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INCOME TAXES | 12 Months Ended
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Dec. 31, 2024
Income Tax Disclosure [Abstract] |
INCOME TAXES | 23. INCOME TAXES For financial reporting purposes, loss before income taxes includes the following components (in thousands):
| Years ended December 31,
| 2024 |  | 2023 |  | 2022
United States loss | $ | (259,395) |  |  | $ | (267,058) |  |  | $ | (35,272) |
Foreign income | 1,284 |  |  | 936 |  |  | 1,420 |
Total loss before income taxes | $ | (258,111) |  |  | $ | (266,122) |  |  | $ | (33,852) |
The provision for income taxes for 2024, 2023 and 2022 consists of the following (in thousands):
| Years ended December 31,
| 2024 |  | 2023 |  | 2022
Current: |  |  |  |  |
Federal | $ | — |  |  | $ | (55) |  |  | $ | 802 |
State | 167 |  |  | 369 |  |  | 1,874 |
Foreign | 233 |  |  | 58 |  |  | 112 |
Total current | 400 |  |  | 372 |  |  | 2,788 |
Deferred: |  |  |  |  |
Federal | 119 |  |  | 37,160 |  |  | (1,275) |
State | 118 |  |  | 4,201 |  |  | (50) |
Foreign | 47 |  |  | (13) |  |  | (79) |
Total deferred | 284 |  |  | 41,348 |  |  | (1,404) |
Total provision for income taxes | $ | 684 |  |  | $ | 41,720 |  |  | $ | 1,384 |
The provision for income taxes for 2024, 2023 and 2022 differ from the amounts computed by applying the U.S. federal income tax rate of 21% to loss before income taxes for the following reasons (in thousands):
| Year ended December 31,
| 2024 |  | 2023 |  | 2022
U.S. federal income tax benefit at statutory rate | $ | (54,203) |  |  | $ | (55,886) |  |  | $ | (7,109) |
State income tax expense, net of federal benefit | (9,444) |  |  | (12,297) |  |  | (1,170) |
Research and development credit | (2,071) |  |  | (3,245) |  |  | (2,956) |
Global intangible low-tax income | 360 |  |  | (736) |  |  | 919 |
Other, net | 391 |  |  | (1) |  |  | (67) |
Non-deductible executive compensation | 1,286 |  |  | 762 |  |  | 905 |
Stock-based compensation expense | 728 |  |  | 2,477 |  |  | 219 |
Change in valuation allowance | 63,637 |  |  | 110,646 |  |  | 10,643 |
Total provision for income taxes | $ | 684 |  |  | $ | 41,720 |  |  | $ | 1,384 |
The components of our deferred tax assets and liabilities as of December 31, 2024 and 2023 are as follows (in thousands):
| December 31,
| 2024 |  | 2023
Deferred tax assets: |  |  |
Net operating loss carryforwards | $ | 73,925 |  |  | $ | 29,440 |
Basis difference in equity securities | 53,335 |  |  | 34,729 |
Capitalized software development | 33,064 |  |  | 25,840 |
Research and development tax credits | 26,040 |  |  | 24,202 |
Unearned revenue | 7,324 |  |  | 7,925 |
Accrued expenses | 3,325 |  |  | 4,275 |
Reserves and other | 2,270 |  |  | 2,551 |
Operating lease liabilities | 1,902 |  |  | 861 |
Other tax credits and carryforwards | 261 |  |  | 270 |
Property and equipment, net held for sale | — |  |  | 6,484 |
Intangible assets | — |  |  | 117 |
Gross deferred tax assets | 201,446 |  |  | 136,694 |
Valuation allowance | (195,742) |  |  | (132,105) |
Total deferred tax assets | 5,704 |  |  | 4,589 |
Deferred tax liabilities: |  |  |
Property and equipment, net | (3,378) |  |  | (3,125) |
Operating lease right-of-use assets | (1,664) |  |  | (786) |
Intangible assets | (487) |  |  | — |
Prepaid expenses | (368) |  |  | (587) |
Total deferred tax liabilities | (5,897) |  |  | (4,498) |
Total deferred tax assets (liabilities), net | $ | (193) |  |  | $ | 91 |
At December 31, 2024, we have federal net operating loss carryforwards with no expiration date of approximately $283.2 million; the utilization of these net operating loss carryforwards is limited to 80% of taxable income in any given year. We have state net operating loss carryforwards with no expiration date of approximately $115.2 million; the utilization of these net operating loss carryforwards is limited to 80% of taxable income in the state in any given year. We also have state net operating loss carryforwards of approximately $169.0 million that expire between 2033 and 2044. At December 31, 2024, we have federal research credit carryforwards of approximately $30.9 million that expire between 2031 and 2044. We also have state research credit carryforwards of approximately $9.9 million that expire between 2025 and 2038. Ownership changes under Internal Revenue Code Section 382 could limit the amount of net operating losses or credit carryforwards that can be used in the future. Each quarter we assess on a jurisdictional basis whether it is more likely than not that our deferred tax assets will be realized under ASC Topic 740. We have no carryback ability, and therefore we must rely on future taxable income, including tax planning strategies and future reversals of taxable temporary differences, to recover our deferred tax assets. We assess available positive and negative evidence to estimate whether we will generate sufficient future taxable income to use our existing deferred tax assets. A significant piece of objective negative evidence evaluated as of December 31, 2024, is our cumulative loss position over a three-year period. Such objective negative evidence limits our ability to consider other more subjective evidence such as our projections for future growth. On the basis of this evaluation we intend to maintain a valuation allowance against our deferred tax assets for the U.S. jurisdiction, not supported by reversals of taxable temporary differences. For the year ended December 31, 2024, the total increase in the valuation allowance was $63.6 million. We intend to continue maintaining a valuation allowance on our net U.S. deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of these allowances. The amount of the deferred tax asset considered realizable could be adjusted if objective negative evidence in the form of cumulative losses is no longer present and additional weight is given to subjective evidence such as our projections for growth. We will continue to monitor the need for a valuation allowance against our deferred tax assets on a quarterly basis. A reconciliation of the beginning and ending unrecognized tax benefits, excluding interest and penalties, as of December 31, 2024, 2023 and 2022 is as follows (in thousands):
| Year ended December 31,
| 2024 |  | 2023 |  | 2022
Beginning balance | $ | 15,020 |  |  | $ | 13,488 |  |  | $ | 11,961 |
Additions for tax positions related to the current year | 1,121 |  |  | 1,258 |  |  | 1,083 |
Additions (reductions) for tax positions taken in prior years | (452) |  |  | 274 |  |  | 444 |
Ending balance | $ | 15,689 |  |  | $ | 15,020 |  |  | $ | 13,488 |
Included in the balance of unrecognized tax benefits as of December 31, 2024, 2023 and 2022, are approximately $15.7 million, $15.0 million, and $13.5 million, respectively, of tax benefits that, if recognized, and the valuation allowance against our net deferred tax assets were released, would affect the effective tax rate. We believe it is reasonably possible that these unrecognized tax benefits will continue to increase in the future. Accrued interest and penalties on unrecognized tax benefits as of December 31, 2024 and 2023 were $1.4 million and $1.3 million, respectively. We are subject to taxation in the United States and various state and foreign jurisdictions. Tax years beginning in 2020 are subject to examination by taxing authorities, although net operating loss and credit carryforwards from all years are subject to examinations and adjustments for at least three years following the year in which the attributes are used. As we repatriate foreign earnings for use in the United States, the distributions will generally be exempt from federal and foreign income taxes but may be subject to certain state taxes. As of December 31, 2024, the cumulative amount of foreign earnings considered permanently reinvested upon which taxes have not been provided, and the corresponding unrecognized deferred tax liability, was not material.

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