v3.25.4
Provision for Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Provision for Income Taxes Provision for Income Taxes
The U.S. and non-U.S. components of loss before income taxes consisted of the following:
 December 31,
 20252024
U.S.$46,260 $(38,615)
Non-U.S.8,466 7,755 
Income (loss) before income taxes$54,725 $(30,860)
The components of the Company's provision for income taxes consisted of the following:
 Year Ended December 31,
 202520242023
Current taxes:   
Federal$— $— $— 
Foreign1,125 2,151 1,976 
State662 3,025 660 
Total current taxes$1,787 $5,176 $2,636 
Deferred taxes:   
Federal$433 $1,427 $420 
Foreign(116)276 (251)
State613 797 757 
Total deferred taxes930 2,500 926 
Provision for income taxes $2,717 $7,676 $3,562 
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. Significant components of the Company's deferred taxes consisted of the following:
 December 31,
 20252024
Deferred tax assets:
NOL and credit carryforwards$131,077 $116,084 
Deferred revenue24,846 26,069 
Accrued expenses and other5,355 7,190 
Stock-based compensation9,716 11,080 
Lease liabilities10,287 11,633 
Convertible debt hedge599 2,957 
IRC Section 174 expenditures58,558 73,860 
Total deferred tax assets240,438 248,873 
Deferred tax liabilities: 
Deferred expenses(18,746)(17,858)
Depreciation and amortization(9,993)(11,441)
Capitalized software— (1,690)
Right of use assets(6,489)(7,166)
Total deferred tax liabilities(35,228)(38,155)
Deferred tax assets less tax liabilities205,210 210,718 
Less: valuation allowance(212,512)(217,053)
Net deferred tax liability$(7,302)$(6,335)
The Company had federal net operating loss carryforwards of approximately $458.8 million and $438.4 million at December 31, 2025 and 2024, respectively, of which $4.5 million will expire at various dates beginning in 2026, if not utilized, and $454.3 million have an indefinite carryforward period. Federal net operating losses generated during and after the year ended December 31, 2018 will have an indefinite carryforward period. The Company also held federal R&D tax credits of $19.6 million and state tax credits of $0.2 million for the year ended December 31, 2025, and federal R&D tax credits of $8.9 million and state tax credits of $0.2 million for the year ended December 31, 2024. The federal and state tax credit carry overs will begin to expire in 2033, if not utilized.
The Company has established a valuation allowance due to uncertainties regarding the realization of deferred tax assets based on the Company's lack of earnings history. During 2025, the valuation allowance decreased by approximately $4.5 million due to continuing operations.
At December 31, 2025, the Company's foreign subsidiaries' undistributed earnings have been retained and are intended to be indefinitely reinvested. It is not practicable to estimate the amount of any taxes that would be payable upon remittance of these earnings, because such tax, if any, is dependent upon circumstances existing if and when remittance occurs.
On July 4, 2025, H.R. 1, the "One Big Beautiful Bill Act," was signed into law. This legislation includes several changes to federal tax law that generally allow for more favorable deductibility of certain business expenses beginning in 2025, including the restoration of immediate expensing of domestic research and development expenditures, reinstatement of 100% bonus depreciation, and more favorable rules for determining the limitation on business interest expense. These changes were reflected in the income tax provision for the year ended December 31, 2025.
The Company's provision for income taxes attributable to continuing operations differs from the expected tax expense amount computed by applying the statutory federal income tax rate of 21% to income before taxes for each of the years ended December 31, 2025, 2024, and 2023, respectively, primarily as a result of the following:
 Year Ended December 31,
 202520242023
AmountPercentageAmountPercentageAmountPercentage
Income tax at U.S. statutory rate$11,492 21.00 %$(6,480)21.00 %$(12,982)21.00 %
State taxes, net of federal benefit (1)
59 0.11 %3,356 (10.88)%1,391 (2.25)%
Foreign tax effects:
Canada 
Rate differential15 0.03 %26 (0.08)%32 (0.05)%
Stock based compensation141 0.26 %499 (1.62)%963 (1.56)%
NOL adjustment— — %— — %8,170 (13.22)%
Changes in valuation allowance— — %— — %(8,307)13.44 %
Other(173)(0.32)%(294)0.95 %94 (0.15)%
India
Rate differential306 0.56 %245 (0.79)%51 (0.08)%
Previously taxed income(1,245)(2.27)%(531)1.72 %— — %
Withholding taxes(832)(1.52)%375 (1.22)%— — %
Other628 1.15 %232 (0.75)%24 (0.04)%
Other foreign jurisdictions431 0.79 %220 (0.71)%106 (0.17)%
Effect of cross-border tax laws
GILTI— — %605 (1.96)%(1,688)2.73 %
Enactment of new tax laws82 0.15 %— — %— — %
Nondeductible items
Stock compensation2,116 3.86 %6,840 (22.17)%10,070 (16.29)%
Other221 0.40 %38 (0.12)%185 (0.30)%
Tax credits
Research and development credit(13,409)(24.50)%— — %— — %
Changes in valuation allowance(1,733)(3.17)%2,366 (7.67)%5,052 (8.17)%
Changes in UTP2,995 5.47 %376 (1.22)%(257)0.42 %
Other
Other349 0.64 %(197)0.64 %658 (1.07)%
Capitalized R&D1,274 2.33 %— — %— — %
Income tax provision effective rate$2,717 4.97 %$7,676 (24.88)%$3,562 (5.76)%
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(1) The states that contribute to the majority (greater than 50%) of the tax effect in this category include California, Illinois, Iowa, Minnesota, New York, Pennsylvania and Texas in 2025; California, Illinois, Oregon and Texas in 2024; and California, Iowa, Maine, Minnesota, New York and Texas in 2023.
The amounts of cash taxes paid are as follows:
 Year Ended December 31,
 202520242023
   
U.S. Federal$259 $— $— 
State taxes
California216 ****
Illinois**349 267 
Pennsylvania**352 316 
Texas300 **158 
Other states550 1,725 403 
Foreign taxes
Australia289 **368 
Canada**1,346 **
India2,033 2,073 1,015 
Other foreign193 35 95 
Total $3,840 $5,880 $2,622 
____________________________________________________________________________
(**) The amount of income taxes paid during the year does not meet the 5% disaggregation threshold.
The total amount of uncertain tax positions as of December 31, 2025 and 2024 was $4.1 million and $1.1 million, respectively. The reconciliation of uncertain tax positions at the beginning and end of the year is as follows:
Year Ended December 31,
20252024
Beginning balance$1,096 $720 
Gross increase related to prior year positions1,557 38 
Gross increase related to current year positions1,437 338 
Ending balance$4,090 $1,096 
At December 31, 2025, approximately $1.4 million would reduce the Company's annual effective tax rate, if recognized. As of December 31, 2025, the Company had no accrued interest. The Company does not believe it is reasonably possible that any of its unrecognized tax positions will be resolved within the next 12 months.
The Company files income tax returns in the U.S. federal jurisdiction, several state jurisdictions, and in each foreign jurisdiction in which we have operations. With few exceptions, the Company is no longer subject to U.S. federal, state or local income tax examinations by tax authorities for years before 2022. Operating losses and credits generated in years prior to 2022 remain open to adjustment until the statute of limitations closes for the tax year in which the net operating losses and credits are utilized. The tax years 2022 through 2025 remain open to examination by all the major taxing jurisdictions to which the Company is subject.