XML 36 R21.htm IDEA: XBRL DOCUMENT v3.22.1
Income Taxes
 12 Months Ended
Mar. 31, 2022
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
All of the Company’s income before income taxes was generated in the United States for the fiscal year ended March 31, 2022, 2021, and 2020.
The Company’s provision for (benefit from) income taxes consisted of the following (in thousands):
Fiscal Year Ended March 31,
202220212020
Current provision:
Federal$160 $1,302 $— 
State309 1,270 876 
Total469 2,572 876 
Deferred provision (benefit):
Federal(34,852)4,862 (6,458)
State(6,395)125 (641)
Total(41,247)4,987 (7,099)
Total provision for (benefit from) income taxes$(40,778)$7,559 $(6,223)
The following is a reconciliation of the income tax expense at the federal statutory tax rate to the Company’s provision for (benefit from) income taxes (in thousands):
Fiscal Year Ended March 31,
202220212020
Income taxes at statutory rate$23,941 $12,131 $4,938 
State income taxes, net of federal benefit5,503 2,532 1,561 
Research and development credits(8,332)(1,845)(1,842)
Stock-based compensation(71,780)(5,796)310 
Change in valuation allowance1,878 171 (11,995)
Section 162(m) limitation7,260 — — 
Other752 366 805 
Total provision for (benefit from) income taxes$(40,778)$7,559 $(6,223)
Components of deferred tax assets and liabilities were as follows (in thousands):
As of March 31,
20222021
Deferred tax assets:
Accruals and deferred revenue$1,760 $1,257 
Net operating loss carryforwards32,215 486 
Research & development credit carryforwards12,310 4,516 
Operating lease liabilities276 315 
Acquisition and other related expense255 271 
Stock-based compensation expense3,847 431 
Unrealized loss5,199 — 
Gross deferred tax assets55,862 7,276 
Less: valuation allowance(4,731)(2,896)
Deferred tax assets, net of valuation allowance51,131 4,380 
Deferred tax liabilities:
Property and equipment(1,899)(1,701)
Operating lease right-of-use assets(276)(336)
Intangible assets(398)(231)
Deferred tax liabilities(2,573)(2,268)
Net deferred tax assets$48,558 $2,112 
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, was enacted and signed into law. The CARES Act did not have a material impact to the Company's consolidated financial statements.
The Company maintains a valuation allowance related to specific net deferred tax assets where it is not more likely than not that the deferred tax assets will be realized, which include California research and development credits and capital loss carryforwards. The Company concluded, based upon the preponderance of positive evidence (i.e., a strong earnings history exclusive of the loss that created the future deductible amount, a history of taxable income in recent periods, the taxable loss is a result of excess tax benefit on stock exercises as a result of a non-recurring event (IPO), and the current forecast of income before taxes for the United States going forward) over negative evidence and the anticipated ability to use the deferred tax assets, that it was more likely than not that the deferred tax assets could be realized. If there are unfavorable changes to actual operating results or to projections of future income, the Company may determine that it is more likely than not such deferred tax assets may not be realizable.
The valuation allowance was $4.7 million and $2.9 million as of March 31, 2022 and 2021, respectively, relating to the California research and development tax credits and capital loss carryforwards. The valuation allowance increased by $1.8 million during the fiscal year ended March 31, 2022, primarily due to the increase in California research and development credits generated during the year. The change in valuation allowance during the fiscal year ended March 31, 2021 was not material.
As of March 31, 2022, the Company had net operating loss, or NOL, carryforwards for state tax purposes of $97.1 million and $124.1 million for federal tax purposes. If not utilized, $83.6 million of the state NOL carryforwards will expire at various dates beginning in the year 2027. The federal NOL carryforwards can be carried forward indefinitely. As of March 31, 2022, the Company had research and development tax credit carryforwards for federal and state tax purposes of $11.4 million and $8.4 million, respectively. The federal research and development tax credit carryforwards will expire at various dates beginning in the year 2040. If not utilized, $0.2 million of the state research and development tax credit carryforwards will expire at various dates beginning in the year 2032. Based on an assessment of the Company’s historical ownership changes through March 31, 2022, the Company does not anticipate a current limitation on the tax attributes.
As of March 31, 2022 and 2021, the Company had unrecognized tax benefits, or UTBs, of $6.2 million and $3.2 million, respectively. If realized, $4.2 million would impact the effective tax rate while the remainder would reduce deferred tax assets subject to a full valuation allowance. The Company does not expect any material changes to its UTBs within the next 12 months.
A reconciliation of the beginning and ending balances for gross UTBs is as follows (in thousands):
Fiscal Year Ended March 31,
202220212020
Beginning balance$3,162 $2,475 $2,900 
Additions for tax positions related to the current year2,995 687 670 
Additions for tax positions related to prior years36 — — 
Reductions for tax positions related to prior years— — (1,095)
Reductions related to a lapse of statute(5)— — 
Ending balance$6,188 $3,162 $2,475 
Interest and penalties were not material during the years ended March 31, 2022, 2021, and 2020.
The Company files income tax returns in the U.S. federal and various state jurisdictions. With limited exceptions, all tax years for which the Company has filed a tax return remain subject to examination.