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INCOME TAXES | 12 Months Ended
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Dec. 31, 2024
Income Tax Disclosure [Abstract] |
INCOME TAXES | 18. INCOME TAXES The components of income (loss) before provision for income taxes are:
(in thousands) | 2024 |  | 2023 |  | 2022
Domestic | $ | 51,966 |  |  | $ | 14,016 |  |  | $ | (185,820) |
Foreign | 90,670 |  |  | 81,424 |  |  | 24,023 |
| $ | 142,636 |  |  | $ | 95,440 |  |  | $ | (161,797) |
The components of provision for income taxes are:
(in thousands) | 2024 |  | 2023 |  | 2022
Current: |  |  |  |  |
Federal | $ | 22,941 |  |  | $ | 7,827 |  |  | $ | 3,920 |
State | 7,503 |  |  | 4,480 |  |  | 775 |
Foreign | 14,547 |  |  | 14,962 |  |  | 10,200 |
Total current provision | 44,991 |  |  | 27,269 |  |  | 14,895 |
Deferred: |  |  |  |  |
Federal | — |  |  | — |  |  | 149,028 |
State | — |  |  | — |  |  | 20,704 |
Foreign | (1,544) |  |  | 363 |  |  | (842) |
Total deferred (benefit) provision | (1,544) |  |  | 363 |  |  | 168,890 |
| $ | 43,447 |  |  | $ | 27,632 |  |  | $ | 183,785 |
A reconciliation of the U.S federal statutory tax rate and the Company’s effective tax rate:
(in thousands) | 2024 |  | 2023 |  | 2022
U.S. federal income taxes at statutory rates | $ | 29,954 |  |  | $ | 20,042 |  |  | $ | (33,977) |
Valuation allowance | (1,504) |  |  | (19,272) |  |  | 188,258 |
State income taxes, net of federal benefit and tax credits | 1,297 |  |  | 4,117 |  |  | (2,433) |
Permanent differences | 786 |  |  | 435 |  |  | 11,561 |
Federal research and experimentation credits | (4,888) |  |  | (3,709) |  |  | (5,012) |
Tax effects of foreign activities | (7,817) |  |  | 658 |  |  | 3,770 |
GILTI, FDII, and BEAT | 13,945 |  |  | 14,022 |  |  | 16,390 |
Provision to return adjustments | 121 |  |  | (3,728) |  |  | (6,317) |
Non-deductible compensation | 10,933 |  |  | 6,818 |  |  | 4,769 |
Tax Reserves | 5,917 |  |  | 1,850 |  |  | 5,673 |
Excess tax (benefits) / detriments related to share-based compensation | (5,645) |  |  | 4,666 |  |  | 1,563 |
Impact of change in tax law | — |  |  | 1,726 |  |  | (793) |
Other | 348 |  |  | 7 |  |  | 333 |
| $ | 43,447 |  |  | $ | 27,632 |  |  | $ | 183,785 |
The effective income tax rate in 2024 was primarily driven by the valuation allowance on our deferred tax assets and tax expense in the U.S. and U.K., partially offset by available tax attributes. Deferred income taxes Significant components of net deferred tax assets and liabilities are:
| December 31,
(in thousands) | 2024 |  | 2023
Deferred tax assets: |  |  |
Net operating loss carryforwards | $ | 72,089 |  |  | $ | 84,656 |
Accruals and reserves | 57,312 |  |  | 41,323 |
Software revenue | 454 |  |  | 3,186 |
Convertible senior notes | 355 |  |  | 2,645 |
Tax credit carryforwards | 10,441 |  |  | 28,456 |
Research and development capitalization | 75,289 |  |  | 58,866 |
Total deferred tax assets | 215,940 |  |  | 219,132 |
Valuation allowances | (195,252) |  |  | (196,901) |
Total net deferred tax assets | 20,688 |  |  | 22,231 |
Deferred tax liabilities: |  |  |
Capped call transactions | (57) |  |  | (223) |
Depreciation | (3,663) |  |  | (4,428) |
Intangibles | (9,116) |  |  | (11,979) |
Other, net | (3,554) |  |  | (2,782) |
Total deferred tax liabilities | (16,390) |  |  | (19,412) |
| $ | 4,298 |  |  | $ | 2,819 |
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. In assessing the Company’s ability to realize its net deferred tax assets, the Company considered various factors including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial results to determine whether it is more likely than not that some portion or all of its net deferred tax assets will not be realized. Based upon these factors, the Company has determined that the uncertainty regarding the realization of these assets is sufficient to warrant the need for a full valuation allowance against its net U.S. and U.K. deferred tax assets as of December 31, 2024. Accordingly, the Company maintained a valuation allowance of $195.3 million at December 31, 2024, a decrease of $1.6 million as a result of the operations of its entities throughout the year. Given the Company’s recent earnings, the Company believes that there is a reasonable possibility that in a future period sufficient positive evidence may become available to allow the Company to reach a conclusion that a substantial portion of the valuation allowance will no longer be needed. However, the exact timing and amount of the valuation allowance release are subject to significant judgement. Release of the valuation allowance would result in the recognition of certain deferred tax assets and a decrease to income tax expense for the period the release is recorded. The Company had approximately $5.4 million and $8.8 million of post apportionment state net operating loss carryforwards, as of December 31, 2024 and 2023, respectively. The U.S. state losses expire at various times through 2044. Additionally, as of December 31, 2024, the Company had $10.4 million of state tax credit carryforwards. The Company’s federal net operating loss carryforwards were approximately $14.2 million and $20.6 million at December 31, 2024 and 2023, respectively. These federal carryforward losses and state credits expire between 2025 and 2039, except for $1.2 million of federal net operating losses and $1 million of state credits, which have an unlimited carryforward period. The Company’s UK net operating loss carryforwards were approximately $147.9 million and $183.1 million at December 31, 2024 and 2023, respectively, which have indefinite carryforward periods. Uncertain tax benefits A rollforward of the Company’s gross unrecognized tax benefits is:
(in thousands) | 2024 |  | 2023 |  | 2022
Balance as of January 1, | $ | 30,655 |  |  | $ | 19,746 |  |  | $ | 17,584 |
Additions for tax positions related to the current year | 7,316 |  |  | 4,859 |  |  | 1,706 |
Additions for tax positions of prior years | 2,941 |  |  | 7,921 |  |  | 728 |
Reductions for tax positions of prior years | (3,026) |  |  | (1,871) |  |  | (272) |
Balance as of December 31, | $ | 37,886 |  |  | $ | 30,655 |  |  | $ | 19,746 |
The total amount of accrued liabilities related to uncertain tax positions that would affect the Company's effective tax rate, if recognized, is $12.9 million as of December 31, 2024. 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, 2024, 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 2018 through 2022. 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 2018.

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