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Income Taxes | 12 Months Ended
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Dec. 31, 2024
Income Tax Disclosure [Abstract] |
Income Taxes | INCOME TAXES Income (loss) before income taxes for the years ended December 31, 2024, 2023 and 2022 is summarized as follows (in thousands):
| As of December 31,
| 2024 |  | 2023 |  | 2022
United States | $ | 55,151 |  |  | $ | (188,421) |  |  | $ | (73,089) |
Foreign | (2,292) |  |  | (1,722) |  |  | (3,145) |
Total income (loss) before income taxes | $ | 52,859 |  |  | $ | (190,143) |  |  | $ | (76,234) |
The components of the provision for (benefit from) income taxes are summarized as follows (in thousands):
| As of December 31,
| 2024 |  | 2023 |  | 2022
Current |  |  |  |  |
Federal | $ | 2 |  |  | $ | (117) |  |  | $ | 145 |
State | 198 |  |  | 186 |  |  | 328 |
Foreign | 9 |  |  | — |  |  | 184 |
Total current income tax expense (benefit) | 209 |  |  | 69 |  |  | 657 |
Deferred |  |  |  |  |
Federal | (10) |  |  | 184 |  |  | (130) |
State | (26) |  |  | (112) |  |  | 75 |
Foreign | 137 |  |  | — |  |  | (223) |
Total deferred income tax expense (benefit) | 101 |  |  | 72 |  |  | (278) |
Income tax expense | $ | 310 |  |  | $ | 141 |  |  | $ | 379 |
The Company's actual provision for tax differed from the amounts computed by applying the U.S. federal income tax rates of 21% in each of the years ended 2024, 2023 and 2022, to income (loss) before income taxes as a result of the following:
| Year Ended December 31,
| 2024 |  | 2023 |  | 2022
Federal tax statutory rate | 21.0 | % |  | 21.0 | % |  | 21.0 | %
Stock-based compensation | (6.3) | % |  | (3.8) | % |  | (2.8) | %
Change in valuation allowance | (18.9) | % |  | (18.1) | % |  | (16.9) | %
Foreign rate differential | — | % |  | 0.2 | % |  | (0.2) | %
Non-deductible executive compensation | 9.9 | % |  | (0.4) | % |  | (2.1) | %
Research credits | (5.1) | % |  | 0.4 | % |  | 1.8 | %
Changes in net operating loss carryforwards, including expirations | — | % |  | 0.8 | % |  | (0.5) | %
Other | — | % |  | (0.2) | % |  | (0.8) | %
Effective income tax rate | 0.6 | % |  | (0.1) | % |  | (0.5) | %
Deferred income tax assets and liabilities consist of the following (in thousands):
| As of December 31, 2024
| 2024 |  | 2023
Deferred tax assets: |  |  |
Net operating loss carryforwards | $ | 29,839 |  |  | $ | 30,260 |
Tax credit carryforwards | 14,045 |  |  | 10,317 |
Accruals | 5,027 |  |  | 26,256 |
Lease liability | 6,843 |  |  | 7,947 |
Section 174 capitalized costs | 33,651 |  |  | 31,724 |
Stock-based compensation | 16,163 |  |  | 12,799 |
Other | 1,061 |  |  | 1,351 |
Gross deferred tax assets | 106,629 |  |  | 120,654 |
Valuation allowance | (92,217) |  |  | (102,865) |
Total deferred tax assets | 14,412 |  |  | 17,789 |
Deferred tax liabilities: |  |  |
Purchased intangibles | (4,828) |  |  | (6,112) |
Operating leases right-of-use assets | (5,858) |  |  | (6,914) |
Property and equipment | (3,524) |  |  | (4,443) |
Other | (366) |  |  | (456) |
Total deferred tax liabilities | (14,576) |  |  | (17,925) |
Net deferred tax liabilities | $ | (164) |  |  | $ | (136) |
The Company assesses the realizability of its net deferred tax assets by evaluating all available evidence, both positive and negative, including (1) cumulative results of operations in recent years, (2) sources of recent losses, (3) estimates of future taxable income and (4) the length of net operating loss carryforward periods. The Company believes that based on the history of its U.S. losses and other factors, the weight of available evidence indicates that it is more likely than not that it will not be able to realize its U.S. net deferred tax assets. The Company has also placed a valuation allowance on the net deferred tax assets of its Australian operations. Accordingly, the U.S. and Sweden net deferred tax assets have been offset by a full valuation allowance. The valuation allowance decreased by $10.6 million and increased by $43.4 million during the years ended December 31, 2024 and 2023, respectively. As of December 31, 2024, the Company had domestic federal net operating loss carryforwards of $109.8 million, domestic state net operating loss carryforwards of $66.3 million, and foreign net operating loss carryforwards of $12.6 million that can reduce future taxable income. The domestic federal and state net operating loss carryforwards will begin to expire in 2025 and 2027, respectively. The foreign net operating loss carryforwards can be carried forward indefinitely. As of December 31, 2024, the Company had credit carryforwards of approximately $12.3 million and $13.2 million available to reduce future taxable income, if any, for domestic federal and California state income tax purposes, respectively. The domestic federal credit carryforwards will begin to expire in 2024. California credits have no expiration date. The Company has recorded a valuation allowance against its deferred tax assets at December 31, 2024 and 2023 because the Company's management believes that it is more likely than not that these assets will not be fully realized. The decrease in the valuation allowance is approximately $10.6 million in the year ended December 31, 2024. A reconciliation of the Company’s unrecognized tax benefits is as follows (in thousands):
| Year Ended December 31,
| 2024 |  | 2023 |  | 2022
Balance at the beginning of the year | $ | 6,184 |  |  | $ | 5,436 |  |  | $ | 4,156 |
Additions based on tax positions related to the current year | 1,323 |  |  | 839 |  |  | 1,255 |
Additions based on tax positions related to prior years | 1,134 |  |  | — |  |  | 25 |
Decreases based on tax positions related to prior years | — |  |  | (91) |  |  | — |
Balance at the end of the year | $ | 8,641 |  |  | $ | 6,184 |  |  | $ | 5,436 |
None of the $8.6 million of net unrecognized tax benefit as of December 31, 2024, if recognized, would impact the Company's effective tax rate. During the year ended December 31, 2024, given the Company's valuation allowance, the uncertain tax benefits would not have impacted the effective tax rate. The Company recognizes interest and penalties related to unrecognized tax benefits as a component of income tax expense. As of December 31, 2024 and December 31, 2023, the Company had in each year $0.2 million of cumulative interest and penalties related to unrecognized tax benefits., of which approximately $0.2 million has been recorded as a noncurrent liability. At this time, the Company is unable to make a reasonably reliable estimate of the timing of payments in individual years in connection with these tax liabilities. The Company does not anticipate a significant change in the unrecognized tax benefits over the next 12 months. The Company files U.S., state and foreign income tax returns in jurisdictions with varying statutes of limitations. Due to net operating loss and credit carryovers, the domestic federal and state income tax returns are subject to tax authority examination from inception. In the foreign jurisdictions where the Company files income tax returns, the statutes of limitations with respect to these jurisdictions vary from jurisdiction to jurisdiction and range from 4 to 6 years.

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