v3.25.4
Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes
15. Income Taxes
For the years ended December 31, 2025, 2024, and 2023, the geographical breakdown of our income (loss) before income taxes is as follows:
Year ended December 31,
202520242023
(in thousands)
Domestic income (loss)$514,826 $(493,371)$(92,627)
Foreign income (loss)13,864 8,164 5,604 
Income (loss) before income taxes$528,690 $(485,207)$(87,023)
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law. The OBBBA makes changes to U.S. federal income tax law, including repealing the requirement to capitalize domestic research and experimental expenditures
under the 2017 Tax Cuts and Jobs Act, and allowing for immediate expensing of these costs. Our income tax provision for the year ended December 31, 2025 reflects these changes and resulted in additional taxable losses.
For the years ended December 31, 2025, 2024, and 2023, income tax expense (benefit) consisted of the following:
Year ended December 31,
202520242023
(in thousands)
Current income tax expense (benefit):
Federal$— $(141)$1,290 
State889 474 1,133 
Foreign2,707 851 1,468 
Total current income tax expense (benefit)3,596 1,184 3,891 
Deferred income tax expense (benefit):
Federal— (237)— 
Foreign(4,627)(1,878)(90)
Total deferred income tax expense (benefit)(4,627)(2,115)(90)
Total income tax expense (benefit):
Federal
— (378)1,290 
State
889 474 1,133 
Foreign
(1,920)(1,027)1,378 
Total income tax expense (benefit)$(1,031)$(931)$3,801 
For the year ended December 31, 2025, following the adoption of ASU 2023-09, our tax provision and effective tax rate differed from the statutory federal rate as follows:
Year ended December 31, 2025
Amount
Percent
(in thousands, except percentages)
Provision for income taxes at statutory federal income tax rate$111,025 21.0 %
State income taxes, net of federal income tax effect(1)
955 0.2 
Foreign tax effects:
United Kingdom:
Stock-based compensation(5,851)(1.1)
Other(698)(0.1)
Other foreign jurisdictions70 — 
Tax credits:
Research and development credits(57,630)(10.9)
Change in valuation allowance172,418 32.6 
Non-taxable or non-deductible items:
Stock-based compensation(285,955)(54.1)
Non-deductible compensation69,402 13.1 
Other non-taxable or non-deductible items1,299 0.3 
Other reconciling items:
Return to provision true-ups(6,317)(1.2)
Other251 — 
Total tax provision and effective tax rate$(1,031)(0.2)%
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(1)State taxes in California made up the majority (greater than 50%) of the tax effect in this category.
For the years ended December 31, 2024 and 2023, prior to the adoption of ASU 2023-09, our effective tax rate, as a percentage of pre-tax income (loss), differed from the statutory federal rate as follows:
Year ended December 31,
20242023
Statutory federal income tax rate21.0 %21.0 %
State income taxes, net of federal benefit5.3 1.2 
Non-deductible compensation
(14.0)— 
Stock-based compensation44.4 3.9 
Research and development credits14.6 13.5 
Change in valuation allowance(71.0)(41.1)
Other(0.2)(2.9)
Effective tax rate0.1 %(4.4)%
Deferred income taxes reflect the net tax effect of temporary differences between amounts recorded for financial reporting purposes and the amounts used for tax purposes. The major components of deferred tax assets and liabilities were as follows:
December 31,
2025		December 31,
2024
(in thousands)
Deferred tax assets:
Net operating loss carryforwards$404,212 $149,735 
Stock-based compensation16,920 28,586 
Lease liability5,634 6,206 
Capitalized research and development costs156,429 268,232 
Research and development credits199,017 124,116 
Other12,103 13,351 
Gross deferred tax assets794,315 590,226 
Valuation allowance(779,030)(572,894)
Total deferred tax assets, net of valuation allowance15,285 17,332 
Deferred tax liabilities:
Right-of-use asset(4,941)(5,436)
Acquired intangibles(3,556)(9,727)
Total deferred tax liabilities(8,497)(15,163)
Net deferred tax assets (liabilities)$6,788 $2,169 
As of December 31, 2025, we had $1.7 billion and $806.1 million, respectively, of gross federal and state net operating loss carryforwards available to reduce future taxable income. The federal net operating loss carryforwards are able to be carried forward indefinitely but are limited to 80% of taxable income. The state carryforwards will begin to expire in 2026.
As of December 31, 2025, we had federal research and development credit carryforwards of $201.0 million that will begin to expire in 2039 and state research and development credit carryforwards of $78.3 million that do not expire.
Utilization of the net operating loss and tax credit carryforwards may be subject to a substantial annual limitation due to the ownership change limitations provided by Section 382 of the Code and similar state tax regulations. Under Section 382 of the Code, substantial changes in our ownership and in the ownership of acquired companies may limit the amount of net operating loss and tax credit carryforwards that are available to offset taxable income. The annual limitation may result in the expiration of net operating losses and tax credits before utilization. Accordingly, our ability to utilize these carryforwards may be limited as a result of such ownership change.
We assessed the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use our existing federal and state deferred tax assets. Based on the weight of the available evidence, including our history of losses, we provided a full valuation allowance against our federal and state deferred tax assets as of December 31, 2025. The
amount of the deferred tax asset considered realizable could be adjusted in future periods if objective negative evidence in the form of cumulative losses is no longer present and additional weight may be given to subjective evidence such as our projections for growth.
Given our recent history of generating net income in the United States, we believe that there is a reasonable possibility that sufficient positive evidence may become available within the next 18 months to allow us to release a significant portion of the federal valuation allowance. The reversal would result in a significant income tax benefit in the period when we release it. However, the exact timing and amount of the valuation allowance release are subject to change based on our actual operating results.
We intend to reinvest unremitted foreign earnings indefinitely and do not expect to incur any significant taxes related to such amounts.
Uncertain Tax Positions
The following table summarizes the activity related to our gross unrecognized tax benefits during the years ended December 31, 2025, 2024, and 2023:
Year ended December 31,
202520242023
(in thousands)
Beginning balance of unrecognized tax benefits$43,861 $19,236 $16,428 
Increases/(decreases) related to prior year tax positions 7,434 1,444 (1,750)
Increases/(decreases) related to current year tax positions 19,115 23,181 4,558 
Ending balance of unrecognized tax benefits$70,410 $43,861 $19,236 
Substantially all of the unrecognized tax benefits were recorded as reductions in our gross deferred tax assets, offset by a corresponding reduction in our valuation allowance. The unrecognized tax benefits, if recognized, would not materially affect the effective tax rate due to the full valuation allowance recorded against our federal and state deferred tax assets.
Our policy is to recognize interest and penalties associated with unrecognized tax benefits as income tax expense. During the year ended December 31, 2025, we had no interest expense or penalties related to uncertain tax positions. As of December 31, 2025, we had no accrued balances of interest and penalties related to uncertain tax positions.
Due to our net operating loss carryforwards, we are subject to examination by taxing authorities in the United States for all tax years. In our foreign jurisdictions, we are subject to examination for tax years ending on or after December 31, 2019.