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Income Taxes
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
Income Taxes
12. Income Taxes

The components of income before income taxes were as follows:

 Year Ended December 31,
 202320222021
 (in thousands)
United States$162,023 $250,421 $386,023 
Foreign131,205 51,563 28,303 
Total income before income taxes$293,228 $301,984 $414,326 

The provision for income taxes was as follows:

 Year Ended December 31,
 202320222021
 (in thousands)
Current:
Federal$130,665 $62,838 $65,586 
State19,831 13,362 15,478 
Foreign17,389 10,076 17,276 
Total current income tax expense167,885 86,276 98,340 
Deferred:
Federal(45,596)(24,970)(4,913)
State(6,286)3,020 (2,621)
Foreign10,147 5,304 (7,593)
Total deferred income tax benefit(41,735)(16,646)(15,127)
Total provision for income taxes$126,150 $69,630 $83,213 
A reconciliation of the Company’s statutory income tax expense to effective income tax provision is as follows:

 Year Ended December 31,
 202320222021
 (in percentages)
Federal statutory income tax rate21.0 %21.0 %21.0 %
State tax, net of federal benefit3.3 2.0 2.6 
Permanent differences0.6 (0.4)(0.3)
Foreign-derived intangible income(0.5)— (1.6)
Research and development credits, net(2.0)(3.0)(1.3)
Tax uncertainties— 0.4 — 
Deferred tax adjustments— (0.2)0.4 
Excess tax benefits from share-based compensation(0.1)(0.2)(1.3)
Change in valuation allowance(0.2)2.6 — 
Foreign rate differential1.0 (0.3)(0.3)
Withholding taxes9.9 1.0 — 
Limitation on executive compensation7.0 — — 
Non-deductible transaction costs2.9 — — 
Other tax rate items0.1 0.2 0.9 
Total43.0 %23.1 %20.1 %

 The difference between the U.S. federal statutory tax rate of 21.0% and the Company’s effective tax rate (“ETR”) for the years ended December 31, 2023, 2022 and 2021, is primarily due to state taxes, benefits from U.S. research and development credits, U.S. tax benefits from share-based compensation deductions, non-deductible costs associated with the separation and distribution, withholding taxes, and limitations on deductible executive compensation. The increase in the ETR from 2022 to 2023 is primarily related to withholding taxes associated with distributions to the Former Parent, non-deductible executive compensation, and non-deductible costs associated with the separation and distribution. The increase in the ETR from 2021 to 2022 is primarily related to the change in valuation allowance and withholding taxes associated with distributions to the Former Parent.
 
Although the Parent is domiciled outside of the United States, as the most significant activity is driven and managed in the United States, the Company has utilized the statutory tax rate of 21.0% as the federal statutory rate in the rate reconciliation.
The following table presents the significant components of the Company’s deferred tax assets and liabilities as of December 31, 2023 and 2022:

 Year Ended December 31,
 20232022
 (in thousands)
Deferred tax assets:
Accrued expenses and reserves$40,105 $33,778 
Operating lease liabilities13,973 15,401 
Share-based compensation2,000 2,215 
Net operating loss carryforwards465 6,587 
Capitalized research and development expenditures65,528 37,180 
Other8,442 7,463 
Gross deferred tax assets130,513 102,624 
Valuation allowance(7,358)(7,903)
Total deferred tax assets, net of valuation allowance$123,155 $94,721 
Deferred tax liabilities:
Goodwill and intangible assets(126,063)(128,713)
Property and equipment, net(1,848)(3,887)
Derivative financial instruments— (4,367)
Right-of-use assets(11,732)(12,439)
Total deferred tax liabilities(139,643)(149,406)
Net deferred tax liabilities$(16,488)$(54,685)

A valuation allowance is provided for deferred tax assets where the recoverability of the assets is uncertain. The determination to provide a valuation allowance is dependent upon the assessment of whether it is more likely than not that sufficient future taxable income will be generated to utilize the deferred tax assets. Based on the weight of the available evidence, which includes the Company’s historical operating profits and substantial taxable temporary differences, a valuation allowance has been established in certain jurisdictions as of December 31, 2023 and 2022, where attributes are not more-likely-than-not to be utilized, primarily in relation to Massachusetts tax credits.

As of December 31, 2023, the Company had foreign net operating loss carryforwards of $3.1 million and state research and development credit carryforwards of $9.0 million, which will begin to expire in 2024 and 2036, respectively.

Federal and state laws impose restrictions on the utilization of net operating loss carryforwards and research and development credit carryforwards in the event of a change in ownership of the Company, which constitutes an ‘ownership change’ as defined by Internal Revenue Code Section 382 and 383. The Company experienced an ownership change in the past that does not materially impact the availability of its net operating losses and tax credits. Should there be an ownership change in the future, the Company’s ability to utilize existing carryforwards could be substantially restricted.

As of December 31, 2023 and 2022, the Company did not have unremitted earnings when evaluating the outside basis difference relating to its investment in foreign subsidiaries. However, there could be local withholding taxes payable due to various foreign countries if certain lower tier earnings are distributed. Withholding taxes and state income taxes that would be payable upon remittance of these lower tier earnings were not material as of December 31, 2023 and 2022.
A reconciliation of the beginning and ending balance of total unrecognized tax position is as follows:

 Unrecognized Tax Positions
 (in thousands)
Balance - January 1, 2021$2,999 
Additions related to current year tax positions12 
Statue of limitations release(903)
Balance - December 31, 2021$2,108 
Additions related to current year tax positions982 
Statue of limitations release(673)
Balance - December 31, 2022$2,417 
Additions related to current year tax positions277 
Statue of limitations release(570)
Settlements(1,319)
Balance - December 31, 2023$805 

As of December 31, 2023, 2022 and 2021, an immaterial amount of the unrecognized tax benefits would affect the Company’s effective tax rate, if recognized and an immaterial amount is expected to reverse in the next twelve months.

The Company recognizes interest and penalties related to unrecognized tax benefits as income tax expense. There was $1.1 million and $1.4 million of accrued interest and penalties related to unrecognized tax benefits as of December 31, 2023 and 2022, respectively. During the years ended December 31, 2023, 2022 and 2021, the Company recorded an immaterial benefit for the accrual of interest and penalties.

The Company’s material income tax jurisdictions are the United States (federal) and UK. The Company is not currently under audit in the United States, but is currently under audit in the UK for the 2020 tax year. The statute of limitations for years prior to 2020 are closed for the United States and the UK. There are open tax years which remain subject to examination in various other jurisdictions that are not material to the Company’s financial statements with open tax years ranging from 2013 to 2023.