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Income Taxes | 12 Months Ended
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Dec. 31, 2024
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The Company's income before income taxes, classified by source of income, was as follows:
| Year Ended December 31,
(in thousands) | 2024 |  | 2023 |  | 2022
U.S. | $ | 370,395 |  |  | $ | 303,337 |  |  | $ | 409,666 |
Outside the U.S. | 25,250 |  |  | 33,619 |  |  | 27,140 |
Income before income taxes | $ | 395,645 |  |  | $ | 336,956 |  |  | $ | 436,806 |
The provision for income taxes, classified by the timing and the location of payment, was as follows:
| Year Ended December 31,
(in thousands) | 2024 |  | 2023 |  | 2022
Current tax expense |  |  |  |  |
Federal | $ | 89,716 |  |  | $ | 60,493 |  |  | $ | 103,275 |
State | 21,518 |  |  | 16,890 |  |  | 20,068 |
Foreign | 2,609 |  | 1,593 |  |  | 2,331 |
Deferred tax (benefit) expense |  |  |  |  |
Federal | (18,378) |  |  | (2,022) |  |  | (18,974) |
State | (2,908) |  |  | (1,874) |  |  | (4,163) |
Foreign | 3,423 |  |  | 3,369 |  |  | 2,117 |
Income tax expense | $ | 95,980 |  |  | $ | 78,449 |  |  | $ | 104,654 |
The net deferred tax assets were as follows:
| December 31,
(in thousands) | 2024 |  | 2023
Deferred tax assets: |  |  |
Accrued compensation | $ | 20,958 |  |  | $ | 18,325 |
Deferred revenue | 40,946 |  |  | 30,007 |
Receivable, net | 12,345 |  |  | 12,460 |
Tax credits | 24,663 |  |  | 19,194 |
Operating lease liabilities | 28,455 |  |  | 28,673 |
Partnership interests | 5,130 |  |  | 5,516 |
Capitalized research and experimental expenditures | 44,946 |  |  | 30,781 |
Foreign net operating losses | 7,870 |  |  | 7,564 |
Non-U.S. intellectual property | 11,333 |  |  | 15,149 |
Other | 7,235 |  |  | 6,588 |
Total gross deferred tax assets | 203,881 |  |  | 174,257 |
Less: Valuation allowance | (29,660) |  |  | (24,228) |
Deferred tax assets | $ | 174,221 |  |  | $ | 150,029 |
Deferred tax liabilities: |  |  |
Property, equipment and intangible assets | $ | (42,895) |  |  | $ | (36,386) |
Operating lease ROU assets | (20,016) |  |  | (21,379) |
Other | (3,002) |  |  | (2,729) |
Deferred tax liabilities | (65,913) |  |  | (60,494) |
Net deferred tax assets | $ | 108,308 |  |  | $ | 89,535 |
The Company assesses all positive and negative evidence to estimate whether sufficient future taxable income will be generated to use its deferred tax assets. Based on this evaluation, the Company recorded a net change to its valuation allowance of $5.4 million due to state tax credits. The Company has $24.7 million of state income tax credit carryforwards. It is unlikely that the Company will realize these benefits. Accordingly, the Company has provided a full valuation allowance against these carryforwards. As of December 31, 2024, the Company had gross foreign net operating losses ("NOLs") of $29.3 million, all of which have indefinite carryforward lives. The Company has recorded a tax-effected valuation allowance of $1.8 million for these NOLs, primarily related to France and India. In addition, the Company has a Dutch deferred tax asset of $11.3 million, for which it has recorded a valuation allowance of $3.0 million. The Dutch valuation allowance did not change during the year ended December 31, 2024. The following table presents a reconciliation of the statutory United States federal income tax rate to the effective income tax rate for continuing operations:
| Year Ended December 31,
| 2024 |  | 2023 |  | 2022
Statutory U.S. federal income tax rate | 21.0 | % |  | 21.0 | % |  | 21.0 | %
State income taxes, net of federal tax benefit | 3.5 | % |  | 3.2 | % |  | 3.0 | %
Expenses related to foreign operations | 0.7 | % |  | 0.3 | % |  | 0.1 | %
Expenses related to compensation, net | 1.3 | % |  | 1.0 | % |  | 1.0 | %
Unrecognized tax positions | (0.8) | % |  | 0.5 | % |  | 0.2 | %
Tax credits | (2.4) | % |  | (2.4) | % |  | (1.5) | %
Valuation allowance | 0.6 | % |  | 0.6 | % |  | 0.5 | %
Other | 0.4 | % |  | (0.9) | % |  | (0.3) | %
Effective income tax rate | 24.3 | % |  | 23.3 | % |  | 24.0 | %
The Company's effective income tax rates from continuing operations were 24.3%, 23.3%, and 24.0% for the years ended December 31, 2024, 2023, and 2022, respectively. The effective income tax rates for the years ended December 31, 2024, 2023, and 2022 were higher than the U.S. federal income tax rate of 21.0% primarily due to the impact of state income taxes and tax expense related to compensation, partially offset by federal income tax credits. For the years ended December 31, 2024, 2023, and 2022, the Company’s gross unrecognized tax benefits totaled $6.9 million, $13.4 million, and $11.9 million, respectively. After considering the deferred income tax accounting impact, it is expected that approximately $4.6 million of the total as of December 31, 2024 would reduce the effective income tax rate if resolved in the Company’s favor. The following table presents a reconciliation of the beginning and ending amounts of the unrecognized tax benefits:
(in thousands) | 2024 |  | 2023 |  | 2022 |
Balance, January 1 | $ | 13,434 |  |  | $ | 11,876 |  |  | $ | 11,147 |  |
Changes for tax positions of prior years | (776) |  |  | 2,338 |  |  | (31) |  |
Increases for tax positions related to the current year | 1,516 |  |  | 1,670 |  |  | 1,650 |  |
Settlements and lapsing of statutes of limitations | (7,260) |  |  | (2,450) |  |  | (890) |  |
Balance, December 31 | $ | 6,914 |  |  | $ | 13,434 |  |  | $ | 11,876 |  |
It is reasonably possible that the Company’s unrecognized tax benefits could decrease within the next 12 months by as much as $2.6 million due to settlements and the expiration of applicable statutes of limitations. The Company's federal income tax returns for the 2021, 2022, 2023, and 2024 tax years are subject to examination by the Internal Revenue Service. The Company's policy is to recognize interest and penalties related to income tax matters in the provision for income taxes. The Company did not incur any material interest or penalties during the years ended December 31, 2024, 2023, and 2022. The Company had $0.3 million and $0.1 million of accrued interest and penalties as of December 31, 2024 and 2023, respectively.

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