INCOME TAXES

9 Months Ended

Sep. 30, 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%. However, the Company has received an approval from the Israeli Tax authorities for Preferred Technological Enterprise (“PTE”) status and received approval on November 18, 2021. 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.  

Non-Israeli subsidiaries are taxed according to the tax laws in their respective countries of residence.

The Company’s effective tax rates for the three and nine months ended September 30, 2025 and 2024 are as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Income (loss) before income taxes	$	8,063	$	(85,755)	$	29,556	$	(180,581)
Income tax (benefit) expense	(15,210)		(11,524)		(12,772)		7,991
Effective tax rate	NM		NM		NM		NM

NM: Not Meaningful

The Company’s tax rate is affected by recurring items, such as tax rates in foreign jurisdictions and the relative amounts of income the Company earns in those jurisdictions. The difference between the effective tax rate and statutory tax rate in Israel mainly related to a change in valuation allowance, tax expenses in the United States, and a change in uncertain tax positions. The change in the effective tax rate was primarily due to accelerated deduction following the enactment of new tax law, with an additional decrease from reduction in uncertain tax positions.

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.

The Company provides a valuation allowance to offset certain deferred tax assets due to the uncertainty of realizing future tax benefits from its net operating loss carryforwards and other deferred tax assets.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBA”) was signed into law in the U.S. which contains a broad range of tax reform provisions affecting businesses. The impact of OBBA is reflected in these financial statements.

In 2025, the Company is currently subject to federal tax audits in Israel and the U.S. 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.