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Income Taxes | 12 Months Ended
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Dec. 31, 2017
Income Tax Disclosure [Abstract] |
Income Taxes | Note 11—Income Taxes The following are the domestic and foreign components of the Company’s income (loss) before income taxes (in thousands):
|  | Year Ended December 31, |
|  | 2015 |  |  | 2016 |  |  | 2017 |
Domestic |  | $ | 29,224 |  |  | $ | 45,904 |  |  | $ | 66,148 |
International |  |  | 631 |  |  |  | (2,070 | ) |  |  | (2,523 | )
Income before income taxes |  | $ | 29,855 |  |  | $ | 43,834 |  |  | $ | 63,625 |
The following are the components of the provision for (benefit from) income taxes (in thousands):
|  | Year Ended December 31, |
|  | 2015 |  |  | 2016 |  |  | 2017 |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 11,123 |  |  | $ | 18,300 |  |  | $ | 9,944 |
State and local |  |  | 2,325 |  |  |  | 5,595 |  |  |  | 3,906 |
Foreign |  |  | 140 |  |  |  | 64 |  |  |  | 558 |
Total current provision |  |  | 13,588 |  |  |  | 23,959 |  |  |  | 14,408 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | 197 |  |  |  | (68 | ) |  |  | (172 | )
State and local |  |  | 141 |  |  |  | (539 | ) |  |  | (1,382 | )
Foreign |  |  | — |  |  |  | — |  |  |  | (27 | )
Total deferred (benefit) provision |  |  | 338 |  |  |  | (607 | ) |  |  | (1,581 | )
Total provision for income taxes |  | $ | 13,926 |  |  | $ | 23,352 |  |  | $ | 12,827 |
A reconciliation of the statutory tax rate to the effective tax rate for the periods presented is as follows:
|  | Year Ended December 31, |
|  | 2015 |  |  | 2016 |  |  | 2017 |
U.S. federal statutory income tax rate |  |  | 35.0 | % |  |  | 35.0 | % |  |  | 35.0 | %
State and local income taxes, net of federal benefit |  |  | 5.4 |  |  |  | 7.5 |  |  |  | 2.6 |
Foreign income at other than U.S. rates |  |  | (0.3 | ) |  |  | 1.1 |  |  |  | 2.7 |
Stock-based compensation |  |  | 0.4 |  |  |  | 3.8 |  |  |  | (19.0 | )
Meals and entertainment |  |  | 0.2 |  |  |  | 0.3 |  |  |  | 0.4 |
Change in value of preferred stock warrant liabilities |  |  | 7.0 |  |  |  | 7.6 |  |  |  | — |
Research and development credit |  |  | (1.0 | ) |  |  | (3.1 | ) |  |  | (2.8 | )
Federal deferred tax asset revaluation |  |  | — |  |  |  | — |  |  |  | 0.9 |
Other permanent items |  |  | (0.1 | ) |  |  | 0.4 |  |  |  | 0.9 |
Change in valuation allowance |  |  | — |  |  |  | 0.7 |  |  |  | (0.5 | )
Effective income tax rate |  |  | 46.6 | % |  |  | 53.3 | % |  |  | 20.2 | %
Set forth below are the tax effects of temporary differences that give rise to a significant portion of the deferred tax assets and deferred tax liabilities (in thousands):
|  | As of December 31, |
|  | 2016 |  |  | 2017 |
Deferred tax assets (liabilities): |  |  |  |  |  |  |  |
Reserves and allowances |  | $ | 1,774 |  |  | $ | 1,804 |
Accrued expenses |  |  | 2,651 |  |  |  | 1,810 |
Net operating losses |  |  | 326 |  |  |  | — |
Research and development tax credit |  |  | 280 |  |  |  | 774 |
Stock-based compensation |  |  | 126 |  |  |  | 1,722 |
Other |  |  | 760 |  |  |  | 971 |
Prepaid expenses |  |  | (484 | ) |  |  | (580 | )
Property and equipment |  |  | (2,254 | ) |  |  | (2,026 | )
Capitalized software development costs |  |  | (1,075 | ) |  |  | (1,116 | )
Valuation allowance |  |  | (326 | ) |  |  | — |
Total deferred tax assets, net |  | $ | 1,778 |  |  | $ | 3,359 |
As of each reporting date, the Company’s management considers new evidence, both positive and negative, that could impact management’s view with regard to future realization of deferred tax assets. During 2016, management recorded a valuation allowance of $0.3 million against its U.K. net deferred tax assets, based on the previous history of cumulative losses and the conclusion that future taxable profit may not be available for the utilization of the deferred tax assets for U.K. income tax purposes. During 2017, management released the valuation allowance due to, among other reasons, three years of cumulative pre-tax income. Management determined that sufficient positive evidence existed to conclude that it is more likely than not there will be full utilization of the deferred tax assets in the U.K.; therefore, the entire valuation allowance of $0.3 million was released during 2017. As of December 31, 2017, the Company had state research and development tax credits of approximately $1.3 million, which carry forward indefinitely. As of December 31, 2017, unremitted earnings of the subsidiaries outside of the U.S. were approximately $4.8 million, on which no state taxes have been paid. The Company’s intention is to indefinitely reinvest these earnings outside the U.S. Upon distribution of those earnings in the form of a dividend or otherwise, the Company would be subject to both state income taxes and withholding taxes payable to various foreign countries. The amounts of such tax liabilities that might be payable upon repatriation of foreign earnings are not material. As of December 31, 2016 and 2017, the Company had gross unrecognized tax benefits of approximately $1.0 million and $3.1 million, respectively, which would affect the Company’s effective tax rate if recognized. The Company classifies liabilities for unrecognized tax benefits in other liabilities, non-current. A reconciliation of the beginning and ending amounts of gross unrecognized tax benefits is as follows (in thousands):
Balance at December 31, 2015 |  | $ | — |
Increases related to current year tax positions |  |  | 605 |
Increases related to prior year tax positions |  |  | 402 |
Balance at December 31, 2016 |  |  | 1,007 |
Increases related to current year tax positions |  |  | 1,971 |
Increases related to prior year tax positions |  |  | 123 |
Balance at December 31, 2017 |  | $ | 3,101 |
Interest and penalties related to the Company’s unrecognized tax benefits accrued as of December 31, 2017 were not material. The Company is currently under examination by the Internal Revenue Service for the years ended December 31, 2014 and 2015. The examination is in the preliminary stage and therefore, the Company does not expect significant changes to the unrecognized tax benefits during the next twelve months. The Company is subject to examination by taxing authorities in the U.S. federal, state and various foreign jurisdictions. For federal and state income taxes, the Company remains subject to examination for 2010 and subsequent years. The majority of the Company’s foreign subsidiaries remain subject to examination by the local taxing authorities for 2013 and subsequent periods.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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