v3.26.1
INCOME TAXES
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
Corporate Income Tax - Ordinary taxable income in Israel is subject to a corporate tax rate of 23%.

Ordinary taxable income in Israel is subject to a corporate tax rate of 23%. However, the Company has received an approval from the Israeli Tax authorities on November 18, 2021 for Preferred Technological Enterprise (“PTE”) status. The Company is eligible for PTE status which is implemented commencing 2020. Income from a PTE is subject to 12% tax rate. The Company is currently in the process of obtaining a renewal of its PTE status.

Foreign Exchange Regulations in Israel

Under the Foreign Exchange Regulations, the Company calculates its tax liability in U.S. Dollars according to certain orders. The tax liability, as calculated in U.S. Dollars is translated into NIS according to the exchange rate as of December 31st of each year.  
One Big Beautiful Bill Act

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law in the U.S. which contains a broad range of tax reform provisions affecting businesses. The Company took an accelerated deduction following the enactment of new tax law. The OBBBA legislation is not expected to have a material impact on our effective tax rate, deferred tax position, or results of operations in 2026.

Non-Israeli subsidiaries are taxed according to the tax laws in their respective countries of residence. The components of income (loss) before income taxes are as follows (in thousands):

December 31,
202520242023
Domestic (Israel)$(74,582)$(8,480)$(53,292)
Foreign126,207 (412,642)(127,876)
Total income (loss) before income taxes$51,625 $(421,122)$(181,168)

The income tax (benefit) expense consists of (in thousands):

December 31,
202520242023
Current:
Domestic$(57)$(247)$593
Foreign(19,499)24,74116,601
Total current(19,556)24,49417,194
Deferred:
Domestic(189)82(461)
Foreign——(1,162)
Total deferred(189)82(1,623)
Total income tax provision$(19,745)$24,576 $15,571 

Effective Tax Rate

The following table presents the reconciliation between Company’s statutory tax and effective income taxes the for the year ended December 31, 2025 after the adoption of ASU 2023-09 (in thousands):
December 31, 2025
AmountPercent
Theoretical income taxes at Israel statutory rate$11,874 23 %
Foreign tax effects:
    United States:
        State and local income taxes, net of federal income tax effect(3,158)(6)%
        Statutory tax rate difference(3,081)(6)%
        Interest expense adjustments(7,183)(14)%
        Base Erosion and Anti-Abuse Tax (BEAT)6,255 12 %
        Change in valuation allowances(25,404)(49)%
        Non-deductible compensations3,294 6 %
        Contingent consideration(1,241)(2)%
        Other(247)— %
    Cayman Islands2,814 5 %
    Other foreign jurisdictions16 — %
Change in valuation allowances6,420 12 %
(Nontaxable) or nondeductible items:
    Share-based payment awards5,690 11 %
Statutory tax rate difference (Preferred technological enterprise)4,874 9 %
Changes in unrecognized tax benefits(20,592)(40)%
Other adjustments(76)— %
Effective income tax benefit$(19,745)NM*

The following tables presents the reconciliation between Company’s statutory tax and effective income taxes the years ended December 31, 2024 and 2023 prior to the adoption of ASU 2023-09 (in thousands):
December 31,
20242023
Loss before income taxes$(421,122)$(181,168)
Israel statutory income tax rate23 %23 %
Theoretical income taxes at statutory rate(96,858)(41,669)
Preferred technological enterprise benefit949 5,891 
Deferred tax assets for which valuation allowance was provided82,602 16,067 
Permanent differences10,033 7,643 
Uncertain tax positions9,035 13,500 
Prior year taxes(1,416)(2,312)
Subsidiaries taxed at a different tax rate17,594 16,443 
Changes in valuation allowance
— (1,162)
Other adjustments
2,637 1,170 
Effective income tax
$24,576 $15,571 
Effective tax rateNM*NM*
*NM = Not meaningful.

Deferred Tax Assets and Liabilities

Deferred taxes reflect the 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. The Company regularly assesses the need for a valuation allowance against its deferred tax assets. In making that assessment, the Company considers both positive and negative evidence related to the likelihood of realization of the deferred tax assets to determine, based on the weight of available evidence, whether it is more likely than not that some or all of the deferred tax assets will not be realized. As of December 31, 2025 and 2024, a
valuation allowance was provided reducing the deferred tax assets due to uncertainty of realizing future tax benefits from its net operating loss carryforwards and other deferred tax assets.
As of December 31, 2025 and 2024, deferred tax assets and deferred tax liabilities presented in the consolidated balance sheets are comprised as follows (in thousands):

December 31,
20252024
Carry forward tax losses$19,854 $13,912 
Research and development cost5,657 8,930 
Compensations and benefits7,218 9,748 
Operating lease liability4,847 5,525 
Investments credit loss64,327 96,324 
Interest expense (Section 163j)— 8,082 
Other comprehensive income10,911 2,715 
Capital loss1,262 948 
Equity method and other investments3,228 1,062 
Other3,837 983 
Deferred tax assets before valuation allowance121,141 148,229 
Valuation allowance111,648 140,020 
Deferred tax assets9,493 8,209 
Intangible assets(1,066)(1,838)
Right-of-use assets(4,305)(5,401)
Capitalized research and development costs(3,759)— 
Equity method and other investments— (904)
Property, equipment and software(335)(246)
Other(28)(9)
Deferred tax liabilities(9,493)(8,398)
Deferred tax liabilities, net$— $(189)

As of December 31, 2025 the Company has an accumulated tax loss carry forward of approximately $110.7 million in Israel and $32.3 million federal and state losses in the U.S which can be offset with the limitation as described in Section 382 of the IRS Code due to U.S subsidiary prior change in ownership. These losses do not have an expiration date.

Uncertain Tax Positions

A reconciliation of the beginning and ending balances of the total amounts of unrecognized tax benefits is as follows (in thousands):

December 31,
20252024
Uncertain tax positions, beginning of the year$31,170 $22,135 
(Decrease) increase in tax positions for prior years(25,724)(13,001)
Increases related to current year tax positions5,543 21,622 
Revaluation(411)414 
Uncertain tax positions, end of year$10,578 $31,170 

As of December 31, 2025 and 2024, unrecognized tax benefits of $10.6 million and $31.2 million, respectively, if recognized, would affect our effective tax rate in a future period. The Company currently does not expect uncertain tax positions to change significantly over the next twelve months.
The Company accrued interest and penalties related to uncertain tax positions recorded during the years ended December 31, 2025, 2024, and 2023. The amounts were immaterial.

Cash Income Taxes Paid (Net of Refunds)

The components of income taxes paid (net of refunds) for the year ended December 31, 2025 are as follows (in thousands):

December 31, 2025
Domestic (Israel)$114 
Foreign (U.S.)2,381 
Total
$2,495 

Tax Assessments

The Company files income tax return in various jurisdictions with varying statue of limitations. As of December 31, 2025, the Company have received final tax assessments in Israel through 2020. In 2025, the Company is currently subject to tax audits in Israel and federal and state tax audits in U.S. The tax audits are ongoing and to date, no material issues have been raised and no adjustments have been proposed.

Pillar Two Taxation

On October 8, 2021, the Organisation for Economic Co-operation and Development (“OECD”)/G20 inclusive framework (the “Inclusive Framework”) on Base Erosion and Profit Shifting published a statement updating and finalizing the key components
of a two-pillar plan on global tax reform. The Inclusive Framework plan has now been agreed to by more than 140 OECD
members. While many countries have adopted some or all aspects of these rules, some countries have not adopted any or all of
them, and many interpretive questions remain that are expected to be addressed in future guidance. In December 2025, Israel enacted Pillar Two legislation to implement a 15% global minimum tax on multinational enterprise groups with consolidated revenues exceeding €750 million in at least two of the four preceding fiscal years, effective from January 1, 2026. The Company is evaluating the effects of the legislation on our effective tax rate and cash tax position.