v3.25.4
Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
During the years ended December 31, 2025, 2024, and 2023, we recorded a provision for income taxes of $3.3 million, $148.7 million, and $32.1 million, respectively. The provision for income taxes during the years ended December 31, 2025, 2024, and 2023 was primarily due to the foreign income taxes, the establishment of a valuation allowance against our United States federal and state deferred tax assets, and the federal and state income taxes in the United States largely driven by shortfall associated with equity compensation, respectively.

The following table presents our provision for income taxes (in thousands):
Years Ended December 31,
202520242023
Current income taxes:
Federal$372 $(234)$(2,460)
State257 (1,128)(3,064)
Foreign(2,560)(4,021)(33)
Total current provision for income taxes(1,931)(5,383)(5,557)
Deferred income taxes:
Federal— (122,057)(26,210)
State— (17,558)(1,634)
Foreign(1,348)(3,704)1,269 
Total deferred provision for income taxes(1,348)(143,319)(26,575)
Total provision for income taxes$(3,279)$(148,702)$(32,132)

The following table presents our (loss) income before provision for income taxes (in thousands):
Years Ended December 31,
202520242023
United States$(91,155)$(297,183)$61,152 
Foreign(8,987)(391,183)(10,840)
Total (loss) income before provision for income taxes$(100,142)$(688,366)$50,312 
We adopted ASU 2023-09 on January 1, 2025 under the prospective method. The following table presents the required disclosures subsequent to our adoption for the differences between our provision for income taxes as presented in the accompanying consolidated statements of operations and the income tax expense computed at the federal statutory rate as a percentage and amount of (loss) income before provision for income taxes (in thousands, except percentages):
Year Ended December 31, 2025
DollarsPercent
U.S. federal statutory tax rate $21,031 21.0 %
State and local income taxes, net of federal income tax effect(1)
304 0.3 
Foreign tax effects
     India
          Withholding tax(1,641)(1.6)
     United Kingdom
          Change in valuation allowance(3,391)(3.4)
          Other(357)(0.4)
     Other foreign jurisdictions(2,083)(2.1)
Effect of changes in tax laws or rates enacted in the current period— — 
Effect of cross-border tax laws
     Foreign branch loss3,934 3.9 
Tax credits— — 
Change in valuation allowance(12,937)(12.9)
Nontaxable or nondeductible Items
     Share-based payment awards(8,414)(8.4)
     Other275 0.3 
Change in unrecognized tax benefits— — 
Other adjustments— — 
     Effective tax rate$(3,279)(3.3)%
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(1) State taxes in Texas made up the majority (greater than 50 percent) of the tax effect in this category.
The following table presents the required disclosures prior to our adoption of ASU 2023-09 and presents the differences between our provision for income taxes as presented in the accompanying consolidated statements of operations and the income tax expense computed at the federal statutory rate as a percentage of (loss) income before provision for income taxes (in percentages):
Years Ended December 31,
20242023
Income tax at U.S. statutory rate21.0 %21.0 %
State, net of federal benefit2.9 11.6 
Taxes on foreign earnings1.7 0.7 
Share-based compensation(2.5)39.3 
Non-deductible expenses— (2.5)
Effect of flow-through entities12.5 — 
Goodwill impairment(17.1)— 
Tax credits— 0.8 
Change in valuation allowance(40.1)4.2 
Settlement of unrecognized tax benefits— (8.0)
Foreign-derived intangible income0.1 (5.2)
Other(0.1)2.0 
Total(21.6)%63.9 %

The following table presents the required disclosures subsequent to our adoption of ASU 2023-09 for cash paid for income taxes, net of refunds received, by jurisdiction (in thousands):
Year Ended December 31, 2025
Federal$— 
State95 
Foreign
   India3,201 
   Spain1,317 
   Other foreign jurisdictions(24)
Total cash paid for income taxes, net of refunds$4,589 
The following table presents a summary of our deferred tax assets and liabilities (in thousands):
December 31,
20252024
Deferred tax assets:
Research and experimental expenditures capitalization$82,418 $102,382 
Net operating loss and credits carryforwards112,376 80,413 
Accrued expenses and reserves31,973 25,039 
Share-based compensation455 3,414 
Convertible senior notes161 1,790 
Goodwill81,814 89,583 
Property and equipment and intangible assets26,193 15,947 
Gross deferred tax assets335,390 318,568 
Valuation allowance(325,401)(307,985)
Total deferred tax assets$9,989 $10,583 
Deferred tax liabilities:
Other$(10,235)$(11,396)
Net deferred tax liability$(246)$(812)

Realization of the deferred tax assets is dependent upon future taxable income, the amount and timing of which are uncertain. During the years ended December 31, 2025, 2024, and 2023, the valuation allowance increased by $17.4 million, $267.8 million, and $4.0 million, respectively. We regularly assess the need for a valuation allowance against our deferred tax assets. In performing our assessment, we consider both positive and negative evidence related to the likelihood of realizing our deferred tax assets. During the second quarter of 2024, we determined that it is more likely than not that the deferred tax benefit will not be realized due to the available negative evidence outweighing the positive evidence, primarily resulting from the cumulative loss influenced by the impairment expense recorded.

Our earnings in India continue to not be permanently reinvested and we've recorded cumulative tax liabilities that would be incurred upon repatriation of such earnings of $6.2 million through December 31, 2025. During the years ended December 31, 2025 and 2024, our subsidiary in India distributed $10.8 million and $23.0 million, respectively, to the United States, resulting in a remittance in withholding tax of $1.6 million and $3.5 million, respectively, which was included within cash flows from financing activities on our consolidated statements of cash flows. As of December 31, 2025, the net tax expense accrued related to future repatriation of earnings is $1.1 million. The determination of the future tax consequences of the remittance of these earnings is not practicable. For our remaining foreign subsidiaries, to the extent we can repatriate cash with no significant tax cost, we have determined those earnings are not permanently reinvested. All other earnings have been determined to be permanently reinvested.

As of December 31, 2025, we had net operating loss carryforwards for federal and state income tax purposes of approximately $243 million and $288 million, respectively, which will begin to expire in years beginning 2030 and 2026, respectively. We also had net operating loss carryforwards for United Kingdom income tax purposes of approximately $144 million, which do not expire.

As of December 31, 2025, we had tax credit carryforwards for federal and state income tax purposes of $13.6 million and $18.1 million, respectively. The federal credits expire in various years beginning in 2038. The state credits do not expire.

Utilization of our net operating losses and tax credit carryforwards may be subject to substantial annual limitations due to ownership change limitations provided by the Internal Revenue Code of 1986, as amended (IRC), and similar state provisions. Such annual limitations could result in the expiration of the net operating losses and tax credit carryforwards before utilization.

We recognize interest and penalties related to uncertain tax positions as a component of income tax expense. As of December 31, 2025, there are no accrued interest and penalties related to uncertain tax positions.
We file tax returns in U.S. federal, state, and certain foreign jurisdictions with varying statutes of limitations. Due to net operating loss and credit carryforwards, all of the tax years since inception through tax year 2025 remain subject to examination by the U.S. federal and some state authorities. Foreign jurisdictions remain subject to examination up to approximately five years from the filing date, depending on the jurisdiction. United Kingdom income tax remains subject to examination by the HM Revenue & Custom for all tax years due to net operating loss and credits carryforwards.

The following table presents the reconciliation of the beginning and ending balances of the total amount of unrecognized tax benefits, excluding accrued interest and penalties (in thousands):
Years Ended December 31,
202520242023
Beginning balance$12,708 $12,400 $16,953 
Increase in tax positions for prior years— 13 — 
Decrease in tax positions for prior years(130)— (131)
Decrease in tax positions for prior year settlement— — (4,703)
Increase in tax positions for current year164 295 281 
Ending balance$12,742 $12,708 $12,400 
As of December 31, 2025, the unrecognized tax benefits of $12.7 million would not affect the effective tax rate, if recognized. The actual amount of any taxes due could vary significantly depending on the ultimate timing and nature of any settlement. We believe that the amount by which the unrecognized tax benefits may increase or decrease within the next 12 months is not estimable.