You should read the following discussion together with our audited consolidated financial statements and related notes included elsewhere in this Annual Report. The statements in this discussion regarding industry outlook, our expectations regarding our future performance, liquidity and capital resources and other non-historical statements are forward-looking statements. These forward- 70 looking statements are subject to numerous risks, uncertainties and assumptions, including, but not limited to, the risks and uncertainties described in “Special Note Regarding Forward-Looking Statements” and Item 3.D. “Key Information — Risk Factors.” Our actual results may differ materially from those contained in or implied by any forward-looking statements. Certain information called for by this Item 5, including a discussion of the year ended December 31, 2023 compared to the year ended December 31, 2024 has been reported previously under Item 5 “Operating and Financial Review and Prospects” in our Annual Report on Form 20-F for the fiscal year ended December 31, 2024, filed with the SEC on March 6, 2025. Company Overview Our mission is to empower businesses to unleash ecommerce growth by outsmarting risk. We have built a next-generation AI-powered ecommerce risk intelligence platform that allows online merchants to create trusted relationships with consumers. Leveraging machine learning that benefits from data from a global merchant network, our platform identifies the individual behind each online interaction, helping merchants—our customers—eliminate risk and uncertainty from their business. Our AI-powered fraud management and risk intelligence platform is designed to help our merchants maximize revenue and profit to allow them to provide superior online shopping experiences for consumers. We believe legacy ecommerce fraud platforms and rules-based, in-house solutions are frequently slow, inaccurate, expensive and inflexible. They can often produce the wrong decision—by rejecting good transactions or accepting fraudulent ones—which causes merchants to either lose revenue or incur unnecessary expenses in the form of chargebacks and other fees. We believe these slow manual processes produce poor online shopping experiences that lead to abandoned shopping carts. Additionally, this outdated infrastructure may prevent merchants from adapting to fast-changing consumer preferences and fraud techniques, including the nascent adoption of Agentic Commerce. Our AI-powered ecommerce risk intelligence platform is built to solve these problems with proprietary machine learning models that drive an automated decisioning engine. We have designed our platform to be fast, accurate, scalable, and cost-effective. Our platform supports our core Chargeback Guarantee product—which optimizes merchant approval rates—as well as our other products that mitigate similar and adjacent ecommerce risks for those same merchants, including Policy Protect, Dispute Resolve and Account Secure. All of our products are designed to enable merchants to generate additional revenue or cost savings, while improving the online shopping experience for consumers. See Item 4.B. “Business Overview” for further information on our products. Business Model Fundamentally, our business model aligns our interests with those of our merchants—we win when our merchants win. We charge merchants using our Chargeback Guarantee product a percentage of every dollar of GMV that we approve on their behalf, so we are incentivized to approve as many orders as we safely can. We believe that this merchant-centric approach, coupled with our rigorous decisioning process, maximizes our financial results and those of our merchants. The fee we charge our merchants for Chargeback Guarantee, is a risk-adjusted price, which is expressed as a percentage of the GMV that we approve. This fee, which is established at contract inception, varies by merchant based on a variety of inputs, including the type of merchant, the order population, submission rates, historical fraud levels, the risk level of the end market (including industry and geographic region), and the guaranteed approval rates we agree to provide. When our merchants ask us to review transactions from end markets that carry higher risk, we may charge higher fees to help offset the increased likelihood of receiving a chargeback. In some instances, we may charge a merchant a fixed fee per transaction for fraud and risk intelligence services that do not carry the same liability shift offered with our Chargeback Guarantee product. We may charge merchants for products, other than 71 our Chargeback Guarantee product, based on alternative pricing models, such as a subscription fee or a fee per transaction. If an approved transaction that we have guaranteed results in an eligible chargeback, we will reimburse the merchant for the amount of the lost sale. In this situation, we record a chargeback expense in cost of revenue. Reimbursements are typically provided to the merchant in the form of credits on future invoices. We have established processes that are designed to help us manage our overall chargeback exposure and control realized chargeback expenses within predetermined parameters. We do this primarily by controlling the transactions we approve and assessing the cost-benefit of our approvals. Our models are trained on a large and diverse population of historical transactions accumulated since our founding. Combined with the short-term duration of our chargeback portfolio, the dynamic feedback loops in our business model ensure our training sets are constantly updated, thereby increasing the accuracy of our AI-powered ecommerce risk intelligence platform. We supplement our models with offline tools that are designed to quickly detect different types of anomalies and gaps in our models. We also adjust our approval rates in real time as we detect riskier order populations. Finally, our chargeback expenses typically become less volatile over time as we scale. As of December 31, 2025, our portfolio of potential chargeback liabilities was diversified across a wide variety of industries, hundreds of merchants and millions of individual transactions. Using our proprietary AI-powered ecommerce risk intelligence platform, data assets, and scaled merchant network, we are able to control the chargeback expenses we incur, as evidenced by our ability to maintain our annual CTB Ratio between 40% and 42% for the past three years. We use the annual CTB Ratio to evaluate the performance of our business operations and the effectiveness of our models. We believe that CTB Ratio is best analyzed on an annualized basis, rather than quarterly, as individual quarters may fluctuate due to a number of factors, including changes in the mix of our merchant industry and geographic base, the risk profile of orders approved in the period, and technological improvements in the performance of our models. Factors Affecting Our Performance We believe that our future performance is broadly correlated with global ecommerce trends and will depend on many factors, including the following: •Chargeback liability shift rules and regulations and adoption of alternative payment methods: Our revenues are primarily derived from ecommerce merchants that bear the liability for fraud-related chargebacks. The adoption, implementation or evolution of laws and regulations, including card scheme rules has or may in the future result in the shift of liability for certain categories of transactions away from merchants and on to other participants in the payments chain. Further, alternative ecommerce payment methods (“APM”) such as “buy now pay later”, cryptocurrencies or “digital wallet” style products such as Apple Pay, Google Pay, and PayPal may be less susceptible to fraud than traditional payment methods. These APMs may include native fraud management features, sit outside of the broader chargebacks regime or allow liability for online transactions to be shifted away from merchants. The evolution of chargeback liability shift laws and regulations, including card scheme rules, and the emergence of APMs may alter our customer base or the demand for our products, or the GMV available for us to review. •Technology leadership and product development: We intend to continue to invest in enhancing our AI-powered ecommerce risk intelligence platform by developing new products, features, and functionality to maintain our technology leadership. Our ability to innovate is a byproduct of our exceptionally deep technology integrations across a variety of merchant systems. The depth of our integrations allows us to collect and analyze complex transaction data and behavior patterns across our merchant network. We use this data to continuously train our machine learning models as well as to develop new products that solve new and different merchant challenges. If revenue contribution from 72 products with take rates and margin profiles that differ from Chargeback Guarantee increases, our revenue growth rates and gross margin profile may change. Similarly, ongoing refinements or changes to our pricing and product bundling strategies and practices, including in response to competitive pressures and trends, may result in changes to our financial performance in the future. •GMV Growth: Our effectiveness in retaining and expanding our existing merchant base, as measured by Net Dollar Retention, is a critical component of our ability to drive growth. Our Net Dollar Retention rate for 2025 was 105%. Acquisition of new merchants in new and diverse industries and geographies is also an important component of our growth as we strive to reduce our dependence on the performance of select merchants, industries and geographies. Our GMV, as compared to global ecommerce GMV calculated by eMarketer, accounted for approximately 2.5% of global ecommerce GMV for the year ended December 31, 2025, leaving significant room for our merchant network to continue to grow. •Foreign Currency: We are exposed to foreign currency exchange risk that we expect will have an unfavorable impact on our results of operations, particularly on our expenses. A significant portion of our operating expenses are denominated in New Israeli Shekel (“NIS”), while a significant portion of our revenues are denominated in United States Dollars (“USD”). From the beginning of 2025 through the beginning of 2026, the USD has depreciated approximately 15% against the NIS. We seek to mitigate the impacts of foreign exchange rate fluctuations through our hedging program, primarily using forward and option contracts, along with ongoing efforts to adjust and optimize our expense base and implement operational changes designed to offset the impact of currency movements. Refer to Item 11 for qualitative and quantitative information regarding these risks. •Macroeconomic Environment: We regularly monitor macroeconomic trends and events that may have a material impact on our business, financial condition, and results of operations, and the financial condition of our merchants. These include global conflicts, international relations, recessionary indicators, inflation rates, trade policies and tariffs, and interest rates. Challenging macroeconomic conditions may result in reduced consumer spending, risk of merchant bankruptcies or business failures, and foreign currency exchange fluctuations, which may adversely impact our business. In addition, changes in the global trade environment, including new or increased tariffs imposed by the U.S. on foreign goods and resulting retaliatory trade actions or tariffs imposed by foreign governments on U.S. goods, as well as the renegotiation or termination by the U.S. of certain existing bilateral and multi-lateral trade agreements, may disrupt global supply chains and could materially increase our merchants’ costs, which in turn may increase the costs of consumer goods and reduce our merchants’ ecommerce transaction volume. We believe that our diversified merchant portfolio and other risk management initiatives assist in mitigating the effects that these macroeconomic events can have on our business. Key Performance Indicators and Non-GAAP Financial Measures In addition to financial measures determined in accordance with GAAP, we use the following key performance indicators and non-GAAP financial measures to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections, develop internal annual operating budgets, and make strategic decisions. By providing these non-GAAP financial measures together with a reconciliation to the most comparable GAAP measure, we believe we are enhancing investors’ understanding of our business and our results of operations, as well as assisting investors in evaluating how well we are executing our strategic initiatives. Changes in our key performance indicators may not correspond with equivalent changes in our revenue. 73 Year Ended December 31, 2025 2024 2023 (in thousands, except where indicated, unaudited) Gross merchandise volume (in millions) $ 155,102 $ 141,198 $ 123,106 Revenue $ 344,638 $ 327,516 $ 297,610 Gross Profit $ 178,072 $ 170,939 $ 152,519 Non-GAAP Gross Profit $ 180,276 $ 173,562 $ 155,026 Gross Profit Margin 52 % 52 % 51 % Non-GAAP Gross Profit Margin 52 % 53 % 52 % Net Profit (Loss) $ (27,565) $ (34,922) $ (59,035) Adjusted EBITDA $ 26,724 $ 17,194 $ (8,490) Net Cash Provided By (Used In) Operating Activities $ 33,879 $ 39,696 $ 7,279 Free Cash Flow $ 33,069 $ 39,059 $ 5,924 Gross Merchandise Volume We assess the growth in transaction volume using GMV, which represents the gross total dollar value of orders reviewed through our AI-powered ecommerce risk intelligence platform during the period indicated, including the value of orders that we did not approve. GMV is an indicator of the success of our merchants and the scale of our platform. GMV does not represent transactions successfully completed on our merchants’ websites or revenue earned by us, however, our revenue is directionally correlated with the level of GMV reviewed through our platform and is an indicator of future revenue opportunities. We generate revenue based on the portion of GMV we approve multiplied by the associated risk-adjusted fee. For the portion of GMV we do not approve and on which we do not generate revenue, for example, GMV associated with declined orders, the underlying data for those transactions is valuable for us to enrich our database and enhance our models. GMV may fluctuate in future periods due to a number of factors, including global macroeconomic conditions, changes in the number and mix of merchants on our AI-powered ecommerce risk intelligence platform, product mix, the level of penetration within our merchant base, and our ability to retain our existing merchant base. Non-GAAP Financial Measures We define non-GAAP gross profit and adjusted EBITDA, which are non-GAAP measures of financial performance, as gross profit and net profit (loss), respectively, adjusted for, as applicable, depreciation and amortization (including amortization of capitalized internal-use software as presented in our statement of cash flows), share-based compensation expense, payroll taxes related to share-based compensation, litigation-related expenses, restructuring costs, provision for (benefit from) income taxes, other income (expense) including foreign currency transaction gains and losses and gains and losses on non-designated hedges, and interest income (expense). Non-GAAP gross profit margin represents non-GAAP gross profit expressed as a percentage of revenue. Management believes that by excluding certain items from the associated GAAP measure that are not core to the performance of our business, these non-GAAP financial measures are useful in assessing our performance and provide meaningful supplemental information and permit investors to view performance using the same tools that we use to budget, forecast, make operating and strategic decisions, and evaluate historical performance. By providing these non-GAAP financial measures together with a reconciliation to the most comparable GAAP measure, we believe we are enhancing investors’ understanding of our business and our results of operations, as well as assisting investors in evaluating how well we are executing our strategic initiatives. Specifically, we exclude the below items due to the following factors: 74 •Depreciation and amortization: We exclude depreciation and amortization because we believe that these costs are not core to the performance of our business and the utilization of the underlying assets being depreciated and amortized can change without a corresponding impact on the operating performance of our business. Management believes that excluding depreciation and amortization facilitates comparability to other companies in our industry. •Share-based compensation expense: We exclude share-based compensation expense primarily because it is a non-cash expense that does not directly correlate to the current performance of our business. This is partly because the expense is calculated based on the grant date fair value of an award which may vary significantly from the current fair market value of the award based on factors outside of our control. Share-based compensation expense is principally aimed at aligning our employees’ interests with those of our shareholders and at long-term retention, rather than to address operational performance for any particular period. •Payroll taxes related to share-based compensation: We exclude employer payroll tax expense related to share-based compensation in order to see the full effect that excluding that share-based compensation expense had on our operating results. These expenses are tied to the exercise or vesting of underlying equity awards and the price of our common stock at the time of vesting or exercise, which may vary from period to period independent of the operating performance of our business. •Legal-related and other expenses: We exclude costs associated with certain corporate initiatives and costs associated with the legal matter previously disclosed in Item 8.A. “Legal and Arbitration Proceedings” in our Form 20-F for the year ended December 31, 2023, as filed with the SEC on March 6, 2024, as such costs are not reflective of costs associated with our ongoing business and operating results and are viewed as unusual and infrequent. •Restructuring costs: We exclude costs associated with reductions in force because these costs are related to one-time severance and benefit payments and are not reflective of costs associated with our ongoing business and operating results and are viewed as unusual and infrequent. We define free cash flow, which is a non-GAAP measure of liquidity, as net cash provided by (used in) operating activities, less cash purchases of property and equipment. We provide free cash flow because it is a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business that can be used for strategic opportunities, including investing in our business and strengthening our balance sheet. Free cash flow is limited, however, because it does not represent the residual cash flow available for discretionary expenditures. Free cash flow is not necessarily a measure of our ability to fund our cash needs. These non-GAAP measures should not be construed as an inference that our future results will be unaffected by unusual or other items. Our non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as an alternative to, or superior to, any measure derived in accordance with, GAAP. Other companies, including companies in our industry, may calculate similarly titled non-GAAP financial measures differently or not at all, which reduces their usefulness as a comparative measure. Some of the limitations are: •these measures do not reflect our cash expenditures, or future requirements for capital expenditures, or contractual commitments; •these measures do not reflect changes in, or cash requirements for, our working capital needs; •these measures do not reflect our tax expense or the cash requirements to pay our taxes; and •assets being depreciated and amortized will often have to be replaced in the future and these measures do not reflect any cash requirements for such replacements. 75 Non-GAAP Gross Profit and Non-GAAP Gross Profit Margin The following table presents a reconciliation of our gross profit and gross profit margin, the most directly comparable U.S. GAAP measure, to non-GAAP gross profit and non-GAAP gross profit margin for each of the periods presented: Year Ended December 31, 2025 2024 2023 (in thousands, except where indicated, unaudited) Revenue $ 344,638 $ 327,516 $ 297,610 Cost of revenue 166,566 156,577 145,091 Gross Profit 178,072 170,939 152,519 Share-based compensation expense included within cost of revenue 738 765 770 Depreciation and amortization included within cost of revenue 1,167 1,685 1,726 Payroll taxes related to share-based compensation included within cost of revenue 15 17 11 Restructuring costs 284 156 — Non-GAAP Gross Profit $ 180,276 $ 173,562 $ 155,026 Gross profit margin 52 % 52 % 51 % Non-GAAP Gross Profit Margin 52 % 53 % 52 % Adjusted EBITDA The following table presents a reconciliation of net profit (loss), the most directly comparable GAAP measure, to adjusted EBITDA for each of the periods presented: Year Ended December 31, 2025 2024 2023 (in thousands, unaudited) Net profit (loss) $ (27,565) $ (34,922) $ (59,035) Provision for (benefit from) income taxes 6,358 6,419 5,798 Interest (income) expense, net (13,465) (20,167) (22,775) Other (income) expense, net 637 818 (837) Depreciation and amortization 3,547 4,881 5,100 Share-based compensation expense 51,626 57,831 62,410 Payroll taxes related to share-based compensation 601 563 459 Legal-related and other expenses 261 1 390 Restructuring costs 4,724 1,770 — Adjusted EBITDA $ 26,724 $ 17,194 $ (8,490) 76 Free Cash Flow The following table presents a reconciliation of net cash provided by (used in) operating activities, the most directly comparable GAAP measure, to free cash flow for each of the periods presented: Year Ended December 31, 2025 2024 2023 (in thousands, unaudited) Net cash provided by (used in) operating activities $ 33,879 $ 39,696 $ 7,279 Purchases of property and equipment (810) (637) (1,355) Free Cash Flow $ 33,069 $ 39,059 $ 5,924 Components of Results of Operations Revenue We primarily generate revenue from our Chargeback Guarantee service which provides merchants access to our AI-powered eCommerce risk intelligence platform that is standing ready to review and guarantee eCommerce transactions for legitimacy. Our Chargeback Guarantee merchants pay us a percentage of every dollar of the gross merchandise volume, or GMV, that we approve and guarantee on their behalf. Our fee, as determined by our risk-based pricing model, in these situations is a percentage of the GMV of our merchants’ orders that we approve, prior to taxes or other charges. These arrangements do not provide merchants with the right to take possession of our software platform. Rather, merchants are granted continuous access to our software platform under a hosting arrangement over the contractual period. Contracts with our merchants for our Chargeback Guarantee product obligate us to stand ready to review and guarantee eCommerce transactions for legitimacy. In the event of a chargeback due to fraud, we indemnify merchants based on the GMV of the approved transaction. Our fee is allocated between the consideration for our stand ready review service performance obligation accounted for under ASC 606 and the consideration for issuing indemnification guarantees that are accounted for under ASC 460 and are recorded at fair value. Consideration allocated to our review service is recognized as revenue over the contract period in the month that the transactions are approved while consideration allocated to the indemnification guarantee is recognized as we are released from risk under the guarantee, generally over a six-month period from the date of the transaction. For stand ready obligations where we we charge a fixed fee per transaction, we recognize revenue over the contract period in the period that the transactions are reviewed under the variable consideration allocation exception. This primarily includes contracts that obligate us to stand ready to review eCommerce transactions for legitimacy without an associated guarantee or for Policy Protect. When Policy Protect is sold as a subscription, revenue is recognized evenly over the contract period. We present revenue net of cancellations and adjustments for minimum service level agreements. Cost of Revenue Cost of revenue primarily consist of chargeback expenses, net of chargebacks won, and other expenses related to providing our services to our merchants. These other expenses include compensation and benefits related costs, including share-based compensation expense associated with teams integral in providing our service, hosting fees and software costs, data enrichment costs, payment processing fees, amortization of capitalized software development costs and deferred contract fulfillment costs, depreciation expense, and allocated overhead. For products that offer guarantees of past performance, such as our Chargeback Guarantee, we provide contractual guarantees around the accuracy of our approvals so that our merchants can confidently automate a transaction’s execution. If an approved transaction that we have guaranteed results in an eligible chargeback, we will reimburse the 77 merchant for the amount of the lost sale. In this situation, we record a chargeback expense in cost of revenue. Reimbursements are typically provided to the merchant in the form of credits on future invoices. Chargeback claims can be disputed and if the decision of the dispute concludes that the order was legitimate and not fraudulent, the chargeback is classified as chargeback won. We present chargeback expenses net of chargebacks won, since such amounts are refunded to us. Gross Profit and Gross Profit Margin As our business continues to grow, we expect our gross profit will increase while our gross profit margin may fluctuate from period to period. Our gross profit margin is highly dependent on our risk-based pricing model which determines the fee we charge our merchants, our approval rate thresholds, the merchant mix of our revenue, new geographies and industries into which we may enter, the risk profile of orders approved in the period, technological improvements in the performance of our models, and seasonality. During periods where we approve a higher percentage of legitimate orders, our CTB ratio is lower and our gross margins are higher. Further, as the merchant mix of our revenues shifts towards industries with historically higher chargeback rates, such as tickets and travel, our CTB ratio may be higher and our gross margins may be lower. We control the decision to approve a particular transaction and continuously monitor our approval rate thresholds to ensure we are not exposed to higher amounts of chargeback risk, and we structure our pricing in a way to mitigate this risk. Operating Expenses Our operating expenses consist of research and development, sales and marketing, and general and administrative expenses. Compensation and benefits related costs are the most significant component of operating expenses and consists of salaries and benefits, share-based compensation expense, sales commissions, and other employee benefit costs. Operating expenses also primarily include third-party hosting fees and software costs, professional service fees, overhead costs including rent and utilities, marketing and advertising related costs, and depreciation expense. For 2026, we expect that our cost reduction efforts will drive decreases in operating expenses as a percent of revenue, however there may be fluctuations on a quarterly basis. Research and Development Research and development expenses primarily consist of compensation and benefits related costs, including share-based compensation expense associated with research and development teams that are responsible for the design, development, and testing of our AI-powered ecommerce risk intelligence platform infrastructure, including expenses associated with adding new features, increasing the functionality, and enhancing the usability of our platform. Research and development expenses also include investments we are making in new products, as well as third-party hosting fees and software costs used by our research and development teams, allocated overhead costs, and depreciation expense. Sales and Marketing Sales and marketing expenses primarily consist of compensation and benefits related costs, including share-based compensation expense and commissions directly associated with our sales and marketing teams. Sales and marketing costs also consists of costs associated with conferences, events, digital marketing and advertising programs, depreciation expense, and allocated overhead. General and Administrative General and administrative expenses primarily consist of compensation and benefits related costs, including share-based compensation expense associated with our finance, legal, human resources, information technology and administrative functions. General and administrative costs also consist of 78 third-party professional service fees for external legal, accounting and other consulting services, depreciation expense, and allocated overhead. Interest Income (Expense), Net Interest income (expense), net primarily consists of interest earned on our bank deposits, money market funds, and investments. Other Income (Expense), Net Other income (expense), net primarily consists of foreign exchange transaction gains and losses, and gains and losses on foreign currency contracts not designated as hedging instruments. Provision for (Benefit From) Income Taxes Provision for income taxes consists of income taxes related to Israel, United States (federal and state), China, and Japan taxes. We maintain a full valuation allowance on our Israeli and U.S. deferred tax assets resulting from carryforward tax losses and other reserves and allowances, as we have concluded that it is not more likely than not that the deferred tax assets will be realized due to our history of operating losses and current uncertainty concerning our ability to realize these deferred tax assets in the foreseeable future. Our effective tax rate is primarily affected by the tax rate in Israel and the United States and the relative amounts of income we earn in those jurisdictions, as well as non-deductible expenses, such as share-based compensation, and changes in our valuation allowance. A.Operating Results The following section discusses our financial condition and results of operations for the year ended December 31, 2025 compared to the year ended December 31, 2024. For a discussion of our financial condition and results of operations for the year ended December 31, 2024 compared to the year ended December 31, 2023, refer to Item 5. “Operating and Financial Review and Prospects" in our Annual Report on Form 20-F for the fiscal year ended December 31, 2024, filed with the SEC on March 6, 2025. The following tables set forth selected consolidated statements of operations data and such data as a percentage of total revenue for each of the periods presented: Year Ended December 31, 2025 2024 2023 (in thousands) Revenue $ 344,638 $ 327,516 $ 297,610 Cost of revenue(1)(2) 166,566 156,577 145,091 Gross profit 178,072 170,939 152,519 Operating expenses: Research and development(1)(2) 69,413 68,065 71,577 Sales and marketing(1)(2) 83,100 86,389 88,441 General and administrative(1)(2) 59,594 64,337 69,350 Total operating expenses 212,107 218,791 229,368 Operating profit (loss) (34,035) (47,852) (76,849) Interest income (expense), net 13,465 20,167 22,775 Other income (expense), net (637) (818) 837 Profit (loss) before income taxes (21,207) (28,503) (53,237) Provision for (benefit from) income taxes 6,358 6,419 5,798 Net profit (loss) $ (27,565) $ (34,922) $ (59,035) 79 _______________ (1)Includes share-based compensation as follows: Year Ended December 31, 2025 2024 2023 (in thousands) Cost of revenue $ 738 $ 765 $ 770 Research and development 12,621 13,061 13,152 Sales and marketing 16,013 18,506 19,420 General and administrative 22,254 25,499 29,068 Total share-based compensation expense $ 51,626 $ 57,831 $ 62,410 (2)Includes depreciation and amortization (including amortization of capitalized internal-use software) as follows: Year Ended December 31, 2025 2024 2023 (in thousands) Cost of revenue $ 1,167 $ 1,685 $ 1,726 Research and development 1,075 1,473 1,566 Sales and marketing 739 973 1,025 General and administrative 566 750 783 Total depreciation and amortization $ 3,547 $ 4,881 $ 5,100 Year Ended December 31, 2025 2024 2023 Revenue 100 % 100 % 100 % Cost of revenue 48 48 49 Gross profit 52 52 51 Operating expenses: Research and development 20 21 24 Sales and marketing 24 26 30 General and administrative 17 20 23 Total operating expenses 62 67 77 Operating profit (loss) (10) (15) (26) Interest income (expense), net 4 6 8 Other income (expense), net — — — Profit (loss) before income taxes (6) (9) (18) Provision for (benefit from) income taxes 2 2 2 Net profit (loss) (8) % (11) % (20) % Comparison of the Years Ended December 31, 2025 and 2024 Revenue Year Ended December 31, 2025 2024 $ Change % Change (dollars in thousands) Revenue $ 344,638 $ 327,516 $ 17,122 5 % The increase in revenue of $17.1 million, or 5%, was driven by a $13.9 billion, or 10% increase in GMV from $141.2 billion to $155.1 billion. Approximately $23.1 million of the increase in revenue was 80 driven by new merchants onboarded to our platform in 2024 and 2025 primarily within our “Money Transfer and Payments” and “Fashion and Luxury” verticals, which grew by 93% and 13%, respectively. Revenue from existing merchants grew by $13.1 million primarily within our “Tickets and Travel”, “Fashion and Luxury”, and “Money Transfer and Payments” verticals. These increases were partially offset by a decrease of $19.1 million in revenue due to the annualization of 2024 attrition primarily within our “Home” vertical. Our Net Dollar Retention Rate improved from 96% in 2024 to 105% in 2025. Revenue attributable to issued indemnification guarantees that are accounted for under ASC 460 and included within the $17.1 million increase in revenue, increased by $3.4 million for the same reasons noted above. Revenue attributable to issued indemnification guarantees as a percentage of total revenue decreased slightly from 43% during 2024 to 41% during 2025 primarily due to timing and changes in fair value of the guarantee. Cost of Revenue and Gross Profit Margin Year Ended December 31, 2025 2024 $ Change % Change (dollars in thousands) Cost of revenue $ 166,566 $ 156,577 $ 9,989 6 % Gross profit margin 52 % 52 % The increase in cost of revenue of $10.0 million, or 6%, was primarily attributable to an increase of $11.5 million in net chargeback expenses which was driven by higher GMV due to the onboarding of new merchants in our ‘Money Transfer and Payments’ vertical, as well as continued GMV growth from merchants in our ‘Tickets and Travel’ and ‘Fashion and Luxury’ verticals. The increase was partially offset by a decrease of $1.2 million in hosting, software, and data enrichment costs. Gross profit margin remained flat at 52%. Our CTB ratio, which is a key driver of our gross profit margin, increased to 42% from 40% in the prior year primarily driven by new merchants onboarded to our platform. Operating Expenses Research and Development Year Ended December 31, 2025 2024 $ Change % Change (dollars in thousands) Research and development $ 69,413 $ 68,065 $ 1,348 2 % The increase in research and development expenses of $1.3 million was primarily attributable to an increase of $1.3 million in payroll and related costs which includes a decrease of $0.4 million in share-based compensation expense. Additionally, there was an increase of $0.2 million in professional service fees. The increase in payroll and related costs and professional service fees were driven by headcount investments in our secondary research and development facility in Portugal. The increases were partially offset by a decrease of $0.2 million in overhead costs, hosting fees and software costs. 81 Sales and Marketing Year Ended December 31, 2025 2024 $ Change % Change (dollars in thousands) Sales and marketing $ 83,100 $ 86,389 $ (3,289) (4) % The decrease in sales and marketing expenses of $3.3 million was primarily attributable to a decrease of $4.0 million in payroll and related costs including a $2.5 million decrease in share-based compensation expense driven by reductions in headcount and equity awards containing performance and service-based vesting conditions that have a declining pattern of expense recognition. There was also a decrease of $0.3 million in travel costs. These decreases were partially offset by a $0.5 million increase in marketing costs, a $0.3 million increase in software costs, and a $0.3 million increase in overhead costs. General and Administrative Year Ended December 31, 2025 2024 $ Change % Change (dollars in thousands) General and administrative $ 59,594 $ 64,337 $ (4,743) (7) % The decrease in general and administrative expenses of $4.7 million was primarily attributable to a decrease of $4.2 million in payroll and related costs including a decrease of $3.2 million in share-based compensation expense primarily driven by reductions in headcount and equity awards granted to our Chief Executive Officer, including the Multi-Year Award that has a declining pattern of expense recognition. For further information on the Multi-Year Award, see Item 6.B. "Compensation". There was also a decrease of $1.5 million in overhead costs, software costs, insurance, and taxes, primarily driven by reductions in headcount and changes in commercial terms on insurance contracts. These decreases were partially offset by a $1.0 million increase in professional services fees related to consulting, legal, and recruiting services. Interest Income (Expense), Net Year Ended December 31, 2025 2024 $ Change % Change (dollars in thousands) Interest income (expense), net $ 13,465 $ 20,167 $ (6,702) (33) % Interest income (expense), net decreased by $6.7 million, or (33)%, primarily due to decreases in global interest rates and a reduction in cash on hand due to our share repurchase program. Other Income (Expense), Net Year Ended December 31, 2025 2024 $ Change % Change (dollars in thousands) Other income (expense), net $ (637) $ (818) $ 181 (22) % Other income (expense), net increased by $0.2 million primarily due to an increase of $1.1 million in gains` from foreign currency transactions, partially offset by an increase of $1.1 million in net losses on non-designated hedging transactions. The increase in gains from foreign currency transactions and 82 losses on non-designated hedging transactions are primarily due to movements in exchange rates between the U.S. Dollar, the Israeli Shekel, and the Euro. The remaining net increase was driven by gains on fixed asset disposals and other individually immaterial items. Provision for (Benefit from) Income Taxes Year Ended December 31, 2025 2024 $ Change % Change (dollars in thousands) Provision for (benefit from) income taxes $ 6,358 $ 6,419 $ (61) (1) % Provision for income taxes decreased by $0.1 million. We maintain a full valuation allowance on our Israeli and U.S. deferred tax assets resulting from carryforward tax losses, capitalized research and development expenses, and other reserves and allowances. The provision for income taxes decreased primarily as a result of uncertain tax positions and change in valuation allowance. Our effective tax rate was (29.9)% and (22.5)% of our net profit (loss) before income taxes for the years ended December 31, 2025 and 2024, respectively. Our effective tax rate is affected by tax rates in foreign jurisdictions and the relative amounts of income we earn in those jurisdictions, as well as non-deductible share-based compensation, uncertain tax positions, and changes in our valuation allowance. Impact of Foreign Currency Fluctuation See Item 3D. “Risk Factors—We are exposed to fluctuations in currency exchange rates, which could negatively affect our operating results.” , Item 5 “Key Factors Affecting Our Performance.”, and Item 11. “Quantitative and Qualitative Disclosures About Market Risk-Foreign Currency Exchange Risk.” B. Liquidity and Capital Resources Since our inception, we have financed our operations primarily through the issuance of ordinary and preferred shares, warrants, and cash flows from operations. Our principal uses of cash have been related to investments in bank deposits, money market funds, and marketable debt securities, funding our operations, capital expenditures, and share repurchases. As of December 31, 2025, our principal sources of liquidity were cash, cash equivalents, bank deposits, and short-term investments of $297.6 million which were held for working capital purposes. Cash and cash equivalents consist of cash in banks, bank deposits, and money market funds. Short-term deposits consist of bank deposits with original maturities between 4 and 12 months and that mature within 12 months of the balance sheet date. Short-term investments consist of available-for-sale marketable debt securities. In 2025, we earned $13.5 million of interest income from our bank deposits, money market funds, and marketable debt securities. We expect to continue to utilize bank deposits, money market funds, and other similar investment vehicles to generate returns on our capital in the future, however the amount of interest income we are able to earn may fluctuate from year-to-year as a result of, among other things, changes in global interest rates, changes in the terms of new bank deposits, and changes in our investment strategy. We believe our cash, cash equivalents, and short-term deposits, together with cash we expect to generate from future operations, will be sufficient to meet our working capital and capital expenditure requirements for a period of at least twelve months from the date of this Annual Report. We may require additional capital to respond to technological advancements, competitive dynamics or technologies, customer demands, business opportunities, challenges, acquisitions or unforeseen circumstances and in either the short-term or long-term may determine to engage in equity or debt financings or enter into credit facilities for other reasons. Our future capital requirements will depend on many factors including our revenue growth rate, chargeback expenses, merchant churn, regulatory developments, the market acceptance and demand for 83 our offerings, international expansion efforts, and the investments we make that support our business. We may in the future enter into arrangements to acquire or invest in complementary businesses, services, and technologies, including intellectual property rights. If we are unable to obtain adequate financing or financing on terms satisfactory to us or at all, when we require it, our ability to continue to grow or support our business and to respond to business challenges could be significantly limited. In particular, inflation and sustained high interest rates across the global economy have resulted in, and may continue to result in, significant disruption of global financial markets, which may reduce our ability to access capital. If we are unable to raise additional funds when or on the terms desired or generate cash flows necessary to expand our operations and invest in continued innovation, we may not be able to compete successfully, our business, financial condition and results of operation could be adversely affected. See Item 3.D. “Risk Factors — We may need additional capital, and we cannot be sure that additional financing will be available on favorable terms, if at all.” Share Repurchase Program As of December 31, 2025, our Board of Directors had approved a share repurchase program for the purchase of an aggregate of up to $300.0 million of our Class A ordinary shares (the “Repurchase Program”), of which approximately $269.0 million had been utilized. On March 2, 2026, our Board of Directors authorized the repurchase of an additional $75 million of the Company’s Class A ordinary shares, subject to the completion of Israeli regulatory procedures. Assuming completion of the required Israeli regulatory procedures, the total aggregate repurchase authorization outstanding under the Repurchase Program as of March 2, 2026 was approximately $85.1 million. Under the Repurchase Program, we may make purchases of Class A ordinary shares from time-to-time in the open market, including through trading plans intended to qualify under Rule 10b5-1 under the Exchange Act, in privately negotiated transactions or by other means in accordance with U.S. federal securities laws. The timing, as well as the number and value of any shares repurchased under the program, will be determined at our discretion and will depend on a variety of factors, including management's assessment of the intrinsic value of our ordinary shares, the market price of our Class A ordinary shares, general market and economic conditions, available liquidity, alternative investment opportunities, and applicable legal requirements. The share repurchases will be funded from existing cash and cash equivalents. The Repurchase Program does not obligate us to acquire a particular amount of our Class A ordinary shares, and the Repurchase Program may be suspended, modified or discontinued at any time at our discretion and without prior notice. For information on share repurchases made pursuant to the Repurchase Program during the year ended December 31, 2025, see Item 16E. “Purchase of Equity Securities by the Issuer and Affiliated Purchasers.” Cash Flows The following table summarizes our cash flows for the periods presented: Year Ended December 31, 2025 2024 2023 Consolidated Statements of Cash Flows Data: (in thousands) Net cash provided by (used in) operating activities $ 33,879 $ 39,696 $ 7,279 Net cash provided by (used in) investing activities $ (132,854) $ 27,754 $ 251,559 Net cash provided by (used in) financing activities $ (110,657) $ (136,824) $ (9,314) Effects of exchange rates on cash, cash equivalents, and restricted cash $ 721 $ (401) $ 297 Net increase (decrease) in cash, cash equivalents, and restricted cash $ (208,911) $ (69,775) $ 249,821 84 Operating Activities Our largest sources of operating cash flows are from revenues we earn from our merchants offset by the reimbursement for chargebacks. Our largest uses of cash from operating activities are for compensation and benefits related costs, overhead costs including rent and utilities, hosting and software fees, professional service fees, and marketing and advertising related costs. We reported net cash provided by operating activities of $33.9 million for the year ended December 31, 2025, compared to net cash provided by operating activities of $39.7 million for the year ended December 31, 2024, representing a decrease of $5.8 million in net cash provided by operating activities. The decrease in operating cash inflows was primarily driven by a decrease in interest received of approximately $8.5 million, partially offset by an increase in cash inflows associated with foreign currency derivative contracts of $4.5 million. The remaining decrease in cash inflows is due to the timing of working capital cash receipts and payments of approximately $1.5 million. The remaining change is due to individually insignificant items. Investing Activities Investing activities consists of investments in and maturities of short-term deposits and investments, and purchases and sales of property and equipment. We reported net cash used in investing activities of $132.9 million for the year ended December 31, 2025, compared to net cash provided by investing activities of $27.8 million for the year ended December 31, 2024, representing an increase of $160.7 million in cash used in investing activities. This increase in cash used in investing activities was primarily attributable to an increase in purchases of short-term investments of $248.0 million, partially offset by an increase of $87.6 million in proceeds from maturities of short-term investments. The remaining change is due to individually insignificant items. Financing Activities Financing activities consists of proceeds we receive from the exercise of stock options, taxes paid related to net share settlement of equity awards, and payments made for the purchase of Class A ordinary shares pursuant to our Repurchase Program. We reported net cash used in financing activities of $110.7 million for the year ended December 31, 2025, compared to net cash used in financing activities of $136.8 million for the year ended December 31, 2024, representing a decrease of $26.2 million in cash used in financing activities. This decrease was primarily driven by a decrease of $34.8 million related to purchases of our Class A ordinary shares pursuant to our Repurchase Program. The decrease was partially offset by an increase in cash used in financing activities related to taxes paid related to net share settlement of equity awards. Material Cash Requirements for Known Contractual and Other Obligations Leases We have various non-cancelable operating leases for our corporate offices in Tel Aviv in Israel and in New York City in the United States. The leases for these facilities in Tel Aviv and New York City expire in 2031 and 2029, respectively, and we have options to renew these leases through 2036 and 2034, respectively. As of December 31, 2025, we had fixed future minimum lease payments of $27.6 million, of which $6.2 million is due in the next twelve months. We have no material plans to construct, expand, or improve facilities as of December 31, 2025. Excluded from the future minimum lease payments discussed above is an unsecured and undated promissory note issued in December 2020 in connection with the execution of a lease agreement for an amount of $3.3 million as of December 31, 2025. The promissory note may only be withdrawn in the 85 event of a material and fundamental breach of the lease agreement. The promissory note expires three months after the lease termination date in 2031. As of December 31, 2025, we were in full compliance of the terms and conditions of the promissory note, and the promissory note has not been withdrawn. Other Obligations In the normal course of business, we enter into non-cancelable purchase commitments with various parties primarily for hosting and software services. As of December 31, 2025, we had non-cancelable purchase obligations with a remaining term in excess of twelve months of $58.9 million, of which $30.0 million is due in the next twelve months. These purchase obligations are primarily related to third-party data center costs that are used to host our risk intelligence platform. For more information on our operating leases, indemnification guarantees, and other commitments, refer to “Leases” in Note 8 and “Guarantees, Commitments, and Contingencies” in Note 9 of our consolidated financial statements included elsewhere in this Annual Report. C. Research and Development, Patents and Licenses, etc. Our research and development activities are primarily located in Israel. We recently established a secondary research and development facility in Portugal. Research and development expenses primarily consist of compensation and benefits related costs, including share-based compensation expense associated with research and development teams that are responsible for the design, development, and testing of our AI-powered ecommerce risk intelligence platform infrastructure, including expenses associated with adding new features, increasing the functionality, and enhancing the usability of our platform. Research and development expenses also include investments we are making in new products, as well as third-party hosting fees and software costs used by our research and development teams, allocated overhead costs, and depreciation expense. For the years ended December 31, 2025, 2024 and 2023, research and development costs accounted for approximately 20%, 21% and 24% of our total revenue, respectively. Research and development costs are expensed as incurred, except to the extent that such costs are associated with internal-use software that qualifies for capitalization. D. Trend Information Seasonality Our revenue is correlated with the level of GMV that our merchants process through our AI-powered ecommerce risk intelligence platform. Our merchants typically generate the most GMV in the calendar fourth quarter, which includes Black Friday, Cyber Monday, the holiday season, and other peak events included in the ecommerce calendar, such as Chinese Singles’ Day and Thanksgiving. Our gross profit typically follows a similar trend. Approximately 29% of our annual revenue was earned in the fourth quarter for both the years ended December 31, 2025 and 2024, while 32% and 29% of our annual gross profit was earned in the fourth quarter for the years ended December 31, 2025 and 2024, respectively. We believe that similar seasonality trends will continue to affect our future performance. Other than as described above and in Item 3.D. "Risk Factors", in Item 5.A. "Operating Results—Factors Affecting Our Performance", and in Item 5.B. “Liquidity and Capital Resources” of this Annual Report, which are incorporated by reference herein, we are not aware of any trends, uncertainties, demands, commitments or events that are reasonably likely to have a material effect on our net revenues, income from operations, profitability, liquidity or capital resources, or that would cause the disclosed financial information to be not necessarily indicative of future operating results or financial condition. E. Critical Accounting Estimates We have provided a summary of our significant accounting policies, estimates and judgments in Note 2 to our audited consolidated financial statements, which are included elsewhere in this Annual Report. 86 The following discussion pertains to critical accounting estimates that management believes are most important to the portrayal of our historical financial condition and results of operations and that require significant, difficult, subjective or complex judgments. Other companies in similar businesses may use different estimation policies and methodologies, which may impact the comparability of our financial condition, results of operations, and cash flows to those of other companies. Application of Critical Accounting Estimates Our consolidated financial statements are prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, as well as related disclosures. We evaluate our estimates and assumptions on an ongoing basis. Our estimates are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances. As events continue to evolve and additional information becomes available, our estimates and assumptions may change materially in future periods. Actual results could differ materially from these estimates. The critical accounting estimates, assumptions, and judgments that we believe have the most significant impact on our consolidated financial statements are described below. Indemnification Guarantees We provide contractual guarantees around the accuracy of our approvals so that our merchants can confidently automate a transaction’s execution. Our Chargeback Guarantee contracts obligate us to indemnify our merchants for any costs incurred from a chargeback due to fraud (i.e., the “guarantee obligation”). Accordingly, we account for the guarantee obligation as an indemnification under the general provisions of ASC 460, Guarantees, or ASC 460, and recognize a liability at fair value upon approving a transaction at an amount that represents what we would need to pay a third party to relieve ourselves from this obligation. We are relieved from our guarantee obligation at the earlier of (a) paying a chargeback or (b) expiration of the guarantee which is generally six months from the date of the transaction. We recognize the guarantee obligation as revenue through a systematic and rational amortization method over a six-month period that is representative of our historical pattern of being released from risk under the guarantee obligation. Indemnification guarantees are recorded at fair value upon approving a transaction and are not remeasured to fair value each period. The determination of the fair value of our indemnification guarantees requires the use of various inputs and assumptions which include the following: •Historical chargebacks as a percentage of Billings: Calculated as historical chargebacks paid divided by the associated Billings. Chargebacks paid are not transactions that are readily observable in a marketplace, however they represent actual transactions between us and the merchant. We utilize historical chargebacks as a proxy to project future chargeback claims. This input has the greatest impact on the overall fair value of the guarantee. •Risk premium fee: Represents the fee that we would have incurred from a third-party in order to relieve ourselves from our legal obligation under the guarantee. We primarily use observable inputs and methodologies with a limited amount of judgment and assumptions. For example, we consider the adjusted EBITDA margin of unrelated public companies in the property casualty and multi-line insurance industry as a benchmark for the implied risk premium that an insurer would charge over the expected costs of insuring the guarantee. •Discount rate: Utilized to determine the present value of chargeback payments and encompasses the time period in which guarantees are resolved as well as our incremental borrowing cost. We mainly use observable inputs and methodologies with a limited amount of judgment and assumptions, such as U.S. corporate bond yields. Since chargebacks are generally paid within 87 six months from the date of transaction, this input has the least impact on the overall fair value of the guarantee. The assumptions and estimates involved in calculating the fair value of our indemnification guarantees, as well as the determination of a systematic and rational amortization method for recognition of our guarantee obligations as revenue, involve inherent uncertainties and the application of significant judgment. We will continue to use judgment in evaluating the assumptions related to our indemnification guarantees, and we may refine our estimation process as we continue to accumulate additional data, which could materially impact the timing of our revenue recognition for transactions approved in future periods. The effect of a hypothetical 10% change in the inputs and assumptions of the fair value of the guarantee, as well as a 10% change in the inputs and assumptions of the systematic and rational amortization method, would have impacted our revenue by approximately 1%. Refer to Note 9 of our consolidated financial statements included elsewhere in this Annual Report for additional information. Provision for Chargebacks Our provision for chargebacks includes amounts associated with chargebacks that have been submitted and accepted but not yet paid by us as of the balance sheet date and estimates of chargebacks that have not yet been submitted and accepted relating to approved transactions that are accounted for under ASC 450, Contingencies, or ASC 450. While no individual transaction is probable of a chargeback occurring, when we analyze a portfolio of transactions, if we believe a future chargeback is probable and reasonably estimated, we accrue a liability and an associated expense through cost of revenue in accordance with ASC 450. Inputs and assumptions used by management to calculate the provision are based on the transactions approved and the features of those transactions as well as historical information about chargebacks. Our merchant agreements typically allow chargebacks to be submitted up to six months from the order approval date and therefore, since the Company is generally only liable for chargebacks associated with transactions approved in the prior six months, the provision for chargebacks is based on the activity during that period. While the provision amount is correlated to the absolute dollar amount of chargeback expenses we incurred during the prior six months, a driver to the provision amount is the pace at which our merchant portfolio submits chargebacks to us. For example, our provision for chargebacks may be higher as a percent of total chargeback expenses when our merchant portfolio is characterized by slower chargeback submission rates based on historical experience, since a larger portion of the total chargeback expenses would not have been reimbursed to the merchant by the balance sheet date. Conversely, our provision for chargebacks may be lower as a percent of total chargeback expenses when our merchant portfolio is characterized by faster chargeback submission rates based on historical experience, since a larger portion of the total chargeback expenses would have been reimbursed to the merchant by the balance sheet date. As we continue to accumulate data related to chargebacks, we may refine our estimates, which could materially impact our cost of revenue. It is possible that the estimate may change in the near term, and the effect of the change could be material. The effect of a hypothetical 10% change in the inputs and assumptions would impact our cost of revenue by approximately 1% to negative 4%. Refer to Note 9 of our consolidated financial statements included elsewhere in this Annual Report for additional information. Cost to Obtain a Contract We capitalize sales commissions and associated payroll taxes paid that are incremental to the acquisition of merchant contracts. We determine whether costs should be deferred based on our sales compensation plans and if the commissions are incremental and would not have occurred absent the merchant contract. Determining whether such costs are incremental to obtaining the online merchant contract requires a certain degree of judgment. 88 Sales commissions for initial contracts are amortized on a straight-line basis over an estimated period of benefit of four years. We determine the period of benefit for sales commissions by taking into consideration the estimated customer life, technological life of our software, and other factors. These factors involved in the determination of the period of benefit include inherent uncertainties and the application of significant judgment. Sales commissions for renewal contracts are not commensurate with sales commissions for initial contracts and are deferred and then amortized on a straight-line basis over the renewal term. The effect of a hypothetical one year decrease in the amortization period would have increased our sales and marketing expenses by approximately $0.2 million. Income Taxes We are subject to income taxes in Israel, the United States, and other jurisdictions. These other jurisdictions may have different statutory rates than in Israel. Income taxes are accounted for in accordance with ASC 740, Income Taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statements carrying amounts of existing assets and liabilities and their respective tax basis as well as operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Valuation allowances are provided when necessary to reduce deferred tax assets to an amount that is more likely than not to be realized. In establishing deferred income tax assets and liabilities, management makes judgments based on the enacted tax laws and published tax guidance applicable to us as well as the amount and jurisdiction of future taxable income. Deferred tax assets and liabilities are recorded and the need for valuation allowances is evaluated to reduce the deferred tax assets to amounts expected to be realized. Our evaluation of the realizability of the deferred tax assets focuses on identifying significant, objective evidence that we will more likely than not be able to realize our deferred tax assets in the future. We record valuation allowances based on an assessment of positive and negative evidence on a jurisdiction-by-jurisdiction basis, which is highly judgmental and requires subjective weighting of such evidence. To make this assessment, we evaluate historical operating results, the existence of cumulative losses in the most recent fiscal years, expectations for future taxable income from each tax-paying component in each tax jurisdiction, the time period over which our temporary differences will reverse and the implementation of feasible and prudent tax planning strategies. If our assumptions and estimates that resulted in our forecast of future taxable income for each tax-paying component prove to be incorrect, we may need to adjust the carrying value of our deferred tax balances. An increase or decrease in the valuation allowance would result in a respective increase or decrease in our effective tax rate in the period the increase or decrease occurs. The calculation of our income tax liabilities involves dealing with uncertainties in the application of complex domestic and foreign income tax regulations. Unrecognized tax benefits are generated when there are differences between tax positions taken in a tax return and amounts recognized in the consolidated financial statements. We recognize income tax benefits from uncertain tax positions only if we believe that it is more likely than not that the tax position will be sustained upon examination by the taxing authorities based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such uncertain tax positions are then measured based on the largest benefit that is more likely than not to be realized upon the ultimate settlement. To the extent we prevail in matters for which liabilities have been established, or are required to pay amounts in excess of our liabilities, our effective income tax rate in a given period could be materially impacted. An unfavorable income tax settlement may require the use of cash and result in an increase in our effective income tax rate in the year it is resolved. A favorable income tax settlement would be recognized as a reduction in the effective income tax rate in the year of resolution. Refer to Note 12 of our consolidated financial statements included elsewhere in this Annual Report for additional information. 89 Recent Accounting Pronouncements Refer to “Summary of Significant Accounting Policies” in Note 2 of our consolidated financial statements included elsewhere in this Annual Report for more information. JOBS Act We are an “emerging growth company” pursuant to the provisions of the JOBS Act. We rely on certain reduced reporting and other requirements that are otherwise generally applicable to public companies. As an “emerging growth company,” we are not required to, among other things, (i) provide an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act, which would otherwise be required beginning with our second annual report on Form 20-F, and (ii) comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis). Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. We have elected to use this extended transition period, which allows us to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies, until the earlier of the date we (i) are no longer an “emerging growth company” or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our consolidated financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates. We expect to lose our status as an emerging growth company on December 31, 2026, which is the last day of the fiscal year following the fifth anniversary of our IPO.