XML 38 R22.htm IDEA: XBRL DOCUMENT v3.23.1
Income Taxes
 12 Months Ended
Mar. 31, 2023
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, 2023, 2022, and 2021.
The Company’s provision for (benefit from) income taxes consisted of the following (in thousands):
Fiscal Year Ended March 31,
202320222021
Current provision:
Federal$3,515 $160 $1,302 
State3,498 309 1,270 
Total7,013 469 2,572 
Deferred provision (benefit):
Federal11,834 (34,852)4,862 
State1,491 (6,395)125 
Total13,325 (41,247)4,987 
Total provision for (benefit from) income taxes$20,338 $(40,778)$7,559 
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,
202320222021
Income taxes at statutory rate$27,963 $23,941 $12,131 
State income taxes, net of federal benefit6,757 5,503 2,532 
Research and development credits(5,076)(8,332)(1,845)
Stock-based compensation(14,841)(71,780)(5,796)
Change in valuation allowance504 1,878 171 
Section 162(m) limitation4,782 7,260 — 
Other249 752 366 
Total provision for (benefit from) income taxes$20,338 $(40,778)$7,559 
Components of deferred tax assets and liabilities were as follows (in thousands):
As of March 31,
20232022
Deferred tax assets:
Accruals and deferred revenue$2,744 $1,760 
Net operating loss carryforwards1,733 32,215 
Research & development credit carryforwards7,230 12,310 
Operating lease liabilities3,968 276 
Acquisition and other related expense298 255 
Stock-based compensation expense6,492 3,847 
Unrealized loss4,785 5,199 
Capitalized research and development19,825 — 
Gross deferred tax assets47,075 55,862 
Less: valuation allowance(5,236)(4,731)
Deferred tax assets, net of valuation allowance41,839 51,131 
Deferred tax liabilities:
Property and equipment(2,734)(1,899)
Operating lease right-of-use assets(3,506)(276)
Intangible assets(692)(398)
Deferred tax liabilities(6,932)(2,573)
Net deferred tax assets$34,907 $48,558 
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, California alternative minimum tax 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 $5.2 million and $4.7 million as of March 31, 2023 and 2022, respectively, relating to the California research and development tax credits, California alternative minimum tax credits, and capital loss carryforwards. The valuation allowance increased by $0.5 million during the fiscal year ended March 31, 2023 primarily due to 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.
As of March 31, 2023, the Company had net operating loss, or NOL, carryforwards for state tax purposes of $15.3 million and no NOL carryforwards for federal tax purposes. Portions of the NOL carryforwards will expire at various dates beginning in the tax year ending March 31, 2035. As of March 31, 2023, the Company had research and development tax credit carryforwards for federal and state tax purposes of $7.4 million and $9.0 million, respectively. The federal research and development tax credit carryforwards will expire beginning in the year ending March 31, 2042. The California state research and development tax credit carryforwards do not expire. The other state research and development tax credit carryforwards will expire at various dates beginning in the year ending March 31, 2032. Based on an assessment of the Company’s historical ownership changes through March 31, 2023, the Company does not anticipate a current limitation on the tax attributes.
As of March 31, 2023 and 2022, the Company had unrecognized tax benefits, or UTBs, of $7.9 million and $6.2 million, respectively. If realized, $5.9 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,
202320222021
Beginning balance$6,188 $3,162 $2,475 
Additions for tax positions related to the current year2,210 2,995 687 
Additions for tax positions related to prior years— 36 — 
Reductions for tax positions related to prior years(472)— — 
Reductions related to a lapse of statute(13)(5)— 
Ending balance$7,913 $6,188 $3,162 
Interest and penalties were not material during the fiscal years ended March 31, 2023, 2022, and 2021.
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.