Annual and transition report of foreign private issuers [Sections 13 or 15(d)]

Derivatives and Hedging Activities

v3.25.4
Derivatives and Hedging Activities
 12 Months Ended
Dec. 31, 2025
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivatives and Hedging Activities
Note 13. Derivatives and Hedging Activities
The Company carries out transactions involving foreign currency exchange derivative financial instruments. The transactions are designed to hedge the Company’s exposure to change in relative value of currencies other than the U.S. dollar. The Company is primarily exposed to foreign exchange risk with respect to recognized assets and liabilities and forecasted transactions denominated in the New Israeli Shekel (“NIS”) and, the Euro. Gains and losses on the hedging instruments offset losses and gains on the hedged items.
The following table summarizes the consolidated balance sheets classification and fair values of the Company’s derivative instruments:
Fair Value Notional Amount
December 31 December 31
Balance sheet location 2025 2024 2025 2024
U.S. $ in thousands
Assets derivatives - Foreign exchange contracts, not designated as hedging instruments
 Other current assets $ 15  $ 71  $ 5,680  $ 29,244 
Assets derivatives - Foreign exchange contracts, designated as cash flow hedge
Other current assets
454  4,005  55,880  89,414 
Liability derivatives - Foreign exchange contracts, not designated as hedging instruments
 Accrued expenses and other current liabilities (175) (21) 99,514  82,818 
Liability derivatives - Foreign exchange contracts, designated as cash flow hedge
 Accrued expenses and other current liabilities (235) (3) 29,587  5,687 
$ 59  $ 4,052  $ 190,661  $ 207,163 
Foreign exchange contracts not designated as hedging instruments
As of December 31, 2025, the notional amounts of the Company’s outstanding exchange forward contracts, not designated as hedging instruments, were $105.0 million and were used to reduce foreign currency exposures of the Euro, New Israeli Shekel (the “NIS”), British Pound, Japanese Yen, Korean Won and Chinese Yuan. With respect to such derivatives, a loss of $2.8 million, a gain of $4.4 million and a gain of $0.5 million were recognized under financial income, net for the years ended December 31, 2025, 2024 and 2023, respectively. Such gains and losses partially offset the revaluation losses of the balance sheet items, which are also recognized under financial income, net.
Cash Flow Hedging—Hedges of Forecasted Foreign Currency Payroll and other operating expenses
As of December 31, 2025 and 2024, the Company had in effect foreign exchange forward contracts for the conversion of $0.0 million and $46.7 million, respectively, into NIS. These foreign exchange forward contracts were designated as cash flow hedges for accounting purposes. The Company uses, from time to time, short-term cash flow hedge contracts to reduce its exposure to variability in expected future cash flows resulting mainly from payroll costs denominated in NIS. The changes in fair value of those contracts are included in the Company’s accumulated other comprehensive loss.
Cash Flow Hedging—Hedges of Forecasted Foreign Currency Revenue
The Company transacts business in U.S. Dollars and in various other currencies. The Company may use foreign exchange or forward contracts to hedge certain cash flow exposures resulting from changes in these foreign currency exchange rates. These foreign exchange contracts, carried at fair value, have maturities of up to twelve months. The Company enters into these foreign exchange contracts to hedge a portion of its forecasted foreign currency denominated revenue in the normal course of business and accordingly, they are not speculative in nature.
As of December 31, 2025, the Company had in effect foreign exchange forward contracts, designated as cash flow hedges for accounting purposes, for the conversion of €72.0 million into dollars.
To receive hedge accounting treatment, all hedging relationships are formally documented at the inception of the hedge, and the hedges must be highly effective in offsetting changes to future cash flows on hedged transactions. The Company record changes in fair value of these cash flow hedges in accumulated other comprehensive income (loss) in its consolidated balance sheets, until the forecasted transaction occurs. When the forecasted transaction occurs, the Company reclassify the related gain or loss to the same statement of operations line item as the hedged item (revenue or payroll and other operating expenses). In the event the underlying forecasted transaction does not occur, or it becomes probable that it will not occur, the Company reclassifies the gain or loss on the related cash flow hedge from accumulated other comprehensive income (loss) to the same statement of operations line item as the hedged item. If the Company does not elect hedge accounting, or the contract does not qualify for hedge accounting treatment, the changes in fair value from period to period are recorded under financial income, net.
Revenues Cost of sales Research and development, net Selling, general and administrative Financial income, net Other comprehensive income (loss), net of tax
December 31, December 31, December 31, December 31, December 31, December 31,
2025 2024 2025 2024 2025 2024 2025 2024 2025 2024 2025 2024
U.S. $ in thousands
Line items in which effects of hedges are recorded $ 551,102  $ 572,458  $ 323,816  $ 315,642  $ 77,304  $ 99,142  $ 222,471  $ 243,335  $ 10,386  $ 1,676  $ 1,834  $ (952)
Foreign exchange contracts designated as hedging instrument (7) (1,292) (972) (111) (1,255) (378) (2,987) (758) —  —  (310) 5,656 
Foreign exchange contracts not designated as hedging instrument $ —  $ —  $ —  $ —  $ —  $ —  $ —  $ (2,846) $ 4,363  $ —  $ —