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INCOME TAXES

12 Months Ended

Dec. 31, 2024

INCOME TAXES

INCOME TAXES

17.INCOME TAXES

The components of net income (loss) before income taxes, by geography, are as follows:

​

​	​	​	​	​	​	​	​	​	​
​	​	For the year ended December 31,
​	​	2024			2023			2022
U.S.	​	$	9,174	​	$	(3,126)	​	$	5,827
Foreign	​		(7,265)	​		(18,548)	​		(15,957)
Net income (loss) before income taxes	​	$	1,909	​	$	(21,674)	​	$	(10,130)

​

Income tax expense (benefit) consists of the following:

​

​	​	​	​	​	​	​	​	​	​
​	​	For the year ended December 31,
​	​	2024			2023			2022
Current income taxes:		​			​			​
Federal	​	$	1,448	​	$	(279)	​	$	1,696
State and local	​	​	855	​	​	1,568	​	​	1,068
Foreign	​		2,204	​		1,347	​		577
Total current	​		4,507	​		2,636	​		3,341
Deferred income taxes:	​			​			​
Federal	​	​	42,346	​	​	(9,224)	​	​	904
State and local	​		9,111	​		(1,552)	​		72
Foreign	​		(1,326)	​		(441)	​		(2,143)
Total deferred	​		50,131	​		(11,217)	​		(1,167)
Income tax expense (benefit)	​	$	54,638	​	$	(8,581)	​	$	2,174

​

During the year ended December 31, 2024, the Company recognized a $37 income tax benefit in accumulated other comprehensive loss relating to unrealized gains (losses) from foreign currency translation adjustments and revaluations, and available-for-sale securities, and in stockholder's equity related to increases in contributed capital. During the year ended December 31, 2023, the Company recognized a $27 income tax expense in accumulated other comprehensive income (loss) relating to unrealized gains from foreign currency translation adjustments and revaluations, and available-for-sale securities.

The reconciliation of the effective tax rate to tax at the statutory rates for the years ended December 31 is as follows:

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​		2024					2023					2022
​	​	Total		​	Tax Rate	​	Total		​	Tax Rate		Total		​	Tax Rate
Pretax net income (loss)	​	$	1,909	​	​	​	$	(21,674)			​	$	(10,130)			​
Taxes:	​		​	​	​	​		​			​		​			​
U.S. federal income tax at statutory rate	​	$	401	​	21.0	%	$	(4,552)		21.0	%	$	(2,128)		21.0	%
State income taxes	​	​	900	​	47.1	%	​	289		(1.3)	%	​	441		(4.4)	%
Stock-based compensation expense	​	​	(20,559)	​	(1,077.0)	%	​	(6,236)	​	28.8	%	​	1,787	​	(17.6)	%
Impact of foreign operations	​		833	​	43.6	%		1,463	​	(6.8)	%		1,352	​	(13.3)	%
Transaction costs	​	​	431	​	22.6	%	​	—	​	0.0	%	​	176	​	(1.7)	%
U.S. taxation of foreign earnings	​	​	2	​	0.1	%	​	(245)	​	1.1	%	​	(179)	​	1.8	%
Nondeductible compensation	​	​	3,948	​	206.8	%	​	2,822	​	(13.0)	%	​	485	​	(4.8)	%
Tax credits	​	​	(4,920)	​	(257.7)	%	​	(5,818)	​	26.8	%	​	(341)	​	3.4	%
Change in valuation allowance	​	​	67,135	​	3,516.8	%	​	3,386	​	(15.6)	%	​	427	​	(4.2)	%
Purchase commitment and contingent consideration liabilities	​	​	6,186	​	324.0	%	​	—		0.0	%	​	—		0.0	%
Changes in prior year unrecognized tax benefits	​	​	98	​	5.1	%	​	451	​	(2.1)	%	​	—	​	0.0	%
Other permanent items, net	​	​	183	​	9.7	%	​	(141)		0.7	%	​	154		(1.7)	%
Taxes and effective tax rate	​	$	54,638		2,862.1	%	$	(8,581)		39.6	%	$	2,174		(21.5)	%

​

The effective tax rate in 2024 increased to 2,862.1% from 39.6% in 2023. The increase in income tax expense in 2024 was primarily driven by changes in valuation allowances on net deferred tax assets established for U.S. and certain foreign jurisdictions, nondeductible purchase commitment and contingent consideration liabilities, and pre-tax income, partially offset by the favorable impact of tax benefits on exercises and vesting of stock awards, net of limitations on deductions of certain employees’ compensation under Internal Revenue Code (“IRC”) Section 162(m).

The effective tax rate in 2023 increased to 39.6% from (21.5)% in 2022. The increase in income tax benefit in 2023 was primarily driven by changes in tax benefits on exercises and vesting of stock awards, tax credits, valuation allowances on net deferred tax assets established for certain foreign jurisdictions, loss before income tax, and limitations on deductions of certain employees’ compensation under IRC Section 162(m).

The impact of foreign operations in 2024, 2023, and 2022 primarily reflects losses in Ireland taxed at 12.5%, as well as income or losses taxed at rates in other foreign jurisdictions, as opposed to the statutory U.S. federal income tax rate.

Significant components of the Company’s net deferred tax assets (liabilities) are as follows:

​

​	​	​	​	​	​	​
​	​	As of December 31,
Deferred tax assets:		2024			2023
Deferred revenue	​	$	1,512	​	$	3,523
State operating loss carry forwards	​		3,674	​		2,682
Federal and foreign loss carry forwards	​		8,651	​		4,361
Accrued expenses	​		1,754	​		2,239
Accrued compensation	​		3,440	​		2,339
Deferred and stock-based compensation	​		13,826	​		19,008
Operating lease liabilities	​	​	4,185	​	​	5,151
Tax credits	​	​	5,160	​	​	3,662
Original issue discount	​		9,396	​		—
Depreciation and amortization	​	​	14,964	​	​	6,417
Other	​		—	​		2,721
Deferred tax assets	​		66,562	​		52,103
Valuation allowance	​		(72,285)	​		(5,941)
Total deferred tax assets	​		(5,723)	​		46,162
Deferred tax liabilities:	​			​
Prepaid expenses	​	​	(671)	​	​	(1,026)
Right of use asset	​		(3,006)	​		(3,428)
Other	​	​	(499)	​	​	—
Total deferred tax liabilities	​		(4,176)	​		(4,454)
Net deferred tax assets (liabilities)	​	$	(9,899)	​	$	41,708
​	​	​	​	​	​	​
Classification in the consolidated balance sheets:	​	​	​	​	​	​
Deferred income tax assets	​	$	19	​	$	41,708
Deferred income tax liabilities	​	​	(9,918)	​	​	—
Net deferred tax assets (liabilities)	​	$	(9,899)	​	$	41,708

​

At December 31, 2024, the Company has U.S. state operating loss carry forwards of $58,869. The state operating losses will expire at varying dates beginning in 2029 through 2044 or will carry forward indefinitely. A full valuation allowance is recorded for the U.S. state operating losses at December 31, 2024.  

At December 31, 2024, the Company has available foreign operating losses of approximately $48,238 and nontrading losses of $44, which generally carry forward indefinitely. A valuation allowance for a portion of the foreign operating and non-operating losses is recorded at December 31, 2024 and 2023. A portion of the foreign operating losses could be forfeited if certain changes in the business occur in future years, which the Company continues to monitor.

At December 31, 2024, the Company has available U.S. federal R&D tax credit carryovers of $5,160. The credits will expire from 2043 through 2044. A full valuation allowance is recorded for the U.S. federal R&D tax credit carryovers at December 31, 2024.

At December 31, 2024 and 2023, the Company has a valuation allowance of $(72,285) and $(5,941), respectively, primarily against certain U.S. and foreign deferred tax assets. The increase in the total valuation allowance of $(66,344) during December 31, 2024, primarily related to recording a valuation allowance on the U.S. deferred tax assets, partially offset by decreases in valuation allowances in certain foreign jurisdictions as well as changes in foreign exchange rates.

During the fourth quarter of 2024, the Company established a valuation allowance against our U.S. deferred tax assets as it was determined to be more likely than not that these assets will not be realized. This determination was made based

on weighing all negative evidence, specifically cumulative losses recognized in our U.S. entity over the past three years.  These cumulative losses were mainly due to significant windfall tax benefits realized from the exercises of stock options during the fourth quarter of 2024, driven by an increase in our Class A common stock price during that period. Despite positive evidence of projected future business profitability in our U.S. entity, management determined that this did not outweigh the negative evidence to allow us to conclude it was more likely than not the deferred tax assets would be realized and therefore we recorded a full valuation allowance against these U.S. deferred tax assets as of December 31, 2024.

The changes in the valuation allowance were as follows:

​

​	​	​	​	​	​	​	​	​	​
​	​	For the year ended December 31,
​	​	2024			2023			2022
Valuation allowance, at beginning of year	​	$	(5,941)	​	$	(2,285)	​	$	(1,839)
Increase in valuation allowance recorded through earnings	​	​	(68,377)	​	​	(3,656)	​	​	(624)
Decrease in valuation allowance recorded through earnings	​		2,033	​		—	​		178
Valuation allowance, at end of year	​	$	(72,285)	​	$	(5,941)	​	$	(2,285)
​	​	​	​	​	​	​	​	​	​

​

The Company does not assert any earnings to be permanently reinvested with respect to the undistributed earnings of its foreign subsidiaries.

Significant judgement is required in evaluating our uncertain tax positions and determining our provision for income taxes. The total amount of gross unrecognized tax benefits was $1,427, $666, and $0 as of December 31, 2024, 2023, and 2022, respectively, which would affect our effective tax rate if recognized. Accrued interest and penalties were not material for the years ended December 31, 2024, 2023, or 2022.

The Company files tax returns as prescribed by the tax laws of the jurisdictions in which the Company operates. Under applicable U.S. federal statutes, tax years ended December 31, 2021 through December 31, 2024 remain subject to examination. Under applicable statutes, state and foreign corporate tax returns filed for the Company and its respective foreign subsidiaries for years ended December 31, 2019 through December 31, 2024 remain subject to examination by the respective authorities.

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