XML 38 R19.htm IDEA: XBRL DOCUMENT
v3.22.0.1

Note 12 - Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2021
Notes to Financial Statements |
Income Tax Disclosure [Text Block] |
NOTE 12. | Income Taxes
The Company’s geographical breakdown of income before income taxes is as follows:
|  | Year Ended December 31, |
|  | 2021 |  |  | 2020 |  |  | 2019 |
|  | (in thousands) |
Domestic |  | $ | 80,472 |  |  | $ | 94,099 |  |  | $ | 72,124 |
Foreign |  |  | 8,925 |  |  |  | 7,938 |  |  |  | 7,859 |
Income before income taxes |  | $ | 89,397 |  |  | $ | 102,037 |  |  | $ | 79,983 |
Income tax provision consists of the following:
|  | Year Ended December 31, |
|  | 2021 |  |  | 2020 |  |  | 2019 |
|  | (in thousands) |
Current |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 20,135 |  |  | $ | 1,944 |  |  | $ | (90 | )
State |  |  | 4,324 |  |  |  | 1,438 |  |  |  | 646 |
Foreign |  |  | 3,701 |  |  |  | 3,571 |  |  |  | 3,000 |
Current income tax provision |  |  | 28,160 |  |  |  | 6,953 |  |  |  | 3,556 |
Deferred |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | (7,342 | ) |  |  | 4,239 |  |  |  | 7,085 |
State |  |  | (1,722 | ) |  |  | 26 |  |  |  | 447 |
Foreign |  |  | (659 | ) |  |  | (753 | ) |  |  | (441 | )
Deferred income tax provision (benefit) |  |  | (9,723 | ) |  |  | 3,512 |  |  |  | 7,091 |
Income tax provision |  | $ | 18,437 |  |  | $ | 10,465 |  |  | $ | 10,647 |
The reconciliation of the statutory federal income tax rate to the Company’s effective tax rate is as follows:
|  | Year Ended December 31, |
|  | 2021 |  |  | 2020 |  |  | 2019 |
Federal statutory rate |  |  | 21.0 | % |  |  | 21.0 | % |  |  | 21.0 | %
State taxes |  |  | 3.1 |  |  |  | 1.6 |  |  |  | 1.5 |
Stock-based compensation |  |  | 10.3 |  |  |  | 4.8 |  |  |  | 4.0 |
Excess tax benefits related to stock-based compensation |  |  | (5.4 | ) |  |  | (13.8 | ) |  |  | (11.2 | )
Foreign source income |  |  | 0.4 |  |  |  | 0.2 |  |  |  | 0.1 |
Change in valuation allowance |  |  | 0.2 |  |  |  | 0.8 |  |  |  | 1.1 |
Foreign-derived intangible income deduction |  |  | (7.0 | ) |  |  | (1.7 | ) |  |  | — |
Federal and state research and development credit |  |  | (1.9 | ) |  |  | (2.6 | ) |  |  | (3.7 | )
Other |  |  | (0.1 | ) |  |  | — |  |  |  | 0.4 |
Income tax provision |  |  | 20.6 | % |  |  | 10.3 | % |  |  | 13.2 | %
Deferred Income Taxes Deferred income taxes reflect the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The components of the Company’s deferred tax assets and liabilities are as follows:
|  | December 31, |
|  | 2021 |  |  | 2020 |
|  | (in thousands) |
Deferred tax assets |  |  |  |  |  |  |  |
Research and development credit carryforwards |  | $ | 10,743 |  |  | $ | 16,965 |
Foreign tax credit carryforwards |  |  | 933 |  |  |  | 3,497 |
Accrued liabilities |  |  | 1,655 |  |  |  | 2,019 |
Deferred revenues |  |  | 7,250 |  |  |  | 5,123 |
Operating lease liabilities |  |  | 11,777 |  |  |  | 15,924 |
Intangible assets |  |  | 12,377 |  |  |  | 1,397 |
Stock-based compensation |  |  | 4,085 |  |  |  | 3,907 |
Other |  |  | 2,987 |  |  |  | 720 |
Gross deferred tax assets |  |  | 51,807 |  |  |  | 49,552 |
Valuation allowance |  |  | (11,364 | ) |  |  | (11,188 | )
Net deferred tax assets |  |  | 40,443 |  |  |  | 38,364 |
Deferred tax liabilities |  |  |  |  |  |  |  |
Fixed assets |  |  | (3,320 | ) |  |  | (7,017 | )
Operating leases - right of use asset |  |  | (9,010 | ) |  |  | (13,054 | )
Deferred commissions |  |  | (3,026 | ) |  |  | (2,482 | )
Total deferred tax liabilities |  |  | (15,356 | ) |  |  | (22,553 | )
Net deferred tax assets |  | $ | 25,087 |  |  | $ | 15,811 |
The realization of deferred tax assets is dependent upon the generation of sufficient taxable income of the appropriate character in future periods. The Company regularly assesses the ability to realize its deferred tax assets and establishes a valuation allowance if it is more-likely than-not that some portion, or all, of the deferred tax assets will not be realized. The Company weighs all available positive and negative evidence, including its earnings history and results of recent operations, scheduled reversals of deferred tax liabilities, projected future taxable income, and tax planning strategies. Due to the weight of objectively verifiable negative evidence, it is more-likely-than-not that its California deferred tax assets will not be realized as of December 31, 2021. Additionally, due to a lack of sufficient future income of the appropriate character, certain U.S. federal and state deferred tax assets are not more-likely-than-not to be realized. Accordingly, the Company has recorded a valuation allowance of $11.4 million and $11.2 million against such deferred tax assets as of December 31, 2021 and 2020, respectively. The increase of $0.2 million in valuation allowance was mainly associated with the California research and development credit generated during the year ended December 31, 2021 that will not likely be realized in the foreseeable future. As of December 31, 2021, the Company had federal net operating loss carryforwards of approximately $0.7 million available to reduce federal taxable income. The state net operating loss carryforwards are not material. The federal net operating losses begin to expire in 2022. Utilization of the Company’s net operating loss carryforwards may be subject to an annual limitation due to the ownership change limitations provided by the Internal Revenue Code and similar state provisions. Such an annual limitation could result in the expiration of the net operating loss carryforwards before utilization. As of December 31, 2021, the Company had $15.5 million of state research and development credit carryforwards. State research and development credits do not expire. As of December 31, 2021, the Company had foreign tax credit carryforwards of $0.9 million which begin to expire in 2028. The following table summarizes the activity related to the Company’s unrecognized tax benefits:
|  | Year Ended December 31, |
|  | 2021 |  |  | 2020 |  |  | 2019 |
|  | (in thousands) |
Unrecognized tax benefits beginning balance |  | $ | 8,855 |  |  | $ | 7,778 |  |  | $ | 6,406 |
Gross increase for tax positions of prior years |  |  | — |  |  |  | 4 |  |  |  | — |
Gross decrease for tax positions of prior years |  |  | (25 | ) |  |  | — |  |  |  | (12 | )
Gross increase for tax positions of current year |  |  | 846 |  |  |  | 1,258 |  |  |  | 1,384 |
Lapse of statute of limitations |  |  | — |  |  |  | (185 | ) |  |  | — |
Total unrecognized tax benefits |  | $ | 9,676 |  |  | $ | 8,855 |  |  | $ | 7,778 |
The unrecognized tax benefits, if recognized, would impact the income tax provision by $4.9 million, $4.6 million and $4.2 million as of December 31, 2021, 2020 and 2019, respectively. The remaining amount would result in the recognition of a corresponding deferred tax asset that is then offset by a full valuation allowance. As of December 31, 2021, the Company does not believe that its estimates, as otherwise provided for, on such tax positions will significantly increase or decrease within the next twelve months. The Company has elected to include interest and penalties as a component of income tax expense. The amounts were not material for the years ended December 31, 2021, 2020 and 2019. The Company files income tax returns in the United States, including various state jurisdictions. The Company’s subsidiaries file tax returns in various foreign jurisdictions. The tax years 2001 through 2020 remain open to examination by the major taxing jurisdictions in which the Company is subject to tax. The Company is also currently subject to tax audits in various jurisdictions. The Company believes that an adequate provision has been made for any adjustments that may result from tax examinations. However, the outcome of tax audits cannot be predicted with certainty. If any issues addressed in the Company's tax audits are resolved in a manner inconsistent with its expectations, the Company could be required to adjust its income tax provision in the period such resolution occurs. As of December 31, 2021, the Company has undistributed earnings in certain foreign subsidiaries that the Company has indefinitely reinvested outside the United States. As a result, the Company has not provided for deferred tax liabilities on those earnings. The Company may be required to pay additional income taxes if the Company repatriates those earnings in the future.

X
- References No definition available. + Details
Name: | us-gaap_DisclosureTextBlockAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration