Income Taxes

12 Months Ended

Dec. 31, 2025

Income Tax Disclosure [Abstract]

Income Taxes

9. Income Taxes

For the years ended December 31, 2025, 2024, and 2023, our income (loss) before income taxes was comprised of the following (in thousands):

	Year Ended December 31,
	2025		2024		2023
Domestic	$	(17,496)	$	(55,183)	$	(89,925)
Foreign	23,940		(36,025)		(18,307)
Total	$	6,444	$	(91,208)	$	(108,232)

For the years ended December 31, 2025, 2024, and 2023, our income tax expense was comprised of the following (in thousands):

	Year Ended December 31,
	2025		2024		2023
Current:
Federal	$	22	$	(10)	$	34
State	171		149		223
Foreign	5,360		1,864		4,523
Total current expense	5,553		2,003		4,780
Deferred:
Federal	—		—		—
State	—		—		—
Foreign	(342)		(949)		(1,571)
Total deferred benefit	(342)		(949)		(1,571)
Total income tax expense	$	5,211	$	1,054	$	3,209

For the year ended December 31, 2025, the provision for income taxes differs from the amount computed by applying the federal statutory income tax rates to our income before the provision for income taxes as follows:

	Year Ended December 31, 2025
	Total		%
U.S. federal statutory tax rate	$	1,353	21.0	%
State income taxes, net of federal income tax effect(1)	171		2.7
Foreign tax effects
Switzerland
Statutory income tax rate differential	(1,193)		(18.5)
Net operating loss expiration	2,185		33.9
Unrealized currency translation gain	1,873		29.1
Changes in valuation allowances	(5,039)		(78.2)
Other	199		3.1
Other foreign jurisdictions	2,008		31.2
Effect of cross-border tax laws
Global intangible low-taxed income	(2,283)		(35.4)
Other	33		0.5
Tax credits
Research & development tax credits	(3,991)		(61.9)
Changes in valuation allowances	5,937		92.1
Non-taxable or Non-deductible Items
Share-based compensation	2,999		46.5
Other	937		14.5
Changes to unrecognized tax benefits	22		0.3
Total tax provision and effective tax rate	$	5,211	80.9	%

(1) State taxes in Texas primarily make up this category. The largest state by apportionment percentage is Virginia.

For the years ended December 31, 2024 and 2023, the provision for income taxes differs from the amount computed by applying the federal statutory income tax rates to our income before the provision for income taxes as follows:

	Percentage of Pretax Earnings
	2024		2023
U.S. federal statutory tax rate	21.0	%	21.0	%
State tax expense	4.3		3.8
Foreign rate differential	(4.0)		(3.1)
Nondeductible expenses	(1.0)		(0.7)
Foreign tax expense	0.1		(0.4)
Equity compensation	3.7		(2.4)
Tax credits	7.3		9.5
Unrecognized tax benefits	(1.5)		(1.8)
Global intangible low-taxed income	(3.0)		—
Change in tax rate	0.8		(0.9)
Other	(0.5)		0.2
Return to provision	3.3		—
Deferred adjustments	(1.4)		(3.0)
Change in valuation allowance	(30.3)		(25.2)
Total	(1.2)	%	(3.0)	%

The 2025 effective tax rate of 80.9% is detailed in the above table. The effective tax rate is driven by jurisdictional profitability mix; specifically, tax losses in the U.S. and Switzerland provided no tax benefit, while profits in other international jurisdictions remained subject to tax. In 2024, the effective tax rate of (1.2)% included $27.6 million of tax expense attributable to the change in the valuation allowances in the United States and Switzerland, partially offset by $6.7 million of favorable tax benefits for research credits. In 2023, the effective tax rate of (3.0)% included $27.3 million of tax expense attributable to the change in the valuation allowances in the United States and Switzerland, partially offset by $10.3 million of favorable tax benefits for research credits.

Deferred tax assets and liabilities reflect the net tax effects of temporary differences between the carrying amount of the assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

As of December 31, 2025 and 2024, significant components of our deferred tax assets and liabilities were as follows (in thousands):

	As of December 31,
	2025		2024
Deferred tax assets:
Net operating losses	$	114,153	$	107,170
Tax credits	39,002		34,885
Deferred revenue	310		521
Equity compensation	5,024		3,994
Lease liabilities	16,138		17,465
Accrued compensation	5,864		3,225
Bad debt	598		502
Other accrued expense	663		318
Capitalized research and development costs	36,186		45,820
Other	3,855		4,033
Gross deferred tax assets	221,793		217,933
Less: Valuation allowance	(191,198)		(187,969)
Total deferred tax assets	30,595		29,964
Deferred tax liabilities:
Prepaid expenses	(11,518)		(13,298)
Right-of-use assets	(7,809)		(8,406)
Depreciation	(2,363)		(3,245)
Intangible assets	(380)		(688)
Other	(3,675)		(198)
Total deferred tax liabilities	(25,745)		(25,835)
Net deferred tax assets	$	4,850	$	4,129

As of December 31, 2025 and 2024, we had $325.6 million and $287.5 million, respectively, of gross net operating loss (“NOL”) carryforwards for U.S. federal tax purposes. U.S. federal NOL carryforwards in the gross amount of $23.5 million and generated prior to 2018 will expire, if unused, in 2037. Under the Tax Cuts and Jobs Act of 2017 (the “TCJA”), as modified by the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), federal NOL carryforwards generated in tax years beginning after December 31, 2017 may be carried forward indefinitely. As of December 31, 2025, we had $302.1 million of gross NOL carryforwards generated after 2017 for U.S. federal tax purposes, which may be used to offset up to 80% of our taxable income annually.

Section 382 of the Internal Revenue Code limits the utilization of NOL carryforwards when ownership changes occur, as defined by that section. A number of states have similar laws that limit utilization of state NOL carryforwards when ownership changes occur. We have performed an analysis of our Section 382 ownership changes and determined all U.S. federal and state NOL carryforwards are available for use as of December 31, 2025.

As of December 31, 2025 and 2024, we had $36.5 million and $32.5 million, respectively, of U.S. federal tax credit carryforwards which will expire, if unused, between 2031 and 2045.

As of December 31, 2025 and 2024, we had U.S. gross state NOL carryforwards of $325.6 million and $297.5 million, respectively. We had tax-effected state NOL carryforwards of $17.1 million and $17.8 million as of

December 31, 2025 and 2024, respectively. The rules regarding carryforwards vary from state to state, and the ability to utilize NOLs varies based on timing and amount. The majority of state NOL carryforwards generated prior to 2018 will expire, if unused, in 2037. Due to the TCJA, certain state NOL carryforwards generated after 2017 have an indefinite carryforward period.

As of December 31, 2025 and 2024, we had foreign gross NOL carryforwards of $231.6 million and $230.1 million, respectively, primarily attributable to our subsidiary in Switzerland. We had tax-effected foreign NOL carryforwards of $28.7 million and $29.0 million as of December 31, 2025 and 2024, respectively. In 2025, $3.0 million of tax-effected Swiss NOLs expired related to the 2018 tax year. An additional portion of those NOL carryforwards will expire each year, if unused, between 2026 and 2032.

As of December 31, 2025 and 2024 we had a total valuation allowance of $191.2 million and $188.0 million, respectively. The following table summarizes the activity related to our valuation allowances for the years ended December 31, 2025, 2024, and 2023 (in thousands):

	Year Ended December 31,
	2025		2024		2023
Beginning balance	$	187,969	$	161,966	$	132,581
Charged to expense	(437)		27,605		27,267
Foreign currency translation adjustments	3,666		(1,602)		2,118
Deductions from reserve	—		—		—
Ending balance	$	191,198	$	187,969	$	161,966

As of December 31, 2025, we continued to maintain a full valuation allowance against U.S. deferred tax assets based on our cumulative operating results as of December 31, 2025, three-year cumulative loss, and an assessment of our expected future results of operations. We have evaluated all evidence, both positive and negative, in assessing the likelihood of realizability, and we determined the negative evidence outweighed the positive evidence.

As of December 31, 2025, we have a valuation allowance of $22.6 million against foreign deferred tax assets at our subsidiary in Switzerland. Based on our cumulative operating results as of December 31, 2025 and an assessment of expected future results of operations, we determined it was not more likely than not we would be able to realize the deferred tax assets prior to expiration.

We plan to distribute previously undistributed earnings of our foreign subsidiaries back to the United States in future years. Upon repatriation of those earnings, if any, we may be subject to taxes, including withholding taxes, net of any applicable foreign tax credits. Determination of the amount of unrecognized deferred U.S. income tax liability is not practicable.

For the years ended December 31, 2025, 2024, and 2023, cash paid, net of refunds received, consisted of the following:

	Year Ended December 31,
	2025		2024		2023
Federal	$	—	$	—	$	—
Aggregated state and local jurisdictions(1)	162		115		154
Disaggregated foreign jurisdictions:
Australia	829		298		664
Canada	389		84		447
India	524		766		212
Italy	684		359		586
Mexico	31		204		162
Netherlands	41		237		162
Spain	670		263		567
United Kingdom	1,666		798		835
Other(1)	124		210		210
Net cash paid for income taxes	5,120		3,334		3,999

[1] No jurisdictions are individually above the threshold of 5% of total income taxes paid, net of refunds received, for the periods presented.

As of December 31, 2025 and 2024, we had unrecognized tax benefits of $8.8 million and $7.8 million, respectively, none of which would affect our effective tax rate if recognized due to the valuation allowance. The following table summarizes the activity related to our unrecognized tax benefit from December 31, 2022 to December 31, 2025 (in thousands):

Balance as of December 31, 2022	$	4,488
Additions for tax positions in current years	1,740
Additions for tax positions in prior years	256
Reductions due to lapse in statutes of limitations	—
Settlements	—
Balance as of December 31, 2023	6,484
Additions for tax positions in current years	1,374
Reductions for tax positions in prior years	(18)
Reductions due to lapse in statutes of limitations	—
Settlements	—
Balance as of December 31, 2024	7,840
Additions for tax positions in current years	1,001
Additions for tax positions in prior years	7
Reductions due to lapse in statutes of limitations	—
Settlements	—
Balance as of December 31, 2025	$	8,848

We recognize interest and penalties related to uncertain tax positions in income tax expense. Our uncertain tax positions primarily relate to U.S. federal research and development tax credits. During the years ended December 31, 2025, 2024, and 2023, we recognized nominal amounts in interest. The cumulative balances of interest and penalties as of December 31, 2025 and 2024 were immaterial.

We file income tax returns in the U.S. federal jurisdiction and in various state and foreign jurisdictions. Due to NOL carryforwards, tax years 2016 through 2025 remain open to examination by the major taxing jurisdictions to which we are subject. There are no open examinations that would have a meaningful impact to our consolidated financial statements.

On July 4, 2025, the One Big Beautiful Bill Act (the “OBBBA”) was enacted, which extends most expiring TCJA provisions and reforms certain international tax rules. The application of the OBBBA to the Company did not have a material impact on its financial statements during the year ended December 31, 2025.