Annual report [Section 13 and 15(d), not S-K Item 405]

Income Taxes

v3.25.4
Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The components of loss before taxes are as follows (in thousands):
Year Ended December 31,
2025 2024 2023
United States $ (910,122) $ (597,424) $ (506,243)
International (18,413) (10,481) (6,668)
Loss before income taxes $ (928,535) $ (607,905) $ (512,911)
The provision for income taxes is as follows (in thousands):
Year Ended December 31,
2025 2024 2023
Current
Federal $ —  $ —  $ — 
State —  14  6 
Foreign 1,307  115  133 
Total current provision $ 1,307  $ 129  $ 139 
Deferred
Federal —  —  — 
State —  —  — 
Total deferred benefit —  —  — 
Total provision (benefit) $ 1,307  $ 129  $ 139 
A reconciliation of the provision for income taxes to the amount computed by applying the 21% statutory U.S. federal income tax rate to income before income taxes after the adoption of ASU 2023-09 is as follows:
Year Ended December 31,
2025
(in thousands)
 %
Tax at U.S. Statutory Rate $ (194,992) 21.0  %
State and Local Income Taxes (2) —  %
Foreign Tax Effects
  Effect of Foreign Operations 4,096  (0.4) %
Tax Credits
  Research and development tax credits (31,180) 3.4  %
Changes in Valuation Allowances 177,069  (19.2) %
Nontaxable and Nondeductible items
  Share-based compensation, net (1)
(11,839) 1.3  %
  Other Adjustments 12,499  (1.3) %
  Change in Fair Value of Derivative 44,488  (4.8) %
Changes in Unrecognized Tax Benefits 1,168  (0.1) %
Effective Tax Rate $ 1,307  (0.1) %
(1) Includes amounts related to non-deductible stock-based compensation, including non-deductible executive compensation, in addition to excess tax benefits or shortfalls from stock-based compensation. Our tax provision includes $13 million of excess tax benefits for 2025.
A reconciliation of the provision for income taxes to the amount computed by applying the 21% statutory U.S. federal income tax rate to income before income taxes for years prior to the adoption of ASU 2023-09 is as follows:
Year Ended December 31,
2024 2023
% %
Tax at federal statutory rate (21.0) % (21.0) %
State taxes, net of federal benefit —  % (1.6) %
Permanent differences 3.5  % 16.8  %
Change in valuation allowance 22.4  % 9.0  %
Tax credits (4.9) % (3.2) %
Effective income tax rate 0.0  % 0.0  %
Significant components of the Company’s net deferred tax assets (in thousands):
December 31,
2025 2024 2023
Deferred tax assets:
Net operating loss carryforwards $ 403,606  $ 190,451  $ 138,735 
Research and development credits 165,103  115,651  55,492 
Accruals and reserves —  567  2,479 
Property and equipment 3,277  2,892  3,110 
Stock-based compensation 14,075  6,094  16,396 
Goodwill 3,921  2,965  4,311 
Intangibles 207  2,769  2,234 
    Lease Liability 642  515  664 
    Capitalized R&D 160,300  173,217  88,985 
    Other 12  —  — 
Total deferred tax assets 751,143  495,121  312,406 
Valuation allowance (736,003) (481,760) (295,740)
Net deferred tax assets $ 15,140  $ 13,361  $ 16,666 
Deferred tax liabilities
Contractual agreement (15,479) (13,361) (16,666)
Total deferred tax liabilities (15,479) (13,361) (16,666)
Net deferred tax assets $ (339) $ —  $ — 
The following shows the changes in the gross amount of unrecognized tax benefits as follows (in thousands):
Year Ended December 31,
2025 2024 2023
Unrecognized tax benefits, beginning of the year $ 42,045  $ 20,241  $ 14,571 
Increases related to prior year tax positions 563  6,925  684 
Decreases related to prior year tax positions —  —  (1,037)
Increases related to current year tax positions 16,335  14,879  6,023 
Unrecognized tax benefits, end of year $ 58,943  $ 42,045  $ 20,241 
The Company has adopted the accounting policy that interest and penalties recognized are classified as part of its income taxes. As of December 31, 2025 and 2024 , the Company has accrued $0.4 million and $0.0 million interest and penalties, respectively. As of each of December 31, 2025 and 2024, the Company has unrecognized tax benefits that, if recognized, would impact its effective tax rate by $0.8 million and $0.0 million, respectively.
In assessing the realizability of deferred income tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Due to the uncertainty of the business in which the Company operates, projections of future profitability are difficult and past operating results are not necessarily indicative of future profitability. Management does not believe it is more likely than not that the deferred income tax assets will be realized; accordingly, a full valuation allowance has been established on net deferred income tax assets. The valuation allowance increased by $254.2 million during the year ended December 31, 2025, and by $186.0 million during the year ended December 31, 2024.
As of December 31, 2025, the Company had federal net operating loss carryforwards (“NOLs”) of $1,662.0 million, of which approximately $15.8 million will begin to expire in 2036 and the remainder do not expire. As of December 31, 2024, the Company had federal net operating loss carryforwards (“NOLs”) of $817.6 million of which approximately $1.3 million will begin to expire in 2036 and the remainder do not expire. As of December 31, 2025 and 2024, the Company had state NOLs of $601.0 million and $156.2 million, respectively, that will begin to expire in 2032. In addition, the Company had foreign NOLs of $58.4 million and $28.0 million as of December 31, 2025 and 2024, respectively.
At December 31, 2025, the Company had federal research and development credits of $105.1 million and California research and development credits of $60.0 million. The federal credits will expire beginning 2036, while California credits have no expiration. At December 31, 2024, the Company had federal research and development credits of $101.6 million and California research and development credits of $66.6 million. The federal credits will expire beginning 2036, while California credits have no expiration.
The realizability of the deferred tax assets is primarily dependent on our ability to generate sufficient taxable income in future periods. The need for a valuation allowance requires an assessment of both positive and negative evidence when determining whether it is more-likely-than-not that deferred tax assets are recoverable. Such assessment is required on a jurisdiction-by-jurisdiction basis. In making such assessment, significant weight is given to evidence that can be objectively verified. Based on cumulative taxable income, projections for future taxable income, and the timing of reversal of deferred tax liabilities, the Company has recorded a valuation allowance against certain deferred tax assets.