XML 40 R26.htm IDEA: XBRL DOCUMENT v3.22.0.1
INCOME TAXES
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
The domestic and foreign components of income before income taxes consisted of the following:
Years Ended December 31,
202120202019
(In thousands)
United States$102,886 $112,727 $85,520 
Foreign18,042 6,683 4,594 
Income before income taxes$120,928 $119,410 $90,114 
The income taxes (benefit) for the years presented is as follows:
Years Ended December 31,
202120202019
(In thousands)
Current:
Federal$— $— $— 
State488 636 327 
Foreign6,232 1,896 1,589 
6,720 2,532 1,916 
Deferred:
Federal(28,398)(13,445)(56,959)
State(4,380)(3,672)(17,458)
Foreign1,537 — 1,467 
(31,241)(17,117)(72,950)
Income taxes (benefit)$(24,521)$(14,585)$(71,034)
A reconciliation of the income taxes (benefit) provision and the amount computed by applying the statutory federal income tax rate of 21% to income before income taxes for the years presented is as follows:
Years Ended December 31,
202120202019
(In thousands)
Income tax (benefit) provision at statutory federal rate$27,681 $25,076 $18,929 
State taxes, net of federal benefit489 (3,098)(17,197)
Change in valuation allowance— — (71,300)
Foreign tax rate and tax law differential1,073 611 1,206 
Tax credits(15,632)(5,835)(1,803)
Stock-based compensation(80,950)(50,818)(8,072)
Other permanent items178 (253)31 
Other nondeductible/nontaxable items2,316 1,525 2,765 
Uncertain tax positions6,911 1,530 504 
GILTI— — 1,086 
Section 162(m)25,812 11,469 2,817 
Convertible note settlements8,223 — — 
Warrant mark-to-mark adjustment(622)5,208 — 
Income tax (benefit) $(24,521)$(14,585)$(71,034)
A summary of significant components of the Company’s deferred tax assets and liabilities as of December 31, 2021 and 2020 is as follows:
December 31,
20212020
(In thousands)
Deferred tax assets:
Allowances and reserves$18,764 $13,146 
Net operating loss and tax credit carryforwards65,699 53,116 
Stock-based compensation12,935 4,598 
Deferred revenue27,778 20,765 
Fixed assets and intangibles39,711 8,706 
Sec. 163(j) interest carryforward10,749 4,401 
Other1,609 7,007 
Subtotal177,245 111,739 
Total deferred tax assets177,245 111,739 
Deferred tax liabilities:
Goodwill(31,805)(1,719)
Unremitted foreign earnings(2,226)(7)
Deferred cost of goods sold(23,713)(17,545)
Total deferred tax liabilities(57,744)(19,271)
Net deferred tax asset$119,501 $92,468 
The Company's accounting for deferred taxes involves the evaluation of a number of factors concerning the realizability of the Company's deferred tax assets. Assessing the realizability of deferred tax assets is dependent upon several factors, including the likelihood and amount, if any, of future taxable income in relevant jurisdictions during the periods in which those temporary differences become deductible. The Company's management forecasts taxable income by considering all available positive and negative evidence including its history of operating income or losses and its financial plans and estimates which are used to manage the business. These assumptions require significant judgment about future taxable income. The amount of deferred tax assets considered realizable is subject to adjustment in future periods if estimates of future taxable income are reduced.
The Company has net operating loss carryforwards for federal and California income tax purposes of approximately $153.9 million and $92.8 million, respectively, as of December 31, 2021. The federal and state net operating loss carryforwards, if not utilized, will expire beginning in 2036 and 2029, respectively.
The Company has approximately $17.3 million of federal research credit and $9.8 million of state research credit carryforwards. The federal credits begin to expire in 2026 and the state credits can be carried forward indefinitely.
Utilization of some of the federal and state net operating loss and credit carryforwards are subject to annual limitations due to the “change in ownership” provisions of the Internal Revenue Code of 1986 and similar state provisions. The Company has completed a Section 382 analysis through December 31, 2021, which indicated no such change has occurred through December 31, 2021.
The accounting for uncertain tax positions prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company is required to recognize in the financial statements the impact of a tax position, if that position is more-likely-than-not of being sustained on audit, based on the technical merits of the position. The Company recorded a net charge for unrecognized tax benefits in 2021 of $12.5 million.
The Company does not have any tax positions for which it is reasonably possible the total amount of gross unrecognized tax benefits will increase or decrease over the next year. The unrecognized tax benefits may increase or change during the next year for items that arise in the ordinary course of business.
A tabular reconciliation of the total amounts of unrecognized tax benefits for the years presented is as follows (in thousands):
Years Ended December 31,
202120202019
Unrecognized tax benefits—at beginning of year$8,421 $6,589 $6,325 
Increases in balances related to tax positions taken in prior years4,391 — — 
Decreases in balances related to tax positions taken in prior years— — (370)
Increases in balances related to tax positions taken in current year8,301 2,006 771 
Lapses in statutes of limitations(209)(174)(137)
Unrecognized tax benefits—at end of year$20,904 $8,421 $6,589 
The Company includes interest and penalties related to unrecognized tax benefits within the income tax benefit (provision). In the years ended December 31, 2021, 2020 and 2019, the total amount of gross interest and penalties accrued in each year was immaterial. Both the unrecognized tax benefits and the associated interest and penalties that are not expected to result in payment or receipt of cash within one year are classified as other non-current liabilities in the consolidated balance sheets. In connection with tax matters, the Company’s interest and penalty expense recognized in 2021, 2020 and 2019 in the consolidated statements of operations was immaterial.
The Company’s tax returns continue to remain effectively subject to examination by U.S. federal authorities for the years 2006 through 2021 and by California state authorities for the years 2006 through 2021 due to use and carryovers of net operating losses and credits.