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INCOME TAXES | 12 Months Ended
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Dec. 31, 2023
Income Tax Disclosure [Abstract] |
INCOME TAXES | 18. INCOME TAXES The components of income (loss) before provision for (benefit from) income taxes are:
(in thousands) | 2023 |  | 2022 |  | 2021
Domestic | $ | 14,016 |  |  | $ | (185,820) |  |  | $ | (125,947) |
Foreign | 81,424 |  |  | 24,023 |  |  | (6,040) |
| $ | 95,440 |  |  | $ | (161,797) |  |  | $ | (131,987) |
The components of provision for (benefit from) income taxes are:
(in thousands) | 2023 |  | 2022 |  | 2021
Current: |  |  |  |  |
Federal | $ | 7,827 |  |  | $ | 3,920 |  |  | $ | 1,921 |
State | 4,480 |  |  | 775 |  |  | 363 |
Foreign | 14,962 |  |  | 10,200 |  |  | 4,105 |
Total current provision | 27,269 |  |  | 14,895 |  |  | 6,389 |
Deferred: |  |  |  |  |
Federal | — |  |  | 149,028 |  |  | (42,214) |
State | — |  |  | 20,704 |  |  | (9,413) |
Foreign | 363 |  |  | (842) |  |  | (23,709) |
Total deferred provision (benefit) | 363 |  |  | 168,890 |  |  | (75,336) |
| $ | 27,632 |  |  | $ | 183,785 |  |  | $ | (68,947) |
A reconciliation of the U.S federal statutory tax rate and the Company’s effective tax rate:
(in thousands) | 2023 |  | 2022 |  | 2021
U.S. federal income taxes at statutory rates | $ | 20,042 |  |  | $ | (33,977) |  |  | $ | (27,717) |
Valuation allowance | (19,272) |  |  | 188,258 |  |  | (469) |
State income taxes, net of federal benefit and tax credits | 4,117 |  |  | (2,433) |  |  | (7,217) |
Permanent differences | 435 |  |  | 11,561 |  |  | 541 |
Federal research and experimentation credits | (3,709) |  |  | (5,012) |  |  | (6,380) |
Tax effects of foreign activities | 658 |  |  | 3,770 |  |  | 3,599 |
GILTI, FDII, and BEAT | 14,022 |  |  | 16,390 |  |  | — |
Provision to return adjustments | (3,728) |  |  | (6,317) |  |  | (2,016) |
Non-deductible compensation | 6,818 |  |  | 4,769 |  |  | 5,464 |
Tax Reserves | 1,850 |  |  | 5,673 |  |  | (2,250) |
Excess tax detriments / (benefits) related to share-based compensation | 4,666 |  |  | 1,563 |  |  | (20,697) |
Impact of change in tax law | 1,726 |  |  | (793) |  |  | (11,811) |
Other | 7 |  |  | 333 |  |  | 6 |
| $ | 27,632 |  |  | $ | 183,785 |  |  | $ | (68,947) |
Deferred income taxes Significant components of net deferred tax assets and liabilities are:
| December 31,
(in thousands) | 2023 |  | 2022
Deferred tax assets: |  |  |
Net operating loss carryforwards | $ | 84,656 |  |  | $ | 109,286 |
Accruals and reserves | 41,323 |  |  | 32,467 |
Interest expense carryforward | — |  |  | 208 |
Software revenue | 3,186 |  |  | 1,828 |
Convertible senior notes | 2,645 |  |  | 5,794 |
Depreciation | — |  |  | 3,698 |
Tax credit carryforwards | 28,456 |  |  | 39,122 |
Research and development capitalization | 58,866 |  |  | 38,425 |
Other | — |  |  | 622 |
Total deferred tax assets | 219,132 |  |  | 231,450 |
Valuation allowances | (196,901) |  |  | (212,808) |
Total net deferred tax assets | 22,231 |  |  | 18,642 |
Deferred tax liabilities: |  |  |
Capped call transactions | (223) |  |  | (644) |
Depreciation | (4,428) |  |  | — |
Intangibles | (11,979) |  |  | (14,280) |
Other, net | (2,782) |  |  | — |
Total deferred tax liabilities | (19,412) |  |  | (14,924) |
| $ | 2,819 |  |  | $ | 3,718 |
The Company recognizes deferred tax assets to the extent that it believes that these assets are more likely than not to be realized. Future realization of deferred tax assets ultimately depends on sufficient taxable income within the available carryback or carryforward periods. The Company’s deferred tax valuation allowance requires significant judgment and has uncertainties, including assumptions about future taxable income based on historical and projected information. On a quarterly basis, the Company reassesses the need for a valuation allowance on its existing net deferred tax assets by tax-paying jurisdiction, weighing positive and negative evidence to assess its recoverability. In making such a determination, the Company considers all available and objectively verifiable negative and positive evidence, including future reversals of existing taxable temporary differences, projected future taxable income inclusive of the impact of enacted legislation, tax-planning strategies, and results of recent operations. The weight given to the potential effect of negative and positive evidence is commensurate with the extent to which it can be objectively verified. The Company determined that the objectively and verifiable negative evidence outweighed the positive evidence and as such intends to maintain a full valuation allowance on its U.S and U.K deferred tax assets until there is sufficient evidence to support the realization of these deferred tax assets. Accordingly, the Company recorded a valuation allowance of $196.9 million at December 31, 2023. As of December 31, 2023, the Company’s U.S. net operating losses and credit carryforwards are:
(in thousands) | Federal |  | State
Net operating losses (1) | $ | 20,624 |  |  | $ | 8,766 |
Net operating losses due to acquisitions (1) | $ | 20,624 |  |  | $ | 2,195 |
Credit carryforwards (2) | $ | 26,464 |  |  | $ | 3,435 |
Credit carryforwards due to acquisitions | $ | 640 |  |  | $ | 60 |
(1) Excludes federal and state net operating losses of $16.1 million and $0.8 million, respectively, from prior acquisitions that the Company expects will expire unutilized. (2) Excludes federal and state tax credits of $0.1 million and $10.7 million, respectively, that the Company expects will expire unutilized. The Company’s federal carryforward losses and credits expire between 2024 and 2041, except for $1.4 million of state credits, which has an unlimited carryforward period. The Company’s U.K. net operating loss carryforwards were $183.1 million and $217.3 million at December 31, 2023 and 2022, respectively, which have indefinite carryforward periods. Uncertain tax benefits A rollforward of the Company’s gross unrecognized tax benefits is:
(in thousands) | 2023 |  | 2022 |  | 2021
Balance as of January 1, | $ | 19,746 |  |  | $ | 17,584 |  |  | $ | 23,801 |
Additions for tax positions related to the current year | 4,859 |  |  | 1,706 |  |  | 653 |
Additions for tax positions of prior years | 7,921 |  |  | 728 |  |  | — |
Reductions for tax positions of prior years | (1,871) |  |  | (272) |  |  | (6,870) |
Balance as of December 31, | $ | 30,655 |  |  | $ | 19,746 |  |  | $ | 17,584 |
Due to the valuation allowance on the U.S. and U.K. deferred tax assets, the Company does not expect the unrecognized tax benefits to materially impact the Company’s effective tax rate if recognized. Tax examinations The Company files federal and state income tax returns in the U.S. and various foreign jurisdictions. In the ordinary course of business, the Company and its subsidiaries are examined by various tax authorities, including the Internal Revenue Service in the U.S. As of December 31, 2023, the Company’s U.S. federal tax returns for the years 2014 through 2019 were under examination by the Internal Revenue Service. In addition, certain foreign jurisdictions are auditing the Company’s income tax returns for periods ranging from 2013 through 2021. The Company does not expect the results of these audits to have a material effect on the Company’s financial condition, results of operations, or cash flows. With few exceptions, the statute of limitations remains open in all jurisdictions for all tax years since 2017.

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