DERIVATIVE INSTRUMENTS

12 Months Ended

Dec. 31, 2023

General Discussion of Derivative Instruments and Hedging Activities [Abstract]

The Company's risk management strategy includes the use of derivative financial instruments to reduce the volatility of earnings and cash flows associated with changes in foreign currency exchange rates.

ASC 815, "Derivatives and Hedging" ("ASC 815"), requires the Company to recognize all of its derivative instruments as either assets or liabilities on the balance sheet at fair value. The accounting for changes in the fair value (i.e., gains or losses) of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and further, on the type of hedging relationship. For those derivative instruments that are designated and qualify as hedging instruments, an entity must designate the hedging instrument, based upon the exposure being hedged, as a fair value hedge, cash flow hedge or a hedge of a net investment in a foreign operation.

Gains and losses on derivatives instruments that are designated and qualify as a cash flow hedge (i.e., hedging the exposure to variability in expected future cash flows that are attributable to a particular risk), are recorded in accumulated other comprehensive income (loss) and reclassified into the statement of income in the same accounting period in which the designated forecasted transaction or hedged item affects earnings.

The Company entered into option and forward contracts to hedge a portion of anticipated New Israeli Shekel ("NIS"), Indian Rupee ("INR") and Philippine peso ("PHP") payroll and benefit payments. These derivative instruments are designated as cash flow hedges, as defined by ASC 815 and accordingly are measured at fair value. These transactions are effective and, as a result, gain or loss on the derivative instruments are reported as a component of accumulated other comprehensive income (loss) and reclassified as payroll expenses, facility expenses or finance expenses, respectively, at the time that the hedged income/expense is recorded.


	Notional amount				Fair value (Level 2 within the fair value hierarchy)
	December 31,				December 31,
	2023		2022		2023		2022
Forward contracts
expenses NIS	107,940		111,253		253		(7,862)
expenses INR	62,023		46,406		147		(1,379)
expenses PHP	11,577		11,235		302		651
	$	181,540	$	168,894	$	702	$	(8,590)

The Company currently hedges its exposure to the variability in future cash flows, generally for a maximum period of one year. As of December 31, 2023, the Company expects to reclassify all of its unrealized gains and losses from accumulated other comprehensive income to earnings during the next fifteen months.

The fair value of the Company's outstanding derivative instruments at December 31, 2023 and 2022 is summarized below:


		Fair value of derivative instruments
		December 31,
	Balance sheet line item	2023		2022
Derivative assets:
Foreign exchange forward contracts	Prepaid expenses and other current assets	$	702	$	651
Derivative liabilities:
Foreign exchange forward contracts	Accrued expenses and other liabilities	$	—	$	(9,241)

The effect of derivative instruments in cash flow hedging relationship on income and other comprehensive income for the years ended December 31, 2023, 2022 and 2021 is summarized below:


	Amount of gain (loss) recognized in other comprehensive income on derivative, net of tax (effective portion)
	Year Ended December 31,
	2023		2022		2021
Derivatives in foreign exchange cash flow hedging relationships:
Forward contracts	$	(5,300)	$	(18,223)	$	4,993
Option contracts	—		—		31
	$	(5,300)	$	(18,223)	$	5,024

Derivatives in foreign exchange cash flow hedging relationships for the years ended December 31, 2023, 2022 and 2021 is summarized below:


		Amount of gain (loss) reclassified from other comprehensive income into income (expenses), net of tax (effective portion)
		Year Ended December 31,
	Statements of income line item	2023		2022		2021
Option contracts to hedge payroll and facility expenses	Cost of revenues and operating expenses	$	—	$	—	$	(771)
Forward contracts to hedge payroll and facility expenses	Cost of revenues, operating expenses and financial expenses	13,335		7,189		(5,157)
		$	13,335	$	7,189	$	(5,928)