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Income Taxes
 12 Months Ended
Dec. 31, 2024
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, 2024, 2023 and 2022 (in thousands):
 
202420232022
U.S.$54,465 $20,146 $61,383 
Foreign532,548 632,381 596,620 
Income before provision for income taxes$587,013 $652,527 $658,003 

The provision for income taxes consisted of the following for the years ended December 31, 2024, 2023 and 2022 (in thousands):
 
202420232022
Current tax provision:
Federal$23,870 $23,406 $49,808 
State6,998 6,731 9,214 
Foreign121,495 99,223 172,645 
Deferred tax benefit:
Federal(43,695)(18,213)(73,826)
State(14,959)(6,692)(18,657)
Foreign(7,525)(2,536)(16,595)
Change in valuation allowance(4,089)4,454 4,107 
Total$82,095 $106,373 $126,696 

The Company’s effective tax rate differed from the U.S. federal statutory tax rate as follows for the years ended December 31, 2024, 2023 and 2022:
 
202420232022
U.S. federal statutory tax rate
21.0 %21.0 %21.0 %
State taxes1.1 1.0 0.7 
Stock-based compensation0.7 3.6 2.0 
U.S. federal, state and foreign research and development credits(6.4)(4.7)(5.1)
Foreign earnings(2.3)(6.5)(6.6)
Nondeductible (nontaxable) foreign items1.0 (0.2)0.7 
Global intangible low-taxed income1.0 1.1 2.5 
Change in prior year uncertain tax position reserve
1.4 — 0.4 
Release of uncertain tax position reserve(0.6)(0.4)(0.7)
Intercompany sale of intellectual property(4.7)0.6 4.0 
Valuation allowance(0.7)0.7 0.6 
Nondeductible transfer pricing
1.9 1.0 0.5 
Foreign-derived intangible income
(1.4)(1.1)(0.8)
Other2.0 0.2 0.1 
14.0 %16.3 %19.3 %
The components of the net deferred tax assets and liabilities and the related valuation allowance as of December 31, 2024 and 2023 were as follows (in thousands):
 
20242023
Accrued bonus$1,958 $3,716 
Deferred revenue20,598 14,223 
Acquired intangible assets
23,731 — 
Operating lease liabilities108,429 116,752 
Stock-based compensation48,486 42,856 
NOLs21,769 19,791 
Tax credit carryforwards101,508 96,020 
Capitalized research and development costs188,470 108,592 
Convertible senior notes interest82,881 111,509 
Depreciation and amortization43,601 66,053 
Other39,917 21,856 
Deferred tax assets681,348 601,368 
Acquired intangible assets— (12,126)
Operating lease right-of-use assets(96,683)(103,392)
Deferred commissions(25,477)(14,752)
Capitalized internal-use software development costs(50,390)(31,719)
Deferred tax liabilities(172,550)(161,989)
Valuation allowance(41,615)(45,704)
Net deferred tax assets$467,183 $393,675 

As summary of activity in the valuation allowance on deferred tax assets for the years ended December 31, 2024, 2023 and 2022 is as follows (in thousands):

202420232022
Beginning balance$45,704 $41,250 $37,143 
Charges to income tax expense3,469 4,814 4,392 
Release of valuation allowance(7,558)(360)(285)
Ending balance$41,615 $45,704 $41,250 

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, 2024, the Company recorded a $41.6 million valuation allowance against deferred tax assets related to state and foreign tax credits, foreign tax deductions and foreign NOLs in which it is more-likely-than-not that such attributes will expire prior to utilization. The decrease in the valuation allowance during 2024 was $4.1 million, which includes a decrease in the beginning balance of $6.5 million due to a change in expected utilization of 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, 2024 and 2023 were as follows (in thousands, except years):

20242023Expirations at Various Dates Through:
NOL carryforwards:
Federal$31,500 $32,700 2035
State$58,600 $33,100 2046
Foreign$47,900 $42,600 2039
Federal and state research and development tax credit and other credit carryforwards$133,400 $125,200 2039

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, 2024, accumulated earnings outside the U.S. totaled $2.3 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, 2024, 2023 and 2022 were as follows (in thousands):

202420232022
Balance at beginning of year$68,658 $67,958 $22,563 
Gross increases – tax positions of prior periods11,150 2,074 3,880 
Gross increases – current period tax positions4,223 4,091 45,975 
Gross decreases – tax positions of prior periods(1,445)(3,685)(688)
Gross decreases – lapse of applicable statute of limitations(2,665)(1,780)(3,772)
Balance at end of year$79,921 $68,658 $67,958 

As of December 31, 2024, 2023 and 2022, the Company had $48.8 million, $39.1 million and $38.3 million of unrecognized tax benefits, respectively. Total interest and penalties for unrecognized tax benefits includes $16.3 million, $11.0 million and $8.6 million as of December 31, 2024, 2023 and 2022, respectively. Interest and penalties related to unrecognized tax benefits are recorded in the provision for income taxes and were $7.5 million, $2.4 million and $2.0 million for the years ended December 31, 2024, 2023 and 2022, respectively. The amount of unrecognized tax benefits that, if recognized, would impact the effective income tax rate is $43.7 million.

As of December 31, 2024, it is reasonably possible that $2.6 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. federal, state and foreign income tax returns from 2015 through 2022 are currently under audit. The Company has reserved for those positions that are not more-likely-than-not to be sustained.