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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Set forth below is a reconciliation of the components that caused our (benefit from) provision for income taxes to differ from amounts computed by applying the United States federal statutory rate:
 
Year Ended December 31,
 202420232022
U.S. federal statutory income tax rate21 %21 %21 %
State and local income taxes, net of federal benefit(2)(44)9 
Change in valuation allowance(37)215 (37)
Stock-based compensation expense(13)(108)7 
Federal research and development tax credits(10)(93)5 
Non-deductible officers' compensation5 79 (6)
Other permanent differences— (4)(1)
(Benefit from) provision for income taxes(36)%66 %(2)%
The (benefit from) provision for income tax consists of the following (in thousands):
Year Ended December 31,
202420232022
Current
       Federal$26,452 $3,485 $1,313 
       State and local6,280 2,299 686 
       Foreign30 — — 
Total current32,762 5,784 1,999 
Deferred
       Federal(46,578)(477)(854)
       State and local(39,930)(12)257 
Total deferred(86,508)(489)(597)
Total (benefit from) provision for income taxes$(53,746)$5,295 $1,402 
The components of deferred tax assets (liabilities) were as follows (in thousands):
 
December 31,
 20242023
Deferred income tax assets:  
Net operating loss carryforwards$9,201 $6,502 
Research and development tax credits24,326 19,513 
Capitalized research and software costs66,090 33,958 
Stock-based compensation413 2,894 
Lease liability11,139 11,914 
Other1,495 3,384 
Total deferred tax assets112,664 78,165 
Valuation allowance— (62,380)
Deferred tax assets, net of valuation allowance$112,664 $15,785 
Deferred tax liabilities:
Property and equipment$(3,351)$(4,189)
Intangible assets(15,387)(2,921)
Capitalized commissions(4,463)(4,237)
State taxes(7,749)— 
Lease asset(4,695)(5,135)
Other(109)— 
Total deferred tax liabilities(35,754)(16,482)
Total net deferred tax liabilities$76,910 $(697)
As of December 31, 2024, the decrease in our valuation allowance of $62.4 million is comprised of decrease in our federal and state valuation allowance of $31.1 million and $31.3 million respectively. In evaluating the need for a valuation allowance at each reporting period, we consider the weighting of all available positive and negative evidence, which includes, among other things, the nature, frequency and severity of current and cumulative taxable income or losses, future projections of profitability, timing of the future reversal of existing temporary differences, and the duration of statutory carryforward periods. In assessing all available evidence, we determined that there was sufficient positive evidence to overcome the negative evidence, including our past and current financial results, growth demonstrated in our top-line performance, as well as projected profitability. Accordingly, we determined it is more likely than not that the deferred tax assets will be realized and we released our valuation allowance at December 31, 2024.
As of December 31, 2024, we had federal and state net operating loss carryforwards $14.4 million and $85.1 million, respectively. The federal net operating loss carryovers do not expire and state net operating losses will begin to expire in 2025. As of December 31, 2024, we also had federal and state research and development credit carryforwards of $0.9 million and $31.4 million, respectively. The federal credit carryforwards will begin to expire in 2044, while the state credit carryforwards
apply indefinitely. Utilization of our net operating loss and credit carryforwards may be subject to annual limitation due to the ownership change limitations provided by the Internal Revenue Code and similar state provisions.
The change in the valuation allowance are as follows (in thousands):
 
Year Ended December 31,
 202420232022
Valuation allowance, at beginning of year$62,380 $43,776 $17,217 
Increase in valuation allowance
— 18,604 26,559 
Decrease in valuation allowance(62,380)— — 
Valuation allowance, at end of year$— $62,380 $43,776 
 
The following is a reconciliation of the total amounts of reserves for unrecognized tax benefits from uncertain tax positions (in thousands):
 
Year Ended December 31,
 202420232022
Unrecognized tax benefit beginning of year$12,315 $9,455 $7,816 
Increases-tax positions in prior year1,203 — — 
Increases-tax positions in current year3,732 2,860 1,639 
Statute of limitation expiration$(2,315)$— $— 
Unrecognized tax benefit end of year$14,935 $12,315 $9,455 
As of December 31, 2024, we recorded gross uncertain tax benefits of $14.9 million a majority of which would impact our effective tax rate, if recognized. We accrued interest and penalties related to our uncertain income tax positions in our income tax expense and accrued no interest and penalties for the year ended December 31, 2024 and 2023. We do not anticipate that the amount of unrecognized tax benefits will significantly increase or decrease within the next twelve months.
We file income tax returns in the U.S. federal jurisdiction and various state and local jurisdictions. While the applicable statute of limitations are generally open for three to four years for the jurisdictions we file in, we remain subject to income tax examinations for years ended after December 31, 2019 for federal taxes and all years for most state jurisdictions due to the usage of carryforward attributes, such as net operating losses and research and development credits. As of December 31, 2024, we have not been notified for audit by the Internal Revenue Service or any significant state jurisdiction.