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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes
15. Income Taxes
The following table presents domestic and foreign components of (loss) income before income taxes for the tax years ended December 31, 2024, 2023 and 2022:
Year Ended December 31,
202420232022
(In thousands)
United States$7,670 $759 $30,594 
International(16,623)(20,062)(13,288)
(Loss) income before income taxes$(8,953)$(19,303)$17,306 

Benefit for income taxes from operations consists of the following:
Year Ended December 31,
202420232022
(In thousands)
Current:
Federal$(342)$(653)$(2,717)
State(1,581)(1,309)(803)
Foreign(1,053)(2,219)(815)
Total(2,976)(4,181)(4,335)
Deferred:
Federal29 (75)1,004 
State— — (1)
Foreign5,376 7,216 5,596 
Total5,405 7,141 6,599 
Income tax benefit$2,429 $2,960 $2,264 
The following table presents a reconciliation of the statutory federal tax rate and the Company’s effective tax rate for the years ended December 31, 2024, 2023 and 2022:
Year Ended December 31,
202420232022
Federal Tax Rate21.0 %21.0 %21.0 %
State Tax Rate - statutory blended rate4.2 4.3 4.3 
Other effective state tax adjustments(8.5)(5.2)3.6 
Non-deductible expenses(4.6)(4.1)4.0 
Non-deductible executive compensation(12.4)— — 
Research tax benefits49.4 24.4 (31.6)
Stock-based compensation1.2 (18.0)6.3 
Change in valuation allowance(22.8)(11.7)(16.1)
Deferred tax rate change0.1 0.6 0.5 
Intangibles and deferred adjustments(7.3)— (4.7)
Foreign rate differential5.4 2.8 1.6 
Other1.4 1.2 (2.0)
Total27.1 %15.3 %(13.1)%
For the year ended December 31, 2024, the Company recognized an income tax benefit of $2.4 million on pre-tax book loss of $9.0 million, resulting in an effective income tax rate of 27.1%. For the year ended December 31, 2023, the Company recognized an income tax benefit of $3.0 million on pre-tax book loss of $19.3 million, resulting in an effective income tax rate of 15.3%. For the year ended December 31, 2022, the Company recognized an income tax benefit of $2.3 million on pre-tax book income of $17.3 million, resulting in an effective income tax rate of (13.1)%.
In 2024, the Company’s valuation allowance in the U.S. continued to offset many of the permanent tax adjustments within the effective tax rate. These adjustments include state taxes, federal research tax credits under Internal Revenue Code Section 41, equity compensation in the U.S., and other non-deductible expenditures in the U.S. The Company has disclosed the statutory blended state income tax rate in the income tax rate reconciliation table. This statutory blended state income tax rate is the rate applied to the Company’s U.S. taxable earnings to calculate its state income tax liability. The Company has also disclosed other effective state tax adjustments which primarily include the state tax impact of permanent tax adjustments and the reconciling adjustment to remove the statutory blended state income tax rate effect from income or loss generated outside of the U.S. The Company continues to generate income tax benefits in the current period related to income tax credits recognized for qualified research activities in the U.S. The applicable federal tax law and regulations define qualified research activities as research and development activities conducted in the U.S. that involve a process of experimentation designed to discover new information intended to develop a new or improved business component. Absent the valuation allowance, equity compensation also impacts the effective tax rate to the extent the income tax deduction exceeds or is below the related book expense, as required under ASC 718-740-35-2. Other U.S. non-deductible expenses that are offset by the valuation allowance consist primarily of non-deductible executive compensation under Internal Revenue Code 162(m).
The following table presents the significant components of the Company’s net deferred tax liability:
As of December 31,
20242023
(In thousands)
Deferred tax assets:
Allowance for doubtful accounts$276 $80 
Accrued liabilities3,256 3,459 
Operating lease liabilities56,788 57,152 
Deferred revenue1,913 1,915 
Stock-based compensation2,826 3,363 
Capitalized research and development expenses44,716 40,306 
Tax credits15,694 12,994 
Net operating losses12,761 17,421 
Other deferred tax assets1,859 3,238 
Gross deferred tax assets140,089 139,928 
Less: valuation allowance(70,008)(67,950)
Total deferred tax assets70,081 71,978 
Deferred tax liabilities:
Property, plant and equipment22,436 24,469 
Goodwill1,554 1,416 
Intangibles34,305 39,334 
Operating lease assets39,090 39,780 
Total deferred tax liabilities97,385 104,999 
Net deferred tax liability$(27,304)$(33,021)
The Company’s accounting for deferred taxes involves the evaluation of a number of factors concerning the realizability of its net deferred tax assets. The Company primarily considered its historic performance, the nature of its deferred tax assets and the timing, likelihood and amount, if any, of future taxable income during the periods in which those temporary differences and carryforwards become deductible. Based on an analysis of these factors, the Company determined that in 2024, a valuation allowance against U.S. deferred tax assets was required.
As of December 31, 2024, the Company had approximately $14.8 million in U.S. federal net operating loss carryforwards, $20.1 million in U.K. loss carryforwards, and $15.7 million in U.S. federal tax credits. All U.S. federal net operating loss carryforwards were generated after the enactment of the Tax Cuts and Jobs Act (the “Act”) and as such do not expire, but can only be utilized to offset up to 80% of taxable income in any given year. The U.S. federal tax credits begin to expire in 2039.
As of December 31, 2024, the Company had approximately $73.6 million in state net operating loss carryforwards. If not utilized, some state net operating loss carryforwards will expire at various dates beginning in 2030.
At December 31, 2024, the amount of unremitted earnings generated by the Company’s foreign subsidiaries is not significant. The Company does not assert indefinite reinvestment on a portion of its unremitted earnings of certain foreign subsidiaries as of December 31, 2024. On the earnings that are not indefinitely reinvested, the Company did not recognize deferred income taxes related to those unremitted foreign earnings, due to the tax favorable manner in which it would be repatriated. For the subsidiaries that the Company asserts permanent reinvestment, if repatriation were to occur, the Company would be required to accrue U.S. taxes, if any, and remit applicable withholding taxes as appropriate. A determination of the amount of the unrecognized deferred tax liability related to these undistributed earnings is not practicable due to the complexity and variety of assumptions necessary based on the manner in which the undistributed earnings would be repatriated.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
Year Ended December 31,
20242023
(In thousands)
Unrecognized tax benefits—January 1,$6,170 $4,800 
Gross increases—tax positions in prior period91 142 
Gross increases—tax positions in current period1,177 1,228 
Unrecognized tax benefits—December 31,$7,438 $6,170 
If the $7.4 million of unrecognized tax benefit is recognized, it would not impact the effective tax rate due to the valuation allowance on the Company’s net U.S. deferred tax assets.
For the years ended December 31, 2024, 2023 and 2022, the Company recognized $0.1 million, $0.3 million and $0.3 million, respectively, in interest and penalties related to income taxes within income tax benefit in the accompanying consolidated statements of operations.
The Company expects no material changes in the twelve months following December 31, 2024 in its uncertain tax positions.
The Company files U.S. federal income tax returns as well as income tax returns in many U.S. states and foreign jurisdictions. The tax years 2021 through 2023 remain open to examination by the major jurisdictions in which the Company is subject to tax.