v3.25.4
Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The domestic and foreign components of pre-tax loss were as follows:
Year Ended December 31,
202520242023
(in thousands)
Domestic (1)
$(238,993)$(280,877)$(285,330)
Foreign (1)
(212,143)(391,349)(1,009,093)
Loss before income taxes$(451,136)$(672,226)$(1,294,423)
(1)Includes the impact of intercompany charges to foreign affiliates for financing, management fees, and research and development cost sharing, inclusive of stock-based compensation.
The components of our income tax (benefit) expense were as follows:
Year Ended December 31,
202520242023
(in thousands)
Current:
Federal$— $5,216 $— 
State4,631 6,811 8,585 
Foreign1,930 13,273 26,727 
Total current income tax expense (benefit)6,561 25,300 35,312 
Deferred:
Federal1,542 1,595 1,267 
State1,061 1,027 1,061 
Foreign189 (2,292)(9,578)
Total deferred income tax expense (benefit)2,792 330 (7,250)
Income tax expense (benefit)$9,353 $25,630 $28,062 
The following is a reconciliation of the U.S. statutory federal income tax rate to our effective tax rate. We adopted ASU 2023-09 prospectively for the fiscal year 2025. Prior period disclosures have not been retrospectively adjusted and may not be comparable to the current period presentation under the new standard.
Year Ended December 31,
2025
AmountPercent
(dollars in thousands)
U.S. federal statutory tax rate$(94,739)21.0 %
Total state and local income taxes (1)
2,506 (0.6)
Foreign tax effects
United Kingdom
Statutory tax rate difference between United Kingdom and United States(1,991)0.4 
Changes in valuation allowances(57,537)12.8 
Other(1,534)0.3 
Singapore
Statutory tax rate difference between Singapore and United States8,588 (1.9)
Changes in valuation allowances37,952 (8.4)
Other2,240 (0.5)
Other foreign jurisdictions2,305 (0.5)
Tax credits
Research and development tax credits(92,642)20.6 
Changes in valuation allowances110,612 (24.5)
Nontaxable or nondeductible items
Stock-based payment awards52,357 (11.6)
Other8,869 (2.0)
Changes in unrecognized tax benefits32,367 (7.2)
Total income tax expense (benefit)$9,353 (2.1)%
(1)State taxes in California contributed to the majority of the tax effect in this category.

The following is a reconciliation of the statutory federal income tax rate to our effective tax rate for the years ended December 31, 2024 and 2023:
Year Ended December 31,
20242023
Tax benefit (expense) computed at the federal statutory rate21.0 %21.0 %
State tax benefit (expense), net of federal benefit (1)
3.9 2.2 
Change in valuation allowance(31.0)(31.5)
Differences between U.S. and foreign tax rates on foreign income(0.3)3.3 
Stock-based compensation(6.4)(7.0)
U.S. federal research & development credit benefit11.0 8.6 
Acquisitions and divestitures(1.0)1.8 
Other benefits (expenses)(1.0)(0.6)
Total income tax benefit (expense)(3.8)%(2.2)%
(1)    Inclusive of state research and development credits.
As a result of our prospective adoption of ASU 2023-09 as of January 1, 2025, the following table presents income taxes paid, net of refunds, disaggregated by jurisdiction in accordance with the new disclosure requirement for the year ended December 31, 2025:
Year Ended
December 31, 2025
(in thousands)
U.S. federal$1,500 
U.S. states and local2,660 
Foreign
Canada1,395 
France5,437 
Germany6,191 
Israel2,950 
Netherlands1,453 
Other5,130 
Total foreign22,556 
Total income taxes paid$26,716 
The significant components of net deferred tax balances were as follows:
Year Ended December 31,
20252024
(in thousands)
Deferred tax assets:
Accruals and reserves$23,230 $16,413 
Intangible assets199,140 139,612 
IRC 174 capitalized R&D440,540 598,669 
Stock-based compensation23,686 58,171 
Loss carryforwards2,865,653 2,757,814 
Tax credit carryforwards1,169,703 1,060,486 
Operating lease liabilities
134,620 128,072 
Other97,987 67,958 
Total deferred tax assets4,954,559 4,827,195 
Deferred tax liabilities:
Operating lease right-of-use assets
(113,448)(112,907)
Unrealized gains in securities and investments
(13,544)(18,333)
Other(20,784)(18,445)
Total deferred tax liabilities(147,776)(149,685)
Total net deferred tax assets before valuation allowance4,806,783 4,677,510 
Valuation allowance(4,808,739)(4,677,088)
Net deferred taxes$(1,956)$422 
During the year ended December 31, 2025, we completed an intra-group transaction, which resulted in the recognition of U.S. deferred tax assets and the reversal of U.K. deferred tax assets. Both are subject to a full valuation allowance and, accordingly, the transaction did not result in a net income tax benefit or expense or a net impact to the consolidated balance sheet.
Income tax expense was $9.4 million for the year ended December 31, 2025, compared to $25.6 million for the same period in 2024. The decrease of $16.3 million was primarily attributable to a reduction in unrecognized tax benefits due to statute expirations and a reduction in U.S. federal and certain state tax liabilities due to the enactment of the One Big Beautiful Bill Act, which repealed the mandatory capitalization of domestic research and experimental expenditures for tax years beginning after December 31, 2024.
As of December 31, 2025, we had an immaterial amount of unremitted earnings related to certain foreign subsidiaries. We intend to continue to reinvest these foreign earnings indefinitely and do not expect to incur any significant taxes related to such amounts.
As of December 31, 2025, we had accumulated U.S. federal and state net operating loss carryforwards of $6.5 billion and $4.4 billion, respectively. Because they were generated after December 31, 2017, these U.S. federal net operating loss carryforwards can be carried forward indefinitely, but the ability to utilize such net operating loss carryforwards to offset taxable income in a tax year may not exceed 80% of the taxable income in such year. Certain significant state net operating loss carryforwards will begin to expire in 2031. As of December 31, 2025, we had $4.9 billion of U.K. net operating loss carryforwards that can be carried forward indefinitely; however, use of such carryforwards in a given year is generally limited to 50% of such year’s taxable income. As of December 31, 2025, we had accumulated $420.0 million of Singapore net operating loss carryforwards, which can be carried forward indefinitely and are not subject to any taxable income limitation. As of December 31, 2025, we had accumulated U.S. federal and state research tax credits of $1.0 billion and $574.8 million, respectively. The U.S. federal research tax credits will begin to expire in 2035. The U.S. state research tax credits do not expire.
We recognize valuation allowances on deferred tax assets if it is more likely than not that some or all of the deferred tax assets will not be realized. We had valuation allowances against net deferred tax assets of $4.8 billion and $4.7 billion as of December 31, 2025 and 2024, respectively. In 2025, the increase in the valuation allowance was primarily attributable to a net increase in our deferred tax assets resulting from the loss from operations.
Uncertain Tax Positions
The following table summarizes the activity related to our gross unrecognized tax benefits for the years ended December 31, 2025, 2024, and 2023:
Year Ended December 31,
202520242023
(in thousands)
Beginning balance of unrecognized tax benefits$562,808 $513,404 $510,669 
Additions for current year tax positions119,255 49,536 46,188 
Additions for prior year tax positions421 1,163 10,171 
Reductions for prior year tax positions(3,935)(622)(16,736)
Changes due to lapse of statute of limitations(10,855)(99)(31,786)
Reductions for settlements with taxing authorities— — (4,927)
Changes due to foreign currency translation adjustments1,858 (574)(175)
Ending balance of unrecognized tax benefits (excluding interest and penalties)669,552 562,808 513,404 
Interest and penalties associated with unrecognized tax benefits1,791 1,918 967 
Ending balance of unrecognized tax benefits (including interest and penalties)$671,343 $564,726 $514,371 
Substantially all of the unrecognized tax benefit was recorded as a reduction in our gross deferred tax assets, offset by a corresponding reduction in our valuation allowance. In addition, we record separate deferred tax assets related to potential competent authority relief under applicable income tax treaties, which are fully offset by a valuation allowance. We have net unrecognized tax benefits of $27.8 million and $35.8 million included in other liabilities on our consolidated balance sheet as of December 31, 2025 and 2024, respectively, which, if recognized, would result in a tax benefit.
Our policy is to recognize interest and penalties associated with tax matters as part of the income tax provision and include accrued interest and penalties with the related income tax liability on our consolidated balance sheets. For the year ended December 31, 2025, interest expense recorded related to uncertain tax positions was not material.
The income taxes we pay are subject to potential review by taxing jurisdictions globally. Our estimate of the potential outcome of any uncertain tax position is subject to management’s assessment of relevant risks, facts, and circumstances existing at that time. We believe that our estimate has adequately provided for these matters. However, our future results may include adjustments to estimates in the period the audits are resolved, which may impact our effective tax rate.
The material tax jurisdictions in which we are subject to potential examination include the United States for tax years ending on or after December 31, 2012, and the United Kingdom for tax years ending on or after December 31, 2020. We are currently under examination by the U.S. Internal Revenue Service for tax year 2022, U.K. tax authorities for tax years 2020 through 2023, and also in various other jurisdictions covering multiple tax years.