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INCOME TAX | 12 Months Ended
--- | ---
Mar. 31, 2024
Income Tax Disclosure [Abstract] |
INCOME TAX | INCOME TAX: Total income tax expense (benefit) was allocated as follows (dollars in thousands):
|  | For the twelve months ended March 31,
|  | 2024 |  | 2023 |  | 2022
Continuing operations |  | $ | 24,270 |  |  | $ | 5,252 |  |  | $ | (1,242) |
Discontinued operations |  | (2,332) |  |  | (7,070) |  |  | — |
|  | $ | 21,938 |  |  | $ | (1,818) |  |  | $ | (1,242) |
Income tax expense (benefit) attributable to continuing operations consists of (dollars in thousands):
|  | For the twelve months ended March 31,
|  | 2024 |  | 2023 |  | 2022
Current: |  |  |  |  |  |
U.S. Federal |  | $ | 21,014 |  |  | $ | 6,325 |  |  | $ | (1,227) |
Non-U.S. |  | 662 |  |  | 1,086 |  |  | 305 |
State |  | 3,384 |  |  | (2,274) |  |  | 1,220 |
|  | 25,060 |  |  | 5,137 |  |  | 298 |
Deferred: |  |  |  |  |  |
U.S. Federal |  | (101) |  |  | 155 |  |  | (895) |
Non-U.S. |  | (387) |  |  | (83) |  |  | (608) |
State |  | (302) |  |  | 43 |  |  | (37) |
|  | (790) |  |  | 115 |  |  | (1,540) |
Total |  | $ | 24,270 |  |  | $ | 5,252 |  |  | $ | (1,242) |
Income (loss) before income tax attributable to U.S. and non-U.S. continuing operations consists of (dollars in thousands):
|  | For the twelve months ended March 31,
|  | 2024 |  | 2023 |  | 2022
U.S. |  | $ | 33,892 |  |  | $ | (122,994) |  |  | $ | (37,415) |
Non-U.S. |  | 469 |  |  | 4,140 |  |  | 2,340 |
Total |  | $ | 34,361 |  |  | $ | (118,854) |  |  | $ | (35,075) |
Income (loss) before income taxes, as shown above, is based on the location of the entity to which such income (loss) is attributable. However, since such income (loss) may be subject to taxation in more than one country, the income tax expense (benefit) shown above as U.S. or non-U.S. may not correspond to the income (loss) shown above. Below is a reconciliation of expected income tax expense (benefit), computed by applying the U.S. federal statutory rate of 21.0% to income (loss) before income taxes, to actual income tax expense (benefit) from continuing operations (dollars in thousands):
|  | For the twelve months ended March 31,
|  | 2024 |  | 2023 |  | 2022
Computed expected income tax expense (benefit) |  | $ | 7,216 |  |  | $ | (24,959) |  |  | $ | (7,366) |
Increase (reduction) in income taxes resulting from: |  |  |  |  |  |
State income taxes, net of federal benefit |  | 2,494 |  |  | (2,440) |  |  | 691 |
Research and other tax credits |  | (3,012) |  |  | (4,363) |  |  | (3,107) |
Nondeductible expenses |  | 2,169 |  |  | 669 |  |  | 673 |
Stock-based compensation |  | 2,013 |  |  | 3,486 |  |  | 5,576 |
Non-U.S. subsidiaries taxed at other rates |  | (1,036) |  |  | 491 |  |  | (364) |
Adjustment to valuation allowances |  | 14,209 |  |  | 33,197 |  |  | 2,520 |
Other, net |  | 217 |  |  | (829) |  |  | 135 |
|  | $ | 24,270 |  |  | $ | 5,252 |  |  | $ | (1,242) |
On March 27, 2020, the U.S. enacted The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). The CARES Act included several significant changes and clarifications to existing tax law, including changes to the treatment of net operating losses (“NOLs”). Under the CARES Act, NOLs arising in tax years beginning after December 31, 2017, and before January 1, 2021, may be carried back to each of the five tax years preceding the tax year of the loss. The Company carried back its fiscal 2021 NOL, resulting in a refund of approximately $29 million, which was received during fiscal 2024. The Company also carried back its fiscal 2020 NOL, resulting in a refund of approximately $33 million, which was received in fiscal 2022. The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities at March 31, 2024 and 2023 are presented below (dollars in thousands).
|  | March 31,
|  | 2024 |  | 2023
Deferred tax assets: |  |  |  |
Accrued expenses |  | $ | 5,849 |  |  | $ | 5,287 |
Lease liabilities |  | 10,107 |  |  | 11,613 |
Net operating loss carryforwards |  | 30,408 |  |  | 22,504 |
Stock-based compensation |  | 7,346 |  |  | 3,335 |
Nonqualified deferred compensation |  | 2,809 |  |  | 2,797 |
Property and equipment |  | — |  |  | 585 |
Tax credit carryforwards |  | 9,764 |  |  | 7,779 |
Capitalized research and development |  | 45,499 |  |  | 26,357 |
Other |  | 1,477 |  |  | 253 |
Total deferred tax assets |  | 113,259 |  |  | 80,510 |
Less valuation allowance |  | (81,284) |  |  | (61,152) |
Net deferred tax assets |  | 31,975 |  |  | 19,358 |
Deferred tax liabilities: |  |  |  |
Prepaid expenses |  | (2,821) |  |  | (2,411) |
Property and equipment |  | (1,976) |  |  | — |
Right-of-use assets |  | (6,186) |  |  | (6,011) |
Intangible assets |  | (7,118) |  |  | (829) |
Deferred commissions |  | (12,098) |  |  | (9,153) |
Other |  | (364) |  |  | — |
Total deferred tax liabilities |  | (30,563) |  |  | (18,404) |
Net deferred tax assets |  | $ | 1,412 |  |  | $ | 954 |
At March 31, 2024, the Company has net operating loss carryforwards of approximately $35.2 million and $130.7 million for U.S. federal and state income tax purposes, respectively. The federal net operating loss carryforwards can be carried forward indefinitely. Of the state net operating loss carryforwards, $16.6 million will not expire and the remainder will expire in various amounts and will completely expire if not used by 2043. The Company has foreign net operating loss carryforwards of approximately $94.7 million. Of this amount, $83.2 million will not expire. The remainder expires in various amounts and will completely expire if not used by 2031. The Company has U.S. federal credit carryforwards of $0.8 million, which will expire if not used by 2044. The Company has U.S. state credit carryforwards of $12.6 million, of which $10.9 million will not expire and the remainder will expire in various amounts and will completely expire if not used by 2039. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. Realization of the Company’s net deferred tax assets is dependent upon its generation of sufficient taxable income of the proper character in future years in appropriate tax jurisdictions to obtain benefit from the reversal of temporary differences and the use of net operating loss and credit carryforwards. Based upon the weight of available evidence, including the Company’s history of losses from continuing operations, management believes that it is not more likely than not the Company will realize the benefits of its deductible temporary differences and net operating loss and credit carryforwards. Accordingly, the Company has established a full valuation allowance against its net U.S. federal and state deferred tax assets as of March 31, 2024 and 2023, respectively. Based upon the Company's history of losses in certain non-U.S. jurisdictions, the Company has not recorded a benefit for current foreign losses in these jurisdictions. In addition, management believes it is not more likely than not the Company will realize the benefits of certain foreign net operating loss carryforwards and has established valuation allowances in the amount of $21.6 million against deferred tax assets in such jurisdictions. No valuation allowance has been established against deferred tax assets in non-U.S. jurisdictions in which historical profits and forecasted continuing profits exist. The current year increase in the valuation allowance is primarily attributable to the impact of the capitalization of research and development expenditures in accordance with IRC Section 174, as modified by the Tax Cuts and Jobs Act of 2017. The following table sets forth changes in the total gross unrecognized tax benefits for the fiscal years ended March 31, 2024, 2023 and 2022 (dollars in thousands):
|  | For the twelve months ended March 31,
|  | 2024 |  | 2023 |  | 2022
Balance at beginning of period |  | $ | 21,624 |  |  | $ | 23,817 |  |  | $ | 25,026 |
Increases related to prior year tax positions |  | 741 |  |  | 93 |  |  | 411 |
Decreases related to prior year tax positions |  | (246) |  |  | (522) |  |  | — |
Increases related to current year tax positions |  | 1,179 |  |  | 2,229 |  |  | 990 |
Settlements with taxing authorities |  | — |  |  | (166) |  |  | — |
Lapse of statute of limitations |  | (376) |  |  | (3,827) |  |  | (2,610) |
Balance at end of period |  | $ | 22,922 |  |  | $ | 21,624 |  |  | $ | 23,817 |
Gross unrecognized tax benefits as of March 31, 2024 was $22.9 million, of which $19.5 million would reduce the Company’s effective tax rate in future periods if and when realized. The Company reports accrued interest and penalties related to unrecognized tax benefits in income tax expense. The combined amount of accrued interest and penalties related to tax positions on tax returns was approximately $6.4 million as of March 31, 2024. Accrued interest and penalties increased by $1.6 million during fiscal 2024. The Company does not anticipate a material reduction of unrecognized tax benefits within the next 12 months. The Company files a consolidated U.S. federal income tax return and tax returns in various state and local jurisdictions. The Company’s subsidiaries also file tax returns in various foreign jurisdictions in which they operate. In the U.S., the statute of limitations for Internal Revenue Service examinations remains open for the Company’s federal income tax returns for fiscal years after 2015. The Company’s federal income tax return for fiscal year 2019 is currently under Internal Revenue Service examination. The status of other U.S. state and foreign tax examinations varies by jurisdiction. The Company does not anticipate any material adjustments to its consolidated financial statements resulting from tax examinations currently in progress.

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