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Income Taxes
 12 Months Ended
Dec. 31, 2022
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The components of the provision (benefit) for income taxes are as follows:

Year ended December 31,
(In thousands)202220212020
           Current:
                Federal$— $— $— 
                State229 87 — 
                       Total current$229 $87 $— 
           Deferred:
               Federal(213)42 — 
               State(477)43 — 
                      Total deferred(690)85 — 
Total provision (benefit) for income taxes
$(461)$172 $— 

The provision (benefit) for income taxes results in effective rates that differ from the statutory rates. The following is a reconciliation of income tax expense (benefit) computed at the statutory federal income tax rate to the total tax expense (benefit) computed at the effective tax rate:

Year ended December 31,
(In thousands)202220212020
Computed tax at federal statutory rate applied to pre-tax loss$(12,403)21.0 %$(9,797)21.0 %$(10,785)21.0 %
State income tax, net of federal tax benefit(2,437)4.1 %(3,927)8.4 %(1,708)3.3 %
Unrealized loss (gain) on tranche liability— — %— — %2,825 (5.5)%
Stock-based compensation1,815 (3.1)%(14,905)31.9 %(746)1.5 %
Other permanent differences, net279 (0.5)%388 (0.8)%174 (0.3)%
Executive compensation1,008 (1.7)%578 (1.2)%— — %
Exercise of warrants— — %1,162 (2.5)%— — %
Return to provision adjustments(54)0.1 %(645)1.4 %— — %
Other42 (0.1)%(111)0.2 %(81)0.1 %
Change in valuation allowance11,289 (19.1)%27,429 (58.8)%10,321 (20.1)%
    Total$(461)0.7 %$172 (0.4)%$— — %
Significant components of the Company’s net deferred tax assets and liabilities were as follows as of December 31, 2022 and 2021:

December 31,
(In thousands)20222021
Deferred tax assets:
Deferred revenue$5,631 $5,440 
Deferred rent— 1,453 
Accrued expenses1,816 1,806 
Stock-based compensation6,233 1,927 
Net operating loss carryforward (federal and state)78,073 71,055 
Reserve for customer credits246 290 
Goodwill— 334 
Intangible assets— 247 
Capitalized research and development costs14,312 — 
Lease liabilities4,872 — 
   Other328 339 
Total deferred tax assets111,511 82,891 
Valuation allowance for deferred tax assets(96,256)(81,634)
Deferred tax assets, net of valuation allowance15,255 1,257 
Deferred tax liabilities:
Fixed assets(459)(637)
Right of use assets(3,670)— 
Goodwill(3,702)— 
Intangible assets(7,850)— 
Deferred implementation costs(1,286)(705)
Total deferred tax liabilities(16,967)(1,342)
Deferred income tax liabilities, net of deferred tax assets$(1,712)$(85)

At December 31, 2022 and 2021, the Company had federal net operating loss carryforwards of $316.9 million and $290.2 million, respectively, of which $92.3 million and $92.6 million, respectively, is subject to limited carryforward periods and begin to expire in 2033. At December 31, 2022 and 2021, the Company had various apportioned state net operating loss carryforwards of $220.3 million and $180.0 million, respectively, which are subject to varying carryforward periods that begin to expire in 2024. Additionally, the Company had $0.3 million of federal general business credit carryforwards as of December 31, 2022, which begin to expire in 2035.

The Company’s ability to utilize net operating loss carryforwards and other tax attributes to reduce future federal taxable income is subject to potential limitations under Internal Revenue Code Section 382 (“Section 382”) and Section 383 and its related tax regulations. The utilization of these attributes may be limited if certain ownership changes by 5% shareholders (as defined in Treasury regulations pursuant to Section 382) and the effects of stock issuances by the Company during any three-year period result in a cumulative change of more than 50% in the beneficial ownership of the Company. In connection with the acquisition of Segmint, the Company acquired tax attributes that are subject to annual utilization limitations. We are in the process of conducting a Section 382 analysis and expect a portion of the acquired tax attributes to expire unutilized. Therefore, we have preliminarily recorded a valuation allowance of $12.8 million, gross, against these acquired NOLs. At December 31, 2022, $41.7 million of our combined federal net operating loss carryforwards, which begin to expire in 2033, remain subject to the annual Section 382 utilization limitation. Subsequent ownership changes may further impact the limitation in future years. At December 31, 2022, $0.1 million of the Company’s federal general business credit carryforwards are subject to limitation under Section 383 and are expected to expire unutilized.

The Company assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit the use of existing deferred tax assets. As part of the evaluation, the Company considered historical losses, future reversals of taxable temporary differences, the duration of statutory carryback and carryforward periods, and ongoing prudent and feasible tax planning strategies. As a result, at December 31, 2022 and 2021, the Company established a valuation allowance of $96.3 million and $81.6 million, respectively, for its net deferred tax assets as realization of the net deferred tax assets is not reasonably assured based upon a “more likely than not” threshold. The Company excluded the deferred tax liabilities related to certain indefinite-lived intangibles when calculating the valuation allowance, as these liabilities cannot be considered as a source of income when determining the realizability of the net definite-lived deferred tax assets. In addition to these indefinite-lived deferred tax liabilities, the Company also has indefinite-lived deferred tax assets which were considered as part of the Company’s net deferred tax position. Due to the Segmint acquisition, the Company had deferred tax liabilities in excess of deferred tax assets related to separate state filings for which a valuation allowance was not recorded. The valuation allowance increased by $14.6 million, of which $11.3 million was recorded through current year earnings and $3.3 million was recorded as part of the Segmint business combination, and $27.4 million during the years ended December 31, 2022 and 2021, respectively.

During the year ended December 31, 2022, the acquisition of Segmint resulted in the recognition of a net deferred tax liability of
$2.3 million. See Note 3 for further information. Prior to the business combination, the Company had a full valuation allowance on its net deferred tax assets. The net deferred tax liability generated from the business combination is considered an additional source of income to support the realizability of the Company’s pre-existing deferred tax assets. As a result, the Company released a portion of the pre-existing valuation allowance against the deferred tax assets and recorded a provisional deferred tax benefit of $2.1 million.

The Company files income tax returns in the U.S. federal jurisdiction and several state jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state or local income tax examinations by tax authorities for tax years before 2018. Operating losses generated in years prior to 2018 remain open to adjustment until the statute of limitations closes for the tax year in which the net operating losses are utilized. The tax years 2018 and forward remain open to examination by all the major taxing jurisdictions to which the Company is subject, though the Company is not currently under examination by any major taxing jurisdiction. The Company did not have any uncertain tax positions as of December 31, 2022 and 2021. The Company’s policy is to accrue interest and penalties related to uncertain tax positions as a component of income tax expense. For the years ended December 31, 2022 and 2021, the Company did not recognize any interest or penalties.

On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief and Economic Security (“CARES”) Act. The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carry back periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. The Company elected to defer the employer side of social security payments resulting in a deferred tax asset for the year ended December 31, 2021.
On August 17, 2022, President Biden signed into law the Inflation Reduction Act of 2022. The Inflation Reduction Act, among other things, includes provisions relating to the corporate alternative minimum tax and an excise tax on corporate stock buybacks. The Company does not expect there to be a material impact on its financial statements and will continue to assess in future periods.