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INCOME TAXES | 12 Months Ended
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Dec. 31, 2023
Income Tax Disclosure [Abstract] |
INCOME TAXES | 7. INCOME TAXES The components of loss before income tax were as follows:
| Year Ended December 31,
| 2023 |  | 2022 |  | 2021
Domestic | $ | (118,481) |  |  | $ | (177,649) |  |  | $ | (148,343) |
Foreign | 7,298 |  |  | 7,012 |  |  | 5,254 |
Total | $ | (111,183) |  |  | $ | (170,637) |  |  | $ | (143,089) |
Income tax expense consisted of the following:
| Year Ended December 31,
| 2023 |  | 2022 |  | 2021
Current taxes: |  |  |  |  |
Federal | $ | — |  |  | $ | — |  |  | $ | — |
State | 3 |  |  | 189 |  |  | 11 |
Foreign | 4,977 |  |  | 4,872 |  |  | 3,025 |
Total current | $ | 4,980 |  |  | $ | 5,061 |  |  | $ | 3,036 |
Deferred taxes: |  |  |  |  |
Federal | $ | — |  |  | $ | — |  |  | $ | — |
State | — |  | — |  | —
Foreign | 391 |  | (341) |  | (910)
Total deferred | $ | 391 |  |  | $ | (341) |  |  | $ | (910) |
Total income tax expense | $ | 5,371 |  |  | $ | 4,720 |  |  | $ | 2,126 |
The reconciliation between the statutory U.S. federal income tax rate and our effective tax rate as a percentage of loss before income taxes was as follows:
| Year Ended December 31,
| 2023 |  | 2022 |  | 2021
U.S federal income taxes at statutory rate | 21.0 | % |  | 21.0 | % |  | 21.0 | %
State income taxes, net of federal benefit | 2.7 | % |  | 2.1 | % |  | 4.3 | %
Foreign income taxes at rates other than the U.S. rate | (3.5) | % |  | (1.8) | % |  | (0.7) | %
Change in valuation allowance | (28.7) | % |  | (19.8) | % |  | (47.3) | %
Research and development credits | 8.2 | % |  | 3.5 | % |  | 7.3 | %
Stock-based compensation | (5.4) | % |  | (4.4) | % |  | 13.3 | %
Foreign inclusions | — | % |  | (3.7) | % |  | — | %
Other | 0.9 | % |  | 0.3 | % |  | 0.6 | %
Effective income tax rate | (4.8) | % |  | (2.8) | % |  | (1.5) | %
Significant components of our deferred tax assets and liabilities consisted of the following:
| December 31, 2023 |  | December 31, 2022
Deferred tax assets: |  |  |
Net operating loss carryforwards | $ | 130,849 |  |  | $ | 112,003 |
Capitalized research and development costs | 51,940 |  |  | 29,047 |
Research and development credits | 42,764 |  |  | 31,248 |
Stock-based compensation | 11,160 |  |  | 22,196 |
Lease liabilities | 1,512 |  |  | 3,312 |
Deferred revenue | 937 |  |  | 1,058 |
Accruals and reserves | 813 |  |  | 743 |
Gross deferred tax assets | 239,975 |  |  | 199,607 |
Valuation allowance | (225,513) |  |  | (185,606) |
Total deferred tax assets | $ | 14,462 |  |  | $ | 14,001 |
Deferred tax liabilities: |  |  |
Deferred commissions | (6,768) |  |  | (5,586) |
Depreciation and amortization | (5,810) |  |  | (5,086) |
Operating lease ROU assets | (1,070) |  |  | (2,172) |
Total deferred tax liabilities | $ | (13,648) |  |  | $ | (12,844) |
Net deferred tax assets | $ | 814 |  |  | $ | 1,157 |
Based on the weight of the available evidence, which includes our historical operating losses, lack of taxable income, and the accumulated deficit, we have a full valuation allowance against our U.S. federal and state deferred tax assets as of December 31, 2023 and 2022. We increased the valuation allowance for the years ended December 31, 2023 and 2022 by $39,907 and $33,838. As of December 31, 2023, U.S. federal and state NOL carryforwards were $556,468 and $206,519, respectively, and U.S. federal and state research and development tax credit carryforwards were $39,483 and $27,351, respectively. If not utilized, certain of the federal and state NOLs will expire at various dates beginning in 2031, while the federal research and development tax credit carryforwards will expire in various amounts beginning in 2033. State research and development tax credit carryforwards can be carried forward indefinitely. Our NOL and tax credit carryovers may be subject to annual limitations of usage, as promulgated by the Internal Revenue Service and similar state provisions, due to ownership changes that may have occurred in the past. The annual limitation may result in the expiration of NOLs and tax credits before utilization. The federal NOL carryforwards generated after December 31, 2017 have an indefinite carryforward period and are subject to an 80% deduction limitation based upon taxable income prior to NOL deduction. Of the total federal NOL carryforwards as of December 31, 2023, $405,529 are carried forward indefinitely, but are limited to 80% of taxable income. On August 16, 2022, the U.S. government enacted the Inflation Reduction Act of 2022 (“IRA”), which, among other things, implements a 15% minimum tax on book income of certain large corporations, a 1% excise tax on net stock repurchases and several tax incentives to promote clean energy. The IRA did not have a material impact on our Consolidated Financial Statements. Uncertain Tax Positions As of December 31, 2023, we had unrecognized tax benefits of $22,535 of which $2,484 would impact our effective tax rate, if recognized. The activity related to the unrecognized tax benefits was as follows:
| Year Ended December 31,
| 2023 |  | 2022 |  | 2021
Gross unrecognized tax benefits—beginning of period | $ | 16,371 |  |  | $ | 12,539 |  |  | $ | 7,477 |
Increases related to tax positions taken during current year | 5,052 |  |  | 3,641 |  |  | 4,850 |
Increases related to tax positions taken during prior years | 1,163 |  |  | 248 |  |  | 220 |
Decreases related to tax positions taken during prior years | (51) |  |  | (57) |  |  | (8) |
Gross unrecognized tax benefits—end of period | $ | 22,535 |  |  | $ | 16,371 |  |  | $ | 12,539 |
We recognize interest and penalties related to unrecognized tax benefits in income tax expense. Interest and penalties were not material as of December 31, 2023, 2022, and 2021. We file income tax returns subject to varying statutes of limitations. Due to our loss carryovers, the statutes of limitations remain open for all tax years since inception in our major tax jurisdictions. The tax returns for the fiscal years ended 2022, 2021, and 2020 are currently under examination in India. We believe that we have provided adequate reserves for income tax uncertainties in all open tax years. We are not under examination in any other jurisdiction. We are not currently aware of uncertain tax positions that could result in significant additional payments, accruals, or other material deviation in the next 12 months.

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