v3.26.1
Derivatives
 6 Months Ended
Jun. 30, 2026
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivatives

6. 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 June 30, 2026, the Company had designated cash flow hedge forward contracts with notional amounts equivalent to $42.5 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 June 30, 2026, the Company had non-designated forward contracts with notional amounts of $43.4 million.

The following summarizes the fair value of derivative financial instruments as of June 30, 2026 and December 31, 2025:
 

 

June 30, 2026

 

December 31, 2025

 

 

(in thousands)

 

Prepaid expenses and other current assets

 

 

 

 

Cash flow hedges

$

—

 

$

240

 

Balance sheet hedges

 

668

 

 

—

 

Total

$

668

 

$

240

 

 

 

 

 

 

Accrued expenses and other current liabilities

 

 

 

 

Cash flow hedges

$

716

 

$

83

 

Balance sheet hedges

 

30

 

$

298

 

Total

$

746

 

$

381

 

 

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

 

Six Months Ended June 30,

 

 

2026

 

2025

 

 

(in thousands)

 

Beginning accumulated other comprehensive (income) loss at January 1

$

(529

)

$

921

 

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

 

1,065

 

 

(948

)

  Net income (losses) reclassified from AOCI to earnings

 

187

 

 

(559

)

Ending accumulated other comprehensive (income) loss at June 30

$

723

 

$

(586

)

 

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

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2026

 

2025

 

2026

 

2025

 

 

(in thousands)

 

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

 

 

 

 

 

 

 

 

Revenue

$

(50

)

$

(189

)

$

187

 

$

(559

)

 

 

 

 

 

 

 

 

 

Gains related to non-designated hedges

 

 

 

 

 

 

 

 

Other (expense) income, net

$

(133

)

$

1,976

 

$

(412

)

$

1,973

 

 

As of June 30, 2026, the estimated net amount expected to be reclassified out of AOCI into earnings over the next 12 months is not material.