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Income Taxes | 12 Months Ended
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Dec. 31, 2024
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes Net income before provision for income taxes consists of the following (in thousands):
|  | Year Ended December 31,
|  | 2024 |  | 2023 |  | 2022
Domestic |  | $ | 334,485 |  |  | $ | 315,643 |  |  | $ | 268,097 |
Foreign |  | 274,474 |  |  | 325,561 |  |  | 330,960 |
Net income before provision for income taxes |  | $ | 608,959 |  |  | $ | 641,204 |  |  | $ | 599,057 |
The provision for (benefit from) income taxes consists of the following (in thousands):
|  | Year Ended December 31,
|  | 2024 |  | 2023 |  | 2022
Federal |  |  |  |  |  |
Current |  | $ | 95,027 |  |  | $ | 134,332 |  |  | $ | 188,050 |
Deferred |  | 1,578 |  |  | (16,805) |  |  | (55,579) |
|  | 96,605 |  |  | 117,527 |  |  | 132,471 |
State |  |  |  |  |  |
Current |  | 13,702 |  |  | 28,535 |  |  | 34,621 |
Deferred |  | 3,384 |  |  | (3,157) |  |  | (12,265) |
|  | 17,086 |  |  | 25,378 |  |  | 22,356 |
Foreign |  |  |  |  |  |
Current |  | 56,653 |  |  | 51,306 |  |  | 56,537 |
Deferred |  | 17,253 |  |  | 1,940 |  |  | 26,120 |
|  | 73,906 |  |  | 53,246 |  |  | 82,657 |
Provision for (benefit from) income taxes |  | $ | 187,597 |  |  | $ | 196,151 |  |  | $ | 237,484 |
The differences between income taxes using the federal statutory income tax rate for the year ended December 31, 2024, 2023 and 2022 and our effective tax rates are as follows:
|  | Year Ended December 31,
|  | 2024 |  | 2023 |  | 2022
U.S. federal statutory income tax rate |  | 21.0 | % |  | 21.0 | % |  | 21.0 | %
State income taxes, net of federal tax benefit |  | 2.2 |  |  | 2.9 |  |  | 3.7 |
U.S. tax on foreign earnings |  | 5.4 |  |  | 3.7 |  |  | 5.6 |
Impact of differences in foreign tax rates |  | (2.0) |  |  | 1.4 |  |  | 3.3 |
Stock-based compensation |  | 3.4 |  |  | 3.0 |  |  | 2.1 |
Settlement on audits |  | — |  |  | 0.1 |  |  | 1.9 |
Change in valuation allowance |  | 0.9 |  |  | (1.3) |  |  | 1.7 |
Other items not individually material |  | (0.1) |  |  | (0.2) |  |  | 0.3 |
Effective tax rate |  | 30.8 | % |  | 30.6 | % |  | 39.6 | %
Certain countries in which we operate, including Switzerland, have adopted legislation to implement the OECD/G20 Framework’s Pillar Two 15% global minimum tax (“Pillar Two”). The adoption of legislation to implement Pillar Two did not have a material effect on our provision for income taxes for the year ended December 31, 2024. We continue to evaluate opportunities to repatriate our foreign earnings if or when needed. We do not expect to incur significant additional costs upon repatriation of these foreign earnings. As of December 31, 2024 and 2023, the significant components of our deferred tax assets and liabilities are (in thousands):
|  | December 31,
|  | 2024 |  | 2023
Deferred tax assets: |  |  |  |
Net operating loss and capital loss carryforwards |  | $ | 2,741 |  |  | $ | 1,389 |
Reserves and accruals |  | 67,221 |  |  | 62,891 |
Stock-based compensation |  | 29,255 |  |  | 25,054 |
Deferred revenue |  | 146,509 |  |  | 142,082 |
Capitalized research & development |  | 32,027 |  |  | 41,505 |
Amortizable tax basis in intangibles |  | 1,301,338 |  |  | 1,325,236 |
Other |  | 12,282 |  |  | 13,228 |
Deferred tax assets before valuation allowance |  | 1,591,373 |  |  | 1,611,385 |
Valuation allowance |  | (19,390) |  |  | (14,991) |
Total deferred tax assets |  | $ | 1,571,983 |  |  | $ | 1,596,394 |
Deferred tax liabilities: |  |  |  |
Depreciation and amortization |  | $ | 16,485 |  |  | $ | 7,814 |
Acquisition-related intangibles |  | 28,868 |  |  | 25,097 |
Other |  | 4,511 |  |  | 3,570 |
Total deferred tax liabilities |  | 49,864 |  |  | 36,481 |
Net deferred tax assets |  | $ | 1,522,119 |  |  | $ | 1,559,913 |
As of December 31, 2024, it was considered more likely than not that our deferred tax assets would be realized with the exception of certain interest expense carryovers, capital loss carryovers and unrealized translation losses as we are unable to forecast sufficient future profits to realize these deferred tax assets. The total valuation allowance as of December 31, 2024 was $19.4 million. During the year ended December 31, 2024, the valuation allowance increased by $4.4 million primarily due to the change in deferred tax assets associated with certain interest expense, net operating loss carryovers, and unrealized translation losses from our German subsidiaries. We may be required to adjust the valuation allowance for deferred tax assets if we determine, based on available evidence at the time of the determination, that it is more likely than not that some portion or all of the deferred tax assets will not be realized. Changes to the valuation allowance could have a material adverse effect on our results of operations. As of December 31, 2024, we have foreign net operating loss carryforwards of approximately $8.7 million, attributed mainly to losses in Austria, Russia, and Germany. The losses in Austria and Germany can be carried forward indefinitely. The operating loss carryforwards in Russia, if not utilized, will expire beginning 2033. The changes in the balance of gross unrecognized tax benefits, which exclude interest and penalties, for the year ended December 31, 2024, 2023 and 2022, are as follows (in thousands):
|  | Year Ended December 31,
|  | 2024 |  | 2023 |  | 2022
Gross unrecognized tax benefits at January 1, |  | $ | 149,172 |  |  | $ | 141,560 |  |  | $ | 63,295 |
Increases related to tax positions taken during the current year |  | 12,264 |  |  | 8,616 |  |  | 84,249 |
Increases related to tax positions taken during a prior year |  | 2,031 |  |  | 5,647 |  |  | 15,411 |
Decreases related to tax positions taken during a prior year |  | (3,924) |  |  | (533) |  |  | (2,647) |
Decreases related to expiration of statute of limitations |  | (14,009) |  |  | (3,654) |  |  | (4,582) |
Decreases related to settlement with tax authorities |  | — |  |  | (2,464) |  |  | (14,166) |
Gross unrecognized tax benefits at December 31, |  | $ | 145,534 |  |  | $ | 149,172 |  |  | $ | 141,560 |
The total amount of gross unrecognized tax benefits as of December 31, 2024 was $145.5 million, of which $139.0 million would impact our effective tax rate if recognized. We file U.S. federal, U.S. state, and non-U.S. income tax returns. Our major tax jurisdictions include U.S. federal, the State of California and Switzerland. We are under IRS audit for U.S. federal tax returns from 2018 to 2020. For U.S state tax returns, we are no longer subject to tax examinations for years before 2019. With few exceptions, we are no longer subject to examination by other foreign tax authorities for years before 2016. We have elected to recognize interest and penalties related to unrecognized tax benefits as a component of income taxes. Interest and penalties included in tax expense for the year ended December 31, 2024, 2023 and 2022 as well as accrued as of December 31, 2024 and 2023 were not material. While we defend income tax audits in various jurisdictions and the results of such audits may differ materially from the amounts accrued for each year, we cannot currently ascertain the bases on which any given audit will be ultimately resolved. Accordingly, we are unable to estimate the range of possible adjustments to our balance of gross unrecognized tax benefits in the next 12 months.

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