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Income Taxes | 12 Months Ended
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Dec. 31, 2023
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The following is a geographical breakdown of income (loss) before income taxes:
| Year Ended December 31,
| 2023 |  | 2022 |  | 2021
| (In thousands)
Domestic | $ | (28,105) |  |  | $ | 369 |  |  | $ | 67,103 |
Foreign | 7,997 |  |  | (2,822) |  |  | (1,096) |
Income (loss) before income taxes | $ | (20,108) |  |  | $ | (2,453) |  |  | $ | 66,007 |
The provision for (benefit from) income taxes consisted of the following:
| Year Ended December 31,
| 2023 |  | 2022 |  | 2021
| (In thousands)
Current: |  |  |  |  |
Federal | $ | 8,556 |  |  | $ | 17,973 |  |  | $ | (7,841) |
State | 1,471 |  |  | 8,024 |  |  | 187 |
Foreign | 840 |  |  | 192 |  |  | (234) |
Total current income taxes | 10,867 |  |  | 26,189 |  |  | (7,888) |
Deferred: |  |  |  |  |
Federal | (8,002) |  |  | (25,753) |  |  | (2,708) |
State | (2,261) |  |  | (7,976) |  |  | (1,217) |
Foreign | (341) |  |  | (561) |  |  | (29) |
Total deferred income taxes | (10,604) |  |  | (34,290) |  |  | (3,954) |
Total provision for (benefit from) income taxes | $ | 263 |  |  | $ | (8,101) |  |  | $ | (11,842) |
The provision for (benefit from) income taxes differs from the amount computed by applying the statutory federal tax rate as follows:
| Year Ended December 31,
| 2023 |  | 2022 |  | 2021
| (In thousands)
U.S. federal tax provision at statutory rate | $ | (4,223) |  |  | $ | (515) |  |  | $ | 13,861 |
State taxes | (624) |  |  | 38 |  |  | (814) |
Section 162(m) limitation | 1,286 |  |  | 3,071 |  |  | 6,382 |
Non-deductible expenses | 531 |  |  | 134 |  |  | 363 |
Uncertain tax positions | (620) |  |  | (776) |  |  | (835) |
Share-based compensation tax expense (benefit) | 7,384 |  |  | (3,264) |  |  | (20,717) |
Research tax credits | (4,587) |  |  | (6,948) |  |  | (5,170) |
Restructuring impact | — |  |  | — |  |  | (6,116) |
Foreign-derived intangible income deduction | (325) |  |  | (753) |  |  | (68) |
Global intangible low-taxed income inclusion | — |  |  | 960 |  |  | 195 |
Foreign rate differential | 219 |  |  | 186 |  |  | (170) |
Foreign branch taxes | 6 |  |  | (51) |  |  | (9) |
Transaction cost | — |  |  | 68 |  |  | 1,097 |
Provision to return true up | 697 |  |  | (84) |  |  | 205 |
State rate true up | 528 |  |  | (135) |  |  | (80) |
Other | (9) |  |  | (32) |  |  | 34 |
Total provision for (benefit from) income taxes | $ | 263 |  |  | $ | (8,101) |  |  | $ | (11,842) |
On August 16, 2022, the Inflation Reduction Act of 2022, (the “IRA”), was signed into law. Among other things, the IRA imposes a 15% corporate alternative minimum tax for tax years beginning after December 31, 2022, levies a 1% excise tax on net stock repurchases after December 31, 2022, and provides tax incentives to promote clean energy. The provisions of the IRA did not have a material impact on the Company’s results of operations or financial position. The Organization for Economic Co-Operation and Development (“OECD”) introduced Base Erosion and Profit Shifting (“BEPS”) Pillar Two rules that impose a global minimum tax rate of 15% on multi-national corporations. The rules are effective for the Company’s financial year beginning January 1, 2024. Numerous countries have enacted or substantively enacted legislation to implement these rules. While the Company does not expect Pillar Two to have a material impact on its tax provision or effective tax rate, the Company continues to monitor evolving tax legislation in the jurisdictions in which it operates. Significant components of the Company’s deferred tax assets (liabilities) were as follows:
| December 31,
| 2023 |  | 2022
| (In thousands)
Deferred tax assets (liabilities): |  |  |
Deferred revenues | $ | 11,343 |  |  | $ | 13,514 |
Share-based compensation | 11,763 |  |  | 12,064 |
Inventory-related items | 5,136 |  |  | 4,567 |
Tax credit carryforwards | 12,505 |  |  | 12,173 |
Reserves and accruals | 5,660 |  |  | 6,244 |
Loss carryforwards | 7,802 |  |  | 10,255 |
Lease liability | 11,457 |  |  | 12,884 |
Convertible debt | 9,649 |  |  | 15,037 |
Capitalized research and development | 41,635 |  |  | 30,881 |
Other, net | 591 |  |  | 1,557 |
Gross deferred tax assets | 117,541 |  |  | 119,176 |
Valuation allowance | — |  |  | — |
Total net deferred tax assets | 117,541 |  |  | 119,176 |
Intangibles | (30,366) |  |  | (36,357) |
Depreciation and amortization | (35,402) |  |  | (37,286) |
Prepaid expenses | (13,858) |  |  | (15,574) |
Right-of-use assets | (6,626) |  |  | (9,725) |
Other, net | (8) |  |  | — |
Total deferred tax liabilities | (86,260) |  |  | (98,942) |
Net deferred tax assets | $ | 31,281 |  |  | $ | 20,234 |
Deferred income tax assets (liabilities) are provided for temporary differences that will result in future tax deductions or future taxable income, as well as the future benefit of tax credit carryforwards. The Company recognizes deferred tax assets to the extent that it believes these assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing temporary differences, projected future taxable income, tax planning strategies, and results of recent operations. As of December 31, 2023 and 2022, the Company does not have a valuation allowance against any of its deferred tax assets. As of December 31, 2023, the Company had no federal net operating loss carryforward, $19.0 million of state net operating loss carryforwards expiring at various dates beginning in 2029, and $22.3 million of foreign net operating losses carried forward indefinitely. For income tax purposes, the Company had no federal research tax credit carryforward and a California research tax credit carryforward of $20.9 million. California research tax credits are carried forward indefinitely to reduce cash taxes payable. It is the Company’s practice and intention to reinvest the earnings of its non-U.S. subsidiaries in those operations. As of December 31, 2023, the Company has not made a provision for U.S. federal income, withholding, and state income taxes on the outside basis difference related to certain foreign subsidiaries because earnings are intended to be indefinitely reinvested in operations outside the U.S. The Company files income tax returns in the United States and various state and foreign jurisdictions. In the normal course of business, the Company is subject to examinations by taxing authorities, including major jurisdictions such as the United States, Germany, Italy, France, the United Kingdom and India. With few exceptions, as of December 31, 2023, the Company was no longer subject to U.S., state, and foreign tax examinations for years before 2020, 2019, and 2019, respectively. The aggregate change in the balance of gross unrecognized tax benefit, which excludes interest and penalties, for the years ended December 31, 2023, 2022, and 2021:
| (In thousands)
Balance as of December 31, 2020 | $ | 18,246 |
Increases related to tax positions taken during a prior period | 40 |
Decreases related to tax positions taken during the prior period | (8,908) |
Increases related to tax positions taken during the current period | 1,219 |
Decreases related to expiration of statute of limitations | (1,636) |
Balance as of December 31, 2021 | 8,961 |
Increases related to tax positions taken during a prior period | 3 |
Decreases related to tax positions taken during the prior period | (59) |
Increases related to tax positions taken during the current period | 1,629 |
Decreases related to expiration of statute of limitations | (1,238) |
Balance as of December 31, 2022 | 9,296 |
Increases related to tax positions taken during a prior period | 750 |
Decreases related to tax positions taken during the prior period | (161) |
Increases related to tax positions taken during the current period | 1,566 |
Decreases related to expiration of statute of limitations | (703) |
Balance as of December 31, 2023 | $ | 10,748 |
The total amount of gross unrecognized tax benefit that, if realized, would favorably affect the Company’s effective income tax rate in future periods, was $10.7 million and $9.3 million as of December 31, 2023 and 2022, respectively. The Company recognizes interest and penalties related to uncertain tax positions in interest and other income (expense), net in the Consolidated Statements of Operations, accruing $0.2 million, $0.2 million, and $0.3 million for the years ended December 31, 2023, 2022, and 2021, respectively. Accrued interest and penalties are included within other long-term liabilities on the Consolidated Balance Sheets. The combined amount of cumulative accrued interest and penalties was approximately $0.4 million, $0.2 million, and $0.6 million for the years ended December 31, 2023, 2022, and 2021, respectively. The Company does not believe there will be any significant changes in its unrecognized tax positions over the next twelve months.

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