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Income Taxes | 12 Months Ended
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Dec. 31, 2023
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The components of income before provision for income taxes were as follows for the years ended December 31, 2023, 2022 and 2021 (in thousands):
| 2023 |  | 2022 |  | 2021
U.S. | $ | 20,146 |  |  | $ | 61,383 |  |  | $ | 70,300 |
Foreign | 632,381 |  |  | 596,620 |  |  | 657,921 |
Income before provision for income taxes | $ | 652,527 |  |  | $ | 658,003 |  |  | $ | 728,221 |
The provision for income taxes consisted of the following for the years ended December 31, 2023, 2022 and 2021 (in thousands):
| 2023 |  | 2022 |  | 2021
Current tax provision: |  |  |  |  |
Federal | $ | 23,406 |  |  | $ | 49,808 |  |  | $ | 11,824 |
State | 6,731 |  |  | 9,214 |  |  | 8,515 |
Foreign | 99,223 |  |  | 172,645 |  |  | 90,026 |
Deferred tax benefit: |  |  |  |  |
Federal | (18,213) |  |  | (73,826) |  |  | (33,366) |
State | (6,692) |  |  | (18,657) |  |  | (14,611) |
Foreign | (2,536) |  |  | (16,595) |  |  | (4,358) |
Change in valuation allowance | 4,454 |  |  | 4,107 |  |  | 4,541 |
Total | $ | 106,373 |  |  | $ | 126,696 |  |  | $ | 62,571 |
The Company’s effective tax rate differed from the U.S. federal statutory tax rate as follows for the years ended December 31, 2023, 2022 and 2021:
| 2023 |  | 2022 |  | 2021
U.S. federal income tax rate | 21.0 | % |  | 21.0 | % |  | 21.0 | %
State taxes | 1.0 |  |  | 0.7 |  |  | 0.7 |
Stock-based compensation | 3.6 |  |  | 2.0 |  |  | 0.1 |
U.S. federal, state and foreign research and development credits | (4.7) |  |  | (5.1) |  |  | (3.7) |
Foreign earnings | (6.5) |  |  | (6.6) |  |  | (7.3) |
Nondeductible (nontaxable) foreign items | (0.2) |  |  | 0.7 |  |  | — |
Global intangible low-taxed income | 1.1 |  |  | 2.5 |  |  | 0.5 |
Release of uncertain tax position reserve | (0.4) |  |  | (0.7) |  |  | (1.0) |
Intercompany sale of intellectual property | 0.6 |  |  | 4.0 |  |  | — |
Valuation allowance | 0.7 |  |  | 0.6 |  |  | 0.6 |
Foreign-derived intangible income | (1.1) |  |  | (0.8) |  |  | (0.5) |
Other | 1.2 |  |  | 1.0 |  |  | (1.8) |
| 16.3 | % |  | 19.3 | % |  | 8.6 | %
The components of the net deferred tax assets and liabilities and the related valuation allowance as of December 31, 2023 and 2022 were as follows (in thousands):
| 2023 |  | 2022
Accrued bonus | $ | 3,716 |  |  | $ | 21,181 |
Deferred revenue | 14,223 |  |  | 11,925 |
Operating lease liabilities | 116,752 |  |  | 125,567 |
Stock-based compensation | 42,856 |  |  | 19,874 |
NOLs | 19,791 |  |  | 18,172 |
Tax credit carryforwards | 96,020 |  |  | 93,672 |
Capitalized research and development costs | 108,592 |  |  | 43,215 |
Convertible senior notes interest | 111,509 |  |  | 75,603 |
Depreciation and amortization | 66,053 |  |  | 79,595 |
Other | 21,856 |  |  | 28,879 |
Deferred tax assets | 601,368 |  |  | 517,683 |
Acquired intangible assets | (12,126) |  |  | (530) |
Operating lease right-of-use assets | (103,392) |  |  | (113,118) |
Deferred commissions | (14,752) |  |  | (12,949) |
Capitalized internal-use software development costs | (31,719) |  |  | (30,559) |
Deferred tax liabilities | (161,989) |  |  | (157,156) |
Valuation allowance | (45,704) |  |  | (41,250) |
Net deferred tax assets | $ | 393,675 |  |  | $ | 319,277 |
As summary of activity in the valuation allowance on deferred tax assets for the years ended December 31, 2023, 2022 and 2021 is as follows (in thousands):
| 2023 |  | 2022 |  | 2021
Beginning balance | $ | 41,250 |  |  | $ | 37,143 |  |  | $ | 32,602 |
Charges to income tax expense | 4,814 |  |  | 4,392 |  |  | 4,707 |
Release of valuation allowance | (360) |  |  | (285) |  |  | (166) |
Ending balance | $ | 45,704 |  |  | $ | 41,250 |  |  | $ | 37,143 |
Valuation allowances will be recognized on deferred tax assets if it is more-likely-than-not that some or all of the deferred tax assets will not be utilized. In measuring deferred tax assets, the Company considers all available evidence, both positive and negative, to determine whether a valuation allowance is needed. As of December 31, 2023, the Company recorded a $45.7 million valuation allowance against deferred tax assets related to state and foreign tax credits, foreign tax deductions and state and foreign NOLs in which it is more-likely-than-not that such attributes will expire prior to utilization. The increase in the valuation allowance during 2023 was $4.5 million. The increase in the valuation allowance is primarily related to state tax credits and foreign tax deductions. The Company's NOL and tax credit carryforwards in U.S. federal, state and foreign jurisdictions as of December 31, 2023 and 2022 were as follows (in thousands, except years):
| 2023 |  | 2022 |  | Expirations at Various Dates Through:
NOL carryforwards: |  |  |  |  |
Federal | $ | 32,700 |  |  | $ | 30,100 |  |  | 2037
State | 33,100 |  |  | 22,400 |  |  | 2043
Foreign | 42,600 |  |  | 40,100 |  |  | 2039
Federal and state research and development tax credit and other credit carryforwards | 125,200 |  |  | 121,300 |  |  | 2038
A portion of the Company's U.S. federal, state and foreign NOL carryforwards relate to acquisitions completed between 2012 and 2023. As of December 31, 2023, accumulated earnings outside the U.S. totaled $2.1 billion, the majority of which have been taxed due to the one-time transition tax on the mandatory deemed repatriation of cumulative foreign earnings and the tax on global intangible low-taxed income required by the U.S. Tax Cuts and Jobs Act ("TCJA"). No provision for U.S. state income taxes and foreign withholding taxes has been provided for any remaining undistributed foreign earnings not subject to tax under the TCJA, or any additional basis differences inherent in the Company's international subsidiaries, as these amounts continue to be indefinitely reinvested. Determination of the amount of the unrecognized deferred tax liability on outside basis differences is not practicable because of the complexity of laws and regulations, the varying tax treatment of alternative repatriation scenarios and the variation due to multiple potential assumptions relating to the timing of any future repatriation. The changes in the Company’s unrecognized tax benefits for the years ended December 31, 2023, 2022 and 2021 were as follows (in thousands):
| 2023 |  | 2022 |  | 2021
Balance at beginning of year | $ | 67,958 |  |  | $ | 22,563 |  |  | $ | 24,105 |
Gross increases – tax positions of prior periods | 2,074 |  |  | 3,880 |  |  | 4,293 |
Gross increases – current period tax positions | 4,091 |  |  | 45,975 |  |  | 3,607 |
Gross decreases – tax positions of prior periods | (3,685) |  |  | (688) |  |  | (816) |
Gross decreases – lapse of applicable statute of limitations | (1,780) |  |  | (3,772) |  |  | (8,626) |
Balance at end of year | $ | 68,658 |  |  | $ | 67,958 |  |  | $ | 22,563 |
As of December 31, 2023, 2022 and 2021, the Company had $39.1 million, $38.3 million and $23.1 million of unrecognized tax benefits, respectively. Total interest and penalties for unrecognized tax benefits includes $11.0 million, $8.6 million and $7.2 million as of December 31, 2023, 2022 and 2021, respectively. Interest and penalties related to unrecognized tax benefits are recorded in the provision for income taxes and were $2.4 million, $2.0 million and $0.5 million for the years ended December 31, 2023, 2022 and 2021, respectively. The amount of unrecognized tax benefits that, if recognized, would impact the effective income tax rate is $36.0 million. As of December 31, 2023, it is reasonably possible that $3.8 million of unrecognized tax benefits may be recognized within the next 12 months due to the expiration of local statutes of limitations. Certain U.S. state and foreign income tax returns from 2015 through 2021 are currently under audit. The Company has reserved for those positions that are not more-likely-than-not to be sustained.

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