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Income Taxes
 12 Months Ended
Mar. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Income tax provision
Income (loss) before income taxes includes the following (in thousands):
Fiscal Year Ended March 31,
202420232022
Domestic$82,033 $63,869 $(2,977)
Foreign72,882 26,098 74,636 
Total$154,915 $89,967 $71,659 
The income tax provision includes the following (in thousands):
Fiscal Year Ended March 31,
202420232022
Current tax position:
Federal$44,568 $11,947 $8,290 
State(6,236)8,071 2,257 
Foreign21,839 15,335 21,406 
Total current tax position60,171 35,353 31,953 
Deferred tax provision:
Federal(52,712)(50,345)(1,341)
State(3,500)(1,689)— 
Foreign(3,676)(1,311)(11,404)
Total deferred tax provision(59,888)(53,345)(12,745)
Total income tax expense (benefit)$283 $(17,992)$19,208 
The Company’s income tax (benefit) differs from the amounts computed by applying the U.S. federal income tax rate of 21% for the years ended March 31, 2024, 2023 and 2022 to pre-tax income, as a result of the following (in thousands):
Fiscal Year Ended March 31,
202420232022
Income tax expense at U.S. federal statutory income tax rate$32,532 $18,893 $15,048 
State and local tax expense (benefit)306 1,421 (3,065)
Foreign tax rate differential3,318 1,770 3,181 
U.S. effects of foreign branch income8,662 1,519 11,016 
Non-deductible expenses1,742 1,216 898 
Tax credits(41,740)(26,457)(27,983)
GILTI inclusion and FDII deduction(13,905)(10,938)(2,708)
Employee compensation(7,188)5,528 (17,180)
Changes in uncertain tax positions(14,835)10,978 501 
Changes in valuation allowance13,080 (32,629)32,026 
Foreign withholding tax18,469 12,598 9,312 
Effects of changes in tax laws(186)382 (859)
Inflation and currency related adjustments851 (1,518)(592)
Other adjustments(823)(755)(387)
Total income tax expense (benefit) $283 $(17,992)$19,208 
Deferred tax assets and liabilities
As of March 31, 2024, the Company continues to maintain a valuation allowance of $32.1 million with respect to certain U.S. federal and state deferred tax assets that, due to their nature, are not likely to be realized. In addition, the Company continues to maintain a valuation allowance of $8.4 million with respect to its deferred tax assets in certain non-U.S. jurisdictions. The net change in the valuation allowance during the year ended March 31, 2024 was $16.9 million.
Temporary differences and carryforwards that give rise to a significant portion of deferred tax assets and liabilities are as follows (in thousands):
March 31,
20242023
Deferred tax assets:
Deferred revenue$26,088 $22,639 
Capitalized research and development costs106,836 51,933 
Accrued expenses20,284 12,714 
Share-based compensation28,518 28,831 
Lease liabilities14,892 15,286 
Net operating loss carryforwards10,998 4,216 
Other tax carryforwards, primarily foreign tax credits29,822 21,853 
Other3,070 7,726 
Total deferred tax assets240,508 165,198 
Valuation allowance(40,530)(23,608)
Total deferred tax assets, net valuation allowance199,978 141,590 
Deferred tax liabilities:
Intangible assets12,880 17,953 
Right-of-use assets12,826 13,466 
Deferred commissions33,798 28,039 
Other2,651 2,590 
Total deferred tax liabilities62,155 62,048 
Net deferred tax assets$137,823 $79,542 
At March 31, 2024, the Company had non-U.S. net operating loss carryforwards of $44.5 million, and non-U.S. tax credit carryforwards of $0.5 million, all of which may be carried forward indefinitely. The Company had U.S. state and local net operating loss carryforwards of $35.9 million, of which $33.0 million expire in periods through 2042 if not utilized, and the remaining balance of $2.9 million may be carried forward indefinitely. The Company had U.S. federal tax credit carryforwards of $29.2 million, which expire in periods through 2034. Deferred tax assets of $28.8 million related to U.S. state net operating losses and federal tax credit carryforwards are subject to valuation allowances as of March 31, 2024.
The Company has not provided for taxes on the excess of the amount for financial reporting over the tax basis of investments in foreign subsidiaries as the Company maintains its assertion that it intends these to be indefinitely reinvested. Generally, these earnings will be treated as previously taxed income from either the one-time transition tax or GILTI, or they will be offset with a 100% dividend received deduction. The income taxes applicable to repatriating such earnings are not readily determinable.
Uncertain tax positions
The amount of gross unrecognized tax benefits (“UTBs”) was $13.7 million and $29.1 million as of March 31, 2024 and 2023, respectively, all of which would favorably affect the Company’s effective tax rate if recognized in future periods.
The following is a tabular reconciliation of the total amounts of unrecognized tax benefits for the years ended March 31, 2024, 2023, and 2022 (in thousands):
Fiscal Year Ended March 31,
202420232022
Gross unrecognized tax benefit, beginning of year$29,110 $15,017 $15,075 
Gross increases to tax positions for prior periods721 16,471 222 
Gross decreases to tax positions for prior periods(4,277)(808)— 
Decreases related to settlements(168)(625)— 
Decreases due to lapse of statutes of limitations(11,689)(832)(313)
Foreign currency translation$(29)$(113)$33 
Gross unrecognized tax benefit, end of year$13,668 $29,110 $15,017 
As of March 31, 2024 and 2023, the net interest and penalties payable associated with uncertain tax positions was $1.1 million and $2.5 million, respectively. During the years ended March 31, 2024, 2023, and 2022, the Company recognized a benefit of $1.4 million, and expense of $1.0 million and $0.6 million, respectively, related to interest and penalties.
The Company files tax returns in U.S. federal, state, and foreign jurisdictions and the tax returns are subject to examination by various domestic and international tax authorities. As of March 31, 2024, the Company has open U.S. federal tax years back to fiscal year 2021. The Company also has open years in certain significant state jurisdictions back to fiscal year 2019, and foreign jurisdictions back to 2014. These open years contain matters that could be subject to differing interpretations of applicable tax laws and regulations due to the amount, timing or inclusion of revenue and expenses. It is reasonably possible that approximately $3.0 million of certain U.S. and foreign UTBs may be recognized within the next twelve months as a result of a lapse of the statute of limitations.