What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2026-02-20 compared with 2025-02-21 · 94 added, 77 removed, 1003 unchanged (15% of the section changed)

9 unchanged sentences

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders

Board of Directors and Shareholders

Opinion on the financial statements

3 unchanged sentences

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated February 20, 2026 expressed an unqualified opinion.

Change in accounting principle

As discussed in Note 1 to the consolidated financial statements, the Company has adopted new accounting guidance in 2024 related to the disclosure of segment information in accordance with Accounting Standards Update ("ASU") 2023-07, Segment Reporting (Topic 280) .

The adoption was retrospectively applied to 2023 and 2022.

Basis for opinion

18 unchanged sentences

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders

Board of Directors and Shareholders

Opinion on internal control over financial reporting

26 unchanged sentences

Cash and cash equivalents $ 250,258 $ 232,182

Restricted cash — 1,500

Short-term marketable securities 195,681 149,241

70 unchanged sentences

Other comprehensive income (loss), net of tax

Net change in unrealized gains (losses) on available-for-sale debt securities, net of tax 283 2,813 ( 2,520 )

Net change in unrealized gains on available-for-sale debt securities, net of tax 599 283 2,813

Net change in unrealized gains (losses) on cash flow hedges, net of tax ( 6,028 ) 2,838 ( 2,570 )

11 unchanged sentences

Provision for credit losses 1,226 764 547

Loss on disposal of property and equipment — — 6

Loss on non-marketable securities — — 533

Stock-based compensation, net of amounts capitalized 76,966 77,133 69,079

Amortization (accretion) of premiums (discount) on marketable securities, net ( 6,735 ) ( 5,712 ) 833

Accretion of discount on marketable securities, net ( 3,440 ) ( 6,735 ) ( 5,712 )

Deferred income taxes 8,412 ( 19,465 ) ( 16,636 )

10 unchanged sentences

Purchases of property and equipment ( 4,990 ) ( 12,334 ) ( 8,786 )

Purchases of intangible assets — — ( 8,620 )

Net cash provided by (used in) investing activities ( 71,427 ) ( 73,166 ) 145,068

Net cash used in investing activities ( 105,924 ) ( 71,427 ) ( 73,166 )

Cash flow from financing activities:

11 unchanged sentences

Non-cash investing and financing activities

Purchases of intangible assets recorded in accrued liabilities and other noncurrent liabilities $ — $ — $ 2,110

Purchases of property and equipment recorded in accounts payable and accrued liabilities $ 540 $ 843 $ 144

12 unchanged sentences

Net income — — — — 151,595 151,595

Other comprehensive loss, net of tax — — — ( 2,954 ) — ( 2,954 )

Other comprehensive income, net of tax — — — 243 — 243

Issuance of common stock upon exercise of stock options 582 1 45,575 — — 45,576

15 unchanged sentences

Net income — — — — 198,320 198,320

Other comprehensive income, net of tax — — — 3,121 — 3,121

Other comprehensive loss, net of tax — — — ( 5,429 ) — ( 5,429 )

Issuance of common stock upon exercise of stock options 279 — 16,294 — — 16,294

40 unchanged sentences

The Company classifies its marketable securities as either short-term or long-term based on each instrument's underlying remaining contractual maturity date.

As of December 31, 2024 and 2023, the Company had a restricted cash balance of $ 1.2 million and $ 2.7 million, respectively, of which $ 1.2 million in the form of a letter of credit issued to the landlord of the Company's California headquarter office lease as security deposit and $ 1.5 million was related to cash held in escrow as part of the Blue Hexagon acquisition.

As of December 31, 2025 and 2024, the Company had a restricted cash balance of $ 1.2 million in the form of a letter of credit issued to the landlord of the Company's California headquarter office lease as security deposit.

Cash equivalents are stated at cost, which approximates fair market value.

32 unchanged sentences

The Company leases certain offices, computer equipment and its shared cloud platform facilities under finance leases and non-cancelable operating leases.

For both operating and finance leases, the Company recognizes a right-of-use asset, which

represents the Company's right to use the underlying asset for the lease term, and a lease liability, which represents the present value of the Company's obligation to make payments arising over the lease term.

For both operating and finance leases, the Company recognizes a right-of-use asset, which represents the Company's right to use the underlying asset for the lease term, and a lease liability, which represents the present

value of the Company's obligation to make payments arising over the lease term.

Many of the Company's leases include rental escalation clauses, renewal options and/or termination options that are factored into the Company's determination of lease payments and lease terms when appropriate.

26 unchanged sentences

Management evaluates the useful lives of these assets on an annual basis and tests for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets.

As of December 31, 2024 and 2023 , unamortized balances related to the Company's internally developed software costs are immaterial.

As of December 31, 2025 and 2024 , unamortized balances related to the Company's internally developed software costs were immaterial for both years.

Costs related to cloud computing arrangements that are service contracts and the related implementation activities are accounted for consistent with internal-used software.

Qualifying implementation costs incurred in cloud computing arrangement incurred during the application development stage are capitalized and included in other noncurrent assets or prepaid expense and other current assets on the consolidated balance sheets, as appropriate.

When the component of the cloud computing arrangement is ready for its intended use, the capitalized costs are amortized on a straight-line basis over the term of the associated hosting arrangement and reported in the same expense category as the related hosting fees in the consolidated statement of operations.

As of December 31, 2025 and 2024, the unamortized balances related to the Company’s capitalized cloud computing implementation costs were $ 3.4 million and $ 1.2 million, respectively.

Asset Acquisitions and Business Combinations

The Company applies the provisions of ASC 805 Business Combinations , in accounting for its acquisitions.

To determine whether transactions should be accounted for as asset acquisition or business combination, the Company evaluates whether

substantially all of the fair value of gross assets included in a transaction is concentrated in a single asset (or a group of similar assets), resulting in an asset acquisition, if not, resulting in a business combination.

To determine whether transactions should be accounted for as asset acquisition or business combination, the Company evaluates whether substantially all of the fair value of gross assets included in a transaction is concentrated in a single asset (or a group of similar assets), resulting in an asset acquisition, if not, resulting in a business combination.

In an asset acquisition, the cost of acquiring the asset group, including transaction costs, is allocated to the acquired assets or assumed liabilities based on their relative fair values without giving rise to goodwill.

13 unchanged sentences

Stock-Based Compensation

The Company recognizes the fair value of its stock options, restricted stock units (“RSUs”) and stock purchase rights under the ESPP on a straight-line basis over the requisite service periods.

The Company recognizes the fair value of its stock options, restricted stock units (“RSUs”) and stock purchase rights under the employee stock purchase plan (“ESPP”) on a straight-line basis over the requisite service periods.

The fair value of each stock option or stock purchase right is estimated on the date of grant using the Black-Scholes-Merton option pricing model and the fair value of each RSU is based on the Company's common stock price on the date of grant.

44 unchanged sentences

The Company regularly reviews its deferred tax assets for recoverability and establishes a valuation allowance if it is more likely than not that some portion or all of the deferred tax assets will not be realized.

To make this assessment, the Company takes into account predictions of the

amount and category of taxable income from various sources and all available positive and negative evidence about these possible sources of taxable income.

To make this assessment, the Company takes into account predictions of the amount and category of taxable income from various sources and all available positive and negative evidence about these possible sources of taxable income.

The weight given to the potential effect of negative and positive evidence is commensurate with the extent to which the strength of the evidence can be objectively verified.

30 unchanged sentences

Recently Adopted Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board ("FASB") issued ASU 2023-07 - Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures , requiring enhanced segment disclosures.

The ASU requires disclosure of significant segment expenses regularly provided to the chief operating decision maker ("CODM") included within segment operating profit or loss.

Additionally, the ASU requires a description of how the CODM utilizes segment operating profit or loss to assess segment performance.

The requirements of the ASU are effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

The Company's annual reporting requirements will be effective for fiscal 2024 and interim reporting requirements will be effective beginning with the first quarter of fiscal 2025.

Retrospective application is required for all periods presented.

The Company adopted this ASU during fiscal year 2024.

See Note 13, "Segment and Geographic Area Information" for the additional required disclosures.

Recently Issued Accounting Pronouncements Not Yet Adopted

In December 2023, the FASB issued ASU 2023-09 - Income Taxes (Topic 740):

In December 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-09 - Income Taxes (Topic 740):

Improvements to Income Tax Disclosures , requiring improvements to income tax disclosures.

The new ASU requires disclosure of disaggregated information about the effective tax rate and income taxes paid.

The requirements of the ASU are effective for annual periods beginning after December 15, 2024 and are to be applied on a prospective basis.

ASU 2023-09 should be applied prospectively, although retrospective application is permitted.

The requirements of the ASU are effective for annual periods beginning after December 15, 2024, with early adoption permitted.

The Company's annual reporting requirements will be effective for fiscal year 2025.

Companies can choose to early adopt and apply the guidance retrospectively.

The Company is in the process of analyzing the impact of the ASU on related disclosures.

The Company adopted this ASU during fiscal year 2025 on a prospective basis.

See Note 11, "Income Taxes" for the additional required disclosures.

Recently Issued Accounting Pronouncements Not Yet Adopted

In November 2024, the FASB issued ASU 2024-03 - Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

4 unchanged sentences

The Company is in the process of analyzing the impact of the ASU on related disclosures.

In July 2025, the FASB issued ASU 2025-05, Financial Instruments-Credit Losses (Topic 326):

Measurement of Credit Losses for Accounts Receivable and Contract Assets , which amends ASC 326-20 to provide a practical expedient (for all entities) and an accounting policy election (for all entities, other than public business entities that elect the practical expedient) related to the estimation of expected credit losses for current accounts receivable and current contract assets that arise from transactions accounted for under ASC 606.

The standard should be applied prospectively, and is effective for annual periods, including interim reporting periods, beginning after December 15, 2025, with early adoption permitted.

The Company's interim and annual reporting requirements will be effective for the Company beginning in the first quarter of fiscal year 2026.

The Company does not expect the adoption of guidance to have a material impact on its consolidated financial statements and related disclosures.

In September 2025, the FASB issued ASU 2025-06 - Intangibles—Goodwill and Other Internal-Use Software (Subtopic 350-40):

Targeted Improvements to the Accounting for Internal-Use Software , which simplifies the capitalization guidance by removing references to software development project stage so that the guidance is neutral to different software development methods.

The requirements of the ASU are effective for annual periods beginning after December 15, 2027, and interim reporting

periods within those annual reporting periods and are to be applied on a prospective, modified retrospective or retrospective basis, with early adoption permitted.

The Company's interim and annual reporting requirements will be effective for the Company beginning in the first quarter of fiscal year 2028.

The Company is in the process of analyzing the impact of the ASU on its consolidated financial statements.

The Company does not believe any other new accounting pronouncements issued by the FASB that have not become effective will have a material impact on its consolidated financial statements.

9 unchanged sentences

The Company's financial instruments consist of assets and liabilities measured using Level 1 and 2 inputs.

Level 1 assets include a highly liquid money market fund, which is valued using unadjusted quoted prices that are available in an active market

for an identical asset.

Level 1 assets include a highly liquid money market fund, which is valued using unadjusted quoted prices that are available in an active market for an identical asset.

Level 2 assets include fixed-income U.S.

7 unchanged sentences

Money market funds $ 205 $ — $ 205

Commercial paper — 6,443 6,443

Treasury and government agencies — 330,163 330,163

25 unchanged sentences

Money market funds $ 205 $ — $ — $ 205

Commercial paper 1,983 — — 1,983

Treasury and government agencies 31,952 3 — 31,955

1 unchanged sentence

Short-term marketable securities:

Commercial paper 4,459 3 ( 2 ) 4,460

Corporate bonds 59,531 273 — 59,804

13 unchanged sentences

Money market funds $ 404 $ — $ — $ 404

Commercial paper 1,983 — — 1,983

Treasury and government agencies 33,939 4 — 33,943

17 unchanged sentences

(in thousands)

Commercial paper $ 4,464 $ ( 2 ) $ — $ — $ 4,464 $ ( 2 )

Corporate bonds $ 10,735 $ ( 12 ) $ 1,791 $ — $ 12,526 $ ( 12 )

6 unchanged sentences

Commercial paper $ 4,464 $ ( 2 ) $ — $ — $ 4,464 $ ( 2 )

Asset-backed securities — — 1,485 ( 6 ) 1,485 ( 6 )

Corporate bonds 27,154 ( 171 ) 672 ( 3 ) 27,826 ( 174 )

2 unchanged sentences

The Company considered the extent to which any unrealized losses on its marketable securities were driven by credit risk and other factors, including market risk, and if it is more-likely-than-not that the Company would have to sell the security before the recovery of the amortized cost basis.

At December 31, 2024 and 2023, the unrealized losses related to its marketable securities were due to rising market interest rates compared to when the investments were initiated.

At December 31, 2025 and 2024, the unrealized losses related to its marketable securities were due to market factors other than credit.

The Company does not believe the unrealized losses represent credit risk, and the Company does not intend to sell any of the securities in an unrealized loss position and it is not likely that the Company would be required to sell these securities before recovery of their amortized cost basis, which may be at maturity.

5 unchanged sentences

Due within One Year $ 227,338 $ 227,841

Due after One Year through Five 186,247 186,367

Due after One Year through Five Years 248,860 249,628

Asset-backed securities 1,227 1,240

9 unchanged sentences

4,381.0 million.

As of December 31, 2024 , the amount of net unrealized gains of $ 1.6 million before tax on the foreign currency forward contracts for GBP and EUR reported in AOCI is expected to be reclassified into revenue within the next 12 months.

As of December 31, 2025 , the amount of net unrealized loss of $ 4.3 million before tax on the foreign currency forward contracts for GBP and EUR reported in AOCI is expected to be reclassified into revenue within the next 12 months.

As of December 31, 2025 , the amount of net unrealized loss of $ 1.6 million before tax on the foreign currency forward contracts for INR reported in AOCI is expected to be reclassified into operating expenses within the next 12 months.

19 unchanged sentences

The Company is not required to pledge nor is entitled to receive cash collateral related to the above contracts.

The counterparties to these derivatives are large, global financial

institutions that the Company believes are creditworthy, and therefore, it does not consider the risk of counterparty nonperformance to be material.

The counterparties to these derivatives are large, global financial institutions that the Company believes are creditworthy, and therefore, it does not consider the risk of counterparty nonperformance to be material.

The following summarizes the gains (losses) recognized from forward contracts and other foreign currency transactions in other income (expense), net in the consolidated statements of operations:

4 unchanged sentences

Other foreign currency transactions gains (losses) 3,895 ( 4,637 ) ( 499 )

Total foreign exchange gains (losses), net $ ( 3,192 ) $ ( 697 ) $ ( 1,771 )

Total foreign exchange losses, net $ ( 423 ) $ ( 3,192 ) $ ( 697 )

Accumulated Other Comprehensive Income (Loss)

80 unchanged sentences

During the same periods, there was no impairment loss related to the deferred costs to obtain contracts.

On October 4, 2022, the Company acquired certain assets of Blue Hexagon Inc., a privately held company incorporated in Delaware, for $ 10.0 million in cash, of which $ 8.5 million was paid on the acquisition date and the remaining $ 1.5 million was deferred and paid in March 2024.

In addition, the Company assumed $ 1.4 million deferred revenue.

Blue Hexagon's AI/ML-driven network detection enables the Company to leverage its cloud platform with AI/machine learning to uncover behavior patterns including active vulnerability exploitation, identification of advanced network threats, and adaptive risk mitigation across all assets and application.

The Company accounted for this transaction as an asset acquisition, as substantially all of the fair value is concentrated in developed technology acquired.

The Company incurred $ 0.6 million transaction costs which is included as the cost of acquiring the intangible assets.

The Company recognized intangible assets of $ 11.5 million for developed technology and $ 0.4 million for assembled workforce, which will be amortized over five years and two years , respectively.

On August 19, 2021, the Company acquired certain developed technology intangible assets of TotalCloud, a privately held company incorporated in India, for a total cash consideration of $ 1.2 million, of which $ 1.1 million was paid on the acquisition date and the remaining $ 0.1 million was deferred and paid in August 2022.

TotalCloud's technology strengthens the Company's cloud security solution by allowing customers to build user-defined workflows for custom policies and execute them on-demand for simplified security and compliance.

The acquired intangible assets will be amortized over five years .

There were no changes in the carrying amount of goodwill for the years ended December 31, 2024 and 2023.

Intangible Assets, Net

7 unchanged sentences

Developed technology 4.6 $ 40,141 $ ( 35,926 ) $ 4,215

Patent licenses 14.0 1,387 ( 1,387 ) —

Assembled workforce 2.0 359 ( 359 ) —

Total intangibles subject to amortization $ 40,141 $ ( 35,926 ) $ 4,215

6 unchanged sentences

Developed technology 4.6 $ 40,141 $ ( 33,369 ) $ 6,772

Patent licenses 14.0 1,387 ( 1,322 ) 65

Assembled workforce 2.0 359 ( 223 ) 136

Total intangibles subject to amortization $ 40,141 $ ( 33,369 ) 6,772

45 unchanged sentences

Significant judgment is required to determine both probability and the estimated amount.

reviews these provisions at least quarterly and adjust these provisions to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and updated information.

The Company reviews these provisions at least quarterly and adjust these provisions to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and updated information.

As of December 31, 2025, there has not been at least a reasonable possibility that the Company has incurred a material loss from any ongoing legal proceedings, individually or taken together.

14 unchanged sentences

Pursuant to the relevant plan provisions, 3,072 thousand shares were available for grant under the Restated 2012 Plan on the Effective Date.

In addition, any outstanding awards or options granted under the Previous 2012 Equity Incentive Plan will be added back to the shares available for grant under the Restated 2012 Plan if they expire unexercised or are otherwise forfeited after the Effective Date.

In addition, any outstanding awards or options granted under the Previous 2012 Plan will be added back to the shares available for grant under the Restated 2012 Plan if they expire unexercised or are otherwise forfeited after the Effective Date.

Any remaining shares of 9,689 thousand available for grant under the Previous 2012 Plan as of the Effective Date were no longer available for future grants under the Restated 2012 Plan.

On June 12, 2024, the Company's stockholders approved an amendment and restatement to the Restated 2012 Plan to increase the number of shares of the Company's common stock reserved for issuance by 1,092 thousand shares.

As of December 31, 2024, 2,326 thousand shares are available for future grants.

As of December 31, 2025, 1,681 thousand shares are available for future grants under the Restated 2012 Plan.

Options may be granted with an exercise price that is at least equal to the fair market value of the Company's stock at the date of grant and are exercisable when vested.

60 unchanged sentences

The aggregate fair value of RSUs vested for the years ended December 31, 2025, 2024 and 2023 was $ 45.5 million, $ 56.2 million and $ 55.7 million, respectively.

The aggregate fair value of PRSUs vested for the years ended December 31, 2025, 2024 and 2023 was $ 12.5 million, $ 10.7 million and $ 3.0 million, respectively.

The Company, at times, grants PRSU under the Plans, to its executive officers and certain other members of its senior leadership team.

These PRSUs include both service-based and performance-based vesting conditions.

During the fourth quarter each year, the Company’s board of directors (the “Board”) or the Compensation and Talent Committee (“CTC”) approves the target value for the PRSUs.

During the fourth quarter each year, the Company’s board of directors (the “Board”) or the Compensation and Talent Committee (“CTC”) approves the

target value for the PRSUs.

The target PRSUs are scheduled to vest in three equal annual installments over a three-year period, beginning the year after approval.

31 unchanged sentences

Total stock-based compensation, net of amounts capitalized (1) $ 76,966 $ 77,133 $ 69,079

(1) Total stock-based compensation expense capitalized was de minimis during the year ended December 31, 2024.

(1) Total stock-based compensation expense capitalized was de minimis during the years ended December 31, 2025, 2024 and 2023.

Of the total stock-based compensation expense in the table above, the Company recognized stock-based compensation expenses related to all PRSUs of $ 13.8 million, $ 12.4 million and $ 7.4 million for the years ended December 31, 2025 , 2024 and 2023, respectively.

The income tax benefit related to the stock-based compensation expenses was $ 11.8 million, $ 11.6 million and $ 11.0 million for the years ended December 31, 2025, 2024 and 2023, respectively.

The tax benefit realized from stock-based compensation vested or exercised was $ 5.2 million , $ 5.9 million , and $ 7.0 million for the years ended December 31, 2024, 2023 and 2022, respectively.

As of December 31, 2024 , the Company had unrecognized stock-based compensation expenses of $ 19.7 million, $ 94.1 million, $ 1.4 million, and $ 0.3 million related to options, RSUs, performance-based RSUs, and ESPP, respectively, which are expected to be recognized over weighted-average periods of 2.3 years, 2.9 years, 0.3 years, and 0.1 years, respectively.

The tax benefit realized from stock-based

compensation vested or exercised was $ 3.6 million , $ 5.2 million , and $ 5.9 million for the years ended December 31, 2025, 2024 and 2023, respectively.

As of December 31, 2025 , the Company had unrecognized stock-based compensation expenses of $ 15.4 million, $ 95.0 million, $ 3.0 million, and $ 0.3 million related to options, RSUs, PRSUs, and ESPP, respectively, which are expected to be recognized over weighted-average periods of 2.4 years, 2.9 years, 1.1 years, and 0.1 years, respectively.

Share Repurchase Program

11 unchanged sentences

February 7, 2024 200.0

February 6, 2025 200.0

Total as of December 31, 2025 $ 1,400.0

18 unchanged sentences

For the years ended December 31, 2025 , 2024 and 2023, the Company contributed $ 4.0 million, $ 3.2 million and $ 2.3 million, respectively, to those plans.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law.

The OBBBA permanently extends and modifies certain domestic and international provisions from the 2017 Tax Cuts and Jobs Act (“TCJA”) and phases out certain provisions from the 2022 Inflation Reduction Act.

Beginning in 2025, the OBBBA provides an elective deduction for domestic research and development expenses and a reinstatement of elective 100% first-year bonus depreciation.

Some international provisions of the OBBBA will not be effective until 2026 and forward.

The Company has recognized the effects of the OBBBA provisions in its financial results to the extent they are applicable to the year ended December 31, 2025.

The Company will continue to monitor the impact of the OBBBA and the range of potential outcomes, which will depend on facts in each year and anticipated guidance from the U.S.

Department of the Treasury.

The Company’s geographical breakdown of income before income taxes is as follows:

18 unchanged sentences

Income tax provision $ 48,508 $ 36,142 $ 27,056

The reconciliation of the statutory federal income tax rate to the Company’s effective tax rate is as follows:

During the year ended December 31, 2025, the Company adopted ASU 2023-09 to enhance the income taxes disclosures regarding income taxes paid and the rate reconciliation disclosure .

See Note 1, "The Company and Summary of Significant Accounting Policies - Recently Adopted Accounting Pronouncements" for additional details on the adoption of ASU 2023-09.

The income taxes paid by the Company are as follows:

Year Ended December 31,

2024 2023 2022

(in thousands)

Cash paid during the period for income taxes, net of refunds

federal $ 23,800

state and local 5,078

Foreign - India 5,133

Foreign - Other 6,875

Total cash paid during the period for income taxes $ 40,886

As previously disclosed for the years ended December 31, 2024 and 2023, prior to the adoption of ASU 2023-09 the cash paid for income taxes was $ 60.6 million and $ 34.9 million , respectively.

The effective income tax rate for the year ended December 31, 2025 differs from the statutory federal income tax rate as follows:

Year Ended December 31 2025

(in thousands, except percentages)

federal statutory tax rate $ 51,834 21.0 %

State income taxes, net of federal benefit (1) 4,911 2.0 %

Foreign tax effects 3,689 1.5 %

Effects of cross border tax effects

Foreign-derived intangible income ( 7,865 ) ( 3.2 %)

Research and development credits ( 2,308 ) ( 0.9 %)

Foreign tax credits ( 2,511 ) ( 1.0 %)

Change in valuation allowance 125 — %

Nontaxable or nondeductible items

Stock-based compensation 5,852 2.4 %

Excess tax benefits related to stock-based compensation ( 3,269 ) ( 1.3 %)

Other 498 0.2 %

Changes in unrecognized tax benefits ( 1,957 ) ( 0.8 %)

Other ( 503 ) ( 0.2 %)

Effective tax rate $ 48,508 19.7 %

(1) State taxes in New York City, New York, Illinois, New Jersey, and Pennsylvania made up the majority (greater than 50 percent) of the tax effect in this category.

As previously disclosed for the years ended December 31, 2024 and 2023, prior to the adoption of ASU 2023-09, the reconciliation of the statutory federal income tax rate to the Company’s effective tax rate is as follows:

Year Ended December 31,

Federal statutory rate 21.0 % 21.0 %

41 unchanged sentences

California research and development credits are carried forward indefinitely.

As of December 31, 2024 and 2023, the Company had foreign tax credit carryforwards of zero and $ 1.0 million, respectively.

As of December 31, 2025 and 2024, the Company had zero foreign tax credit carryforwards for both years.

The following table summarizes the activity related to the Company’s unrecognized tax benefits:

10 unchanged sentences

The remaining amount would result in the recognition of a corresponding deferred tax asset that is then offset by a full valuation allowance.

As of December 31, 2024 , the Company does not believe that its estimates, as otherwise provided for, on such tax positions will significantly increase within the next twelve months.

It is reasonably possible that the Company may recognize approximately $ 1.9 million of its unrecognized tax benefits within the next twelve months if the statutes lapse in certain jurisdictions without an examination.

The Company has elected to include interest and penalties as a component of income tax expense.

11 unchanged sentences

Segment and Geographic Area Information

Under ASC 280 Segment Reportin g, operating segments are defined as components of an entity about which separate financial information is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance.

Under ASC 280 Segment Reportin g, operating segments are defined as components of an entity about which separate financial information is evaluated regularly by the chief operating decision maker (“CODM”) in deciding how to allocate resources and in assessing performance.

The Company operates in one operating segment and has only one reportable segment.

62 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data