XML 37 R23.htm IDEA: XBRL DOCUMENT
v3.25.0.1

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2024
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The provision (benefit) for income taxes consisted of the following (in thousands):
| December 31, 2024 |  | December 31, 2023
Current expense (benefit): |  |  |
Federal | $ | 4,418 |  |  | $ | 20,694 |
State | 3,242 |  |  | 5,001 |
Foreign | 24 |  |  | 24 |
Total | 7,684 |  |  | 25,719 |
Deferred expense (benefit): |  |  |
Federal | (16,512) |  |  | (21,454) |
State | (3,152) |  |  | (4,088) |
Foreign | – |  |  | – |
Total | (19,665) |  |  | (25,542) |
Provision (benefit) for income taxes | $ | (11,980) |  |  | $ | 177 |
The Company measures deferred tax assets and liabilities based on the difference between the financial statement and tax bases of assets and liabilities at the applicable tax rates. Components of the Company’s deferred tax asset and liability are as follows (in thousands):
| December 31, 2024 |  | December 31, 2023
Deferred tax assets: |  |  |
Lease liabilities | $ | 12,379 |  |  | $ | 12,119 |
Bad debt reserve | 795 |  |  | 608 |
Accrued employee related expenses | 2,633 |  |  | 1,029 |
Capitalized research and development costs | 52,040 |  |  | 37,957 |
Restricted stock units | 2,965 |  |  | 3,052 |
Performance stock units | 1,878 |  |  | 1,738 |
Acquisition related transaction costs | 818 |  |  | 890 |
| 73,508 |  |  | 57,393 |
Deferred tax liabilities: |  |  |
Fixed asset depreciation | (7,579) |  |  | (4,833) |
Lease assets | (10,833) |  |  | (10,387) |
Intangible asset amortization | (6,782) |  |  | (1,775) |
Prepaid expenses | (1,442) |  |  | (1,102) |
Section 481(a) adjustment | (1,580) |  |  | (3,343) |
Goodwill amortization | (3,136) |  |  | (2,175) |
Other | (115) |  |  | 2 |
| (31,467) |  |  | (23,613) |
Net deferred tax assets (liabilities) | $ | 42,040 |  |  | $ | 33,780 |
Beginning January 1, 2022, the Tax Cuts and Jobs Act (TCJA) of 2017 eliminated the option to deduct research and development expenditures in the current year and now requires taxpayers to capitalize and amortize research and development costs pursuant to Internal Revenue Code Section 174. The capitalized expenses are amortized over a 5-year period for domestic expenses and a 15-year period for foreign expenses. As a result of this provision of the TCJA, deferred tax assets reflect approximately $122 million and $92 million of pre-tax capitalized and amortizable research and development costs for the years ended December 31, 2024 and 2023, respectively. The Company’s tax attributes, including research and development credits, are subject to any ownership changes as defined under the Internal Revenue Code Sections 382 and 383. A change in ownership could affect the Company’s ability to utilize its credits and certain other tax attributes. The Company has recognized the portion of research and development credits acquired that will not be limited and more likely than not to be realized. Based on the Company’s operating history and management’s expectation regarding future profitability, management believes the Company’s deferred tax assets are more likely than not to be realizable under ASC 740, Income Taxes. Accordingly, no valuation allowance exists as of December 31, 2024, and December 31, 2023. Income tax expense (benefit) differed from the amounts computed by applying the federal statutory income tax rate of 21% to pretax income due to the following adjustments (in thousands):
| December 31, 2024 |  | December 31, 2023
Statutory rate | $ | (1,871) |  |  | $ | (1,354) |
State income taxes, net of federal benefit | (879) |  |  | (138) |
Section 162(m) compensation differences | 3,499 |  |  | 1,381 |
Other permanent differences | (29) |  |  | – |
Meals & entertainment | 399 |  |  | 267 |
Employee stock purchase plans | 319 |  |  | 201 |
Acquisition-related costs | 4 |  |  | 112 |
Stock compensation | (3,952) |  |  | (1,970) |
Foreign taxes | 24 |  |  | 24 |
Other | (13) |  |  | (111) |
Research & development credit | (7,067) |  |  | (3,098) |
Uncertain tax positions | (2,414) |  |  | 4,863 |
Provision (benefit) for income tax | $ | (11,980) |  |  | $ | 177 |
The adjustment to the statutory rate from state income taxes for the year ended December 31, 2024, and December 31, 2023, respectively, are the result of state and local income tax expense, including tax rate and apportionment factor changes. The adjustment to the statutory rate from Internal Revenue Code Section 162(m) for the year ended December 31, 2024, and December 31, 2023, are the result of permanent differences created by the annual disallowance of certain executive compensation exceeding $1.0 million. The adjustment to the statutory rate from stock compensation for the year ended December 31, 2024, and 2023, are the result of permanent differences recognized for the tax deduction in excess of book amortization on the exercise and vesting of stock-based compensation. The adjustment to the statutory rate from research and development credits for the year ended December 31, 2024, and 2023 are the result of application of research and development tax credits earned generated by the Company in connection with certain at-risk work performed on behalf of our customers. The Company has elected to record tax-related penalties and interest as current income tax expense. For the year ended December 31, 2024, total penalties and interest related to uncertain tax positions is a net decrease of $2.5 million, including a net decrease of $2.6 million related to IRC Section 174 research and development expenditures. For the year ended December 31, 2023, total penalties and interest related to uncertain tax positions is a net increase of $4.8 million, including a net increase of $4.6 million related to IRC Section 174 research and development expenditures. A reconciliation of the beginning balance and ending amounts of unrecognized tax benefits (excluding interest and penalties) is as follows for the year ended December 31, 2024, and 2023 (in thousands):
| 2024 |  | 2023
Balances at January 1 | $ | 38,899 |  |  | $ | 716 |
Additions based on tax positions related to the prior year | 99 |  |  | 14,485 |
Decreases based on tax positions related to prior year | (5,354) |  |  | – |
Additions based on tax positions related to the current year | 19,617 |  |  | 23,698 |
Settlements | – |  |  | – |
Balances at December 31 | $ | 53,261 |  |  | $ | 38,899 |
The amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate at December 31, 2024 and 2023, is $1.2 million and $0.9 million, respectively. The amount of the unrecognized tax benefits expected to reverse within the next 12 months is $13.6 million. For the period ending December 31, 2024, the Company recorded net interest of $1.5 million and released $4.0 million of penalties, respectively, related to uncertain tax positions, which were recognized as a component of income tax expense. For the period ending December 31, 2023, the Company recorded interest and penalties of $0.6 million and $4.0 million, respectively, related to uncertain tax positions, which were recognized as a component of income tax expense. For the periods ending December 31, 2024, and December 31, 2023, the Company has an ending uncertain tax position of $52.0 million and $38.0 million, respectively, against its IRC Section 174 research and development expenditures. The Company reported this uncertain tax position given its position that its costs are deductible currently and therefore should not be capitalized and amortized over five years. This uncertain tax position represents a timing difference with no impact to overall income tax expense or benefit. For the periods ending December 31, 2024, and December 31, 2023, the Company has an ending uncertain tax position of $0.9 million and $0.6 million, respectively, against its research and development expenditures credit. The Company files income tax returns in the U.S. federal jurisdiction and certain states in which it operates. The Company’s federal income tax returns for tax years 2021 and thereafter remain subject to examination by the U.S. Internal Revenue Service. The statute of limitations on the Company’s state income tax returns generally conforms to the federal three-year statute of limitations. The Organization for Economic Cooperation and Development has released Pillar Two Model Rules, a 15% minimum effective tax rate designed to ensure that large multinational enterprises pay a minimum level of tax on the income arising in each jurisdiction where they operate and mandates sharing of certain company information with taxing authorities on a local and global basis. Certain jurisdictions have enacted, and others have proposed, legislation to implement certain provisions of Pillar Two. The Company is continuing to monitor the implications resulting from the potential enactment of Pillar Two rules in the jurisdictions where we operate. The Company has no tax liability resulting from Pillar II for the 2024 year.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for income tax. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-12 Reference 2: http://www.xbrl.org/2003/role/exampleRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 55 -Paragraph 231 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482663/740-10-55-231 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12C -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-12C Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12B -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-12B Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 270 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Publisher FASB -URI https://asc.fasb.org/1943274/2147477891/740-270-50-1 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SAB Topic 6.I.5.Q1) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479360/740-10-S99-1 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 946 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 13 -Publisher FASB -URI https://asc.fasb.org/1943274/2147480990/946-20-50-13 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 235 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480678/235-10-S99-1 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/740/tableOfContent Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 14 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-14 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 21 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-21 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 17 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-17 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479360/740-10-S99-2 Reference 14: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 30 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482603/740-30-50-2 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration