31, 2025 and 2024:
 

 

December 31, 2025

 

 

December 31, 2024

 

 

(in thousands)

 

Prepaid expenses and other current assets

 

 

 

 

 

Cash flow hedges

$

240

 

 

$

—

 

Total

$

240

 

 

$

—

 

 

 

 

 

 

 

Accrued expenses and other current liabilities

 

 

 

 

 

Cash flow hedges

$

83

 

 

$

584

 

Balance sheet hedges

 

298

 

 

 

—

 

Total

$

381

 

 

$

584

 

 

The following table presents the activity of foreign currency forward contracts designated as hedging instruments and the impact of these derivatives on AOCI:
 

 

Year Ended December 31,

 

 

2025

 

 

2024

 

 

2023

 

 

(in thousands)

 

Beginning accumulated other comprehensive (income) loss at January 1

$

921

 

 

$

—

 

 

$

—

 

  Net (income) losses recognized in other comprehensive income,
    net of tax

 

(1,472

)

 

 

1,622

 

 

 

—

 

  Net income (losses) reclassified from AOCI to earnings

 

22

 

 

 

(701

)

 

 

—

 

Ending accumulated other comprehensive (income) loss at December 31,

$

(529

)

 

$

921

 

 

$

—

 

 

The effect of hedges on the consolidated statements of operations are as follows:

 

 

Year Ended December 31,

 

 

2025

 

 

2024

 

 

2023

 

 

(in thousands)

 

Income (losses) reclassified from AOCI related to cash flow hedges

 

 

 

 

 

 

 

 

Revenue

$

22

 

 

$

(701

)

 

$

—

 

 

 

 

 

 

 

 

 

 

Income related to non-designated hedges

 

 

 

 

 

 

 

 

Other (expense) income

$

2,542

 

 

$

—

 

 

$

—

 

 

As of December 31, 2025, the Company estimates the net amount of unrealized income (losses) before tax on the foreign currency contracts expected to be reclassified into revenue over the next 12 months is approximately $0.3 million.