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Income Taxes | 12 Months Ended
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Dec. 31, 2023
Income Tax Disclosure [Abstract] |
Income Taxes | NOTE 14 – INCOME TAXES The components of loss before taxes are as follows (in thousands):
|  | Year Ended December 31, |
|  | 2023 |  |  | 2022 |  |  | 2021 |
U.S. |  | $ | (142,447 | ) |  | $ | (667,612 | ) |  | $ | (123,201 | )
Foreign |  |  | 12,801 |  |  |  | (80,005 | ) |  |  | (37,037 | )
Loss before taxes |  | $ | (129,646 | ) |  | $ | (747,617 | ) |  | $ | (160,238 | )
The provision for income taxes consisted of the following (in thousands):
|  | Year Ended December 31, |
|  | 2023 |  |  | 2022 |  |  | 2021 |
Current: |  |  |  |  |  |  |  |  |
U.S. federal |  | $ | 1,398 |  |  | $ | — |  |  | $ | — |
Foreign |  |  | 16,546 |  |  |  | 21,252 |  |  |  | 12,531 |
State and local |  |  | 694 |  |  |  | 1,723 |  |  |  | (604 | )
Total current |  |  | 18,638 |  |  |  | 22,975 |  |  |  | 11,927 |
Deferred: |  |  |  |  |  |  |  |  |
U.S. federal |  |  | 19 |  |  |  | (5,431 | ) |  |  | 1,215 |
Foreign |  |  | (8,113 | ) |  |  | (3,871 | ) |  |  | 7,116 |
State and local |  |  | (502 | ) |  |  | (84 | ) |  |  | (1,418 | )
Total deferred |  |  | (8,596 | ) |  |  | (9,386 | ) |  |  | 6,913 |
Provision for income taxes |  | $ | 10,042 |  |  | $ | 13,589 |  |  | $ | 18,840 |
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts for income tax purposes. As of December 31, 2023, the Company released $2.6 million of valuation allowance associated with certain foreign deferred tax assets due to the change in circumstances that affect the realizability of those deferred tax assets. Significant components of the Company’s deferred tax assets and liabilities are as follows (in thousands):
|  | December 31, |
|  | 2023 |  |  | 2022 |
Deferred tax assets: |  |  |  |  |  |
Net operating losses |  | $ | 22,442 |  |  | $ | 19,477 |
Research credits |  |  | 10,513 |  |  |  | 6,791 |
Foreign tax credits |  |  | 5,796 |  |  |  | 2,119 |
Accrued expenses |  |  | 25,729 |  |  |  | 27,987 |
Basis difference in fixed and intangible assets |  |  | 38,899 |  |  |  | 16,290 |
Deferred revenue |  |  | 10,652 |  |  |  | 9,556 |
Capitalized R&D |  |  | 87,465 |  |  |  | 63,601 |
Lease liability |  |  | 11,075 |  |  |  | 13,310 |
Other tax credits |  |  | 2,318 |  |  |  | 1,673 |
Gross deferred tax assets |  |  | 214,889 |  |  |  | 160,804 |
Valuation allowance |  |  | (157,595 | ) |  |  | (111,779 | )
Net deferred tax assets |  |  | 57,294 |  |  |  | 49,025 |
Deferred tax liabilities: |  |  |  |  |  |
Acquired intangible assets |  |  | (36,416 | ) |  |  | (45,424 | )
Revenue recognition |  |  | (4,574 | ) |  |  | (2,292 | )
Operating ROU assets |  |  | (9,758 | ) |  |  | (10,550 | )
Other |  |  | (8,436 | ) |  |  | (1,562 | )
Gross deferred tax liabilities |  |  | (59,184 | ) |  |  | (59,828 | )
Net deferred tax liabilities |  | $ | (1,890 | ) |  | $ | (10,803 | )
The need for a valuation allowance requires an assessment of both positive and negative evidence when determining whether it is more-likely-than-not that deferred tax assets are recoverable. Such assessment is required on a jurisdiction-by-jurisdiction basis. In making such assessment, significant weight is given to evidence that can be objectively verified. After considering both positive and negative evidence to assess the recoverability of the Company’s net deferred tax assets, the Company determined that it was not more-likely-than-not that it would realize its federal, certain state and certain foreign deferred tax assets. The Company intends to continue maintaining a valuation allowance on its federal deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of these allowances. Release of the valuation allowance would result in the recognition of certain federal deferred tax assets and a decrease to income tax expense for the period the release is recorded. The exact timing and amount of the valuation allowance release depends on the level of profitability that the Company is able to achieve. As of December 31, 2023, the Company had recorded deferred tax assets for the tax effects of the following gross tax loss carryforwards (in thousands):
|  | Carry forward Amount |  |  | Years of Expiration
Federal |  | $ | 29,202 |  |  | 2027—indefinite
State (post-apportionment) |  | $ | 93,258 |  |  | 2024—2042
As of December 31, 2023, the Company had the following credits available to reduce future income tax expense (in thousands):
|  | Carry forward Amount |  |  | Years of Expiration
Federal research and development credits |  | $ | 9,451 |  |  | 2024—2043
State research and development credits |  | $ | 17,356 |  |  | 2024—indefinite
Foreign tax credits |  | $ | 8,114 |  |  | 2026—2033
The deferred tax asset valuation allowance and changes in the deferred tax asset valuation allowance consisted of the following (in thousands):
|  | Year Ended December 31, |
|  | 2023 |  |  | 2022 |  |  | 2021 |
Balance at beginning of period |  | $ | 111,779 |  |  | $ | 101,529 |  |  | $ | 52,676 |
Charged (credited) to expenses |  |  | 46,397 |  |  |  | 19,321 |  |  |  | 59,249 |
Charged (credited) to other accounts |  |  | (581 | ) |  |  | (9,071 | ) |  |  | (10,396 | )
Balance at end of period |  | $ | 157,595 |  |  | $ | 111,779 |  |  | $ | 101,529 |
Income tax expense differed from the amounts computed by applying the U.S. federal income tax rate to loss before income taxes as a result of the following (in thousands):
|  | Year Ended December 31, |
|  | 2023 |  |  | 2022 |  |  | 2021 |
U.S. federal statutory rate |  | $ | (27,226 | ) |  | $ | (157,032 | ) |  | $ | (33,650 | )
State, net of federal benefit |  |  | 532 |  |  |  | 1,974 |  |  |  | (258 | )
Stock-based compensation |  |  | 6,758 |  |  |  | 2,036 |  |  |  | (1,740 | )
Executive compensation limitation |  |  | 1,911 |  |  |  | 2,286 |  |  |  | 2,221 |
Research tax credit |  |  | (6,983 | ) |  |  | (5,225 | ) |  |  | (2,321 | )
Foreign withholding tax |  |  | 12,811 |  |  |  | 8,079 |  |  |  | 11,018 |
Goodwill impairment |  |  | — |  |  |  | 107,831 |  |  |  | — |
Restructuring and transaction costs |  |  | 649 |  |  |  | 293 |  |  |  | — |
Divestiture-related activity |  |  | (26,915 | ) |  |  | — |  |  |  | — |
Foreign rate differential |  |  | (7,354 | ) |  |  | 19,337 |  |  |  | 16,407 |
Foreign tax credit |  |  | (10,124 | ) |  |  | (977 | ) |  |  | (8,928 | )
Change in valuation allowance |  |  | 50,314 |  |  |  | 20,491 |  |  |  | 39,063 |
Foreign income inclusions |  |  | 10,151 |  |  |  | 7,656 |  |  |  | — |
Unrecognized tax benefits |  |  | 746 |  |  |  | 6,798 |  |  |  | 1,526 |
Change in estimates |  |  | 3,844 |  |  |  | (1,802 | ) |  |  | (4,674 | )
Others |  |  | 928 |  |  |  | 1,844 |  |  |  | 176 |
Total |  | $ | 10,042 |  |  | $ | 13,589 |  |  | $ | 18,840 |
At December 31, 2023, the Company asserts that it will not permanently reinvest its foreign earnings outside the United States. The Company anticipates that the cash from its foreign earnings may be used domestically to fund operations or used for other business needs. The accumulated undistributed earnings generated by its foreign subsidiaries was approximately $29.7 million. Substantially all of these earnings will not be taxable upon repatriation to the United States since they will be treated as previously taxed earnings and profits. The U.S. state income taxes and foreign withholding taxes related to the distributable cash of the Company’s foreign subsidiaries are not expected to be material. As of December 31, 2023, unrecognized tax benefits were approximately $23.6 million, of which $9.6 million would affect the effective tax rate, if recognized. As of December 31, 2022, unrecognized tax benefits were approximately $19.4 million, of which $8.8 million would affect the effective tax rate, if recognized. As of December 31, 2021, unrecognized tax benefits were approximately $8.4 million, of which $1.7 million would affect the effective tax rate, if recognized. The Company is unable to make a reasonable estimate of the timing of the long-term payments or the amount by which the unrecognized tax benefits will increase or decrease over the next 12 months. The reconciliation of the Company’s unrecognized tax benefits for the years ended December 31, 2023, 2022 and 2021 is as follows (in thousands):
|  | Year Ended December 31, |
|  | 2023 |  |  | 2022 |  |  | 2021 |
Total unrecognized tax benefits at January 1 |  | $ | 19,354 |  |  | $ | 8,438 |  |  | $ | 7,106 |
Changes due to mergers and transactions |  |  | — |  |  |  | 1,682 |  |  |  | (1,440 | )
Increases for tax positions related to the current year |  |  | 4,070 |  |  |  | 8,793 |  |  |  | 1,962 |
Increases for tax positions related to prior years |  |  | 961 |  |  |  | 444 |  |  |  | 1,303 |
Decreases for tax positions related to prior years |  |  | (798 | ) |  |  | (3 | ) |  |  | (493 | )
Total unrecognized tax benefits at December 31 |  | $ | 23,587 |  |  | $ | 19,354 |  |  | $ | 8,438 |
It is the Company’s policy to classify accrued interest and penalties related to unrecognized tax benefits in the provision for income taxes. For the year ended December 31, 2023, the Company recognized interest and penalties of $0.3 million related to unrecognized tax benefits, whereas interest and penalties were immaterial for the years ended December 31, 2022 and 2021. As of December 31, 2023, accrued interest and penalties were $0.4 million, whereas amounts accrued as of December 31, 2022 were immaterial. With few exceptions, the Company’s 2019 through 2023 tax years are open and subject to potential examination in one or more jurisdictions at December 31, 2023. In addition, in the United States, any net operating losses or credits that were generated in 2022 or earlier but not yet fully utilized in a year that is closed under the statute of limitations may also be subject to adjustment if the Former Parent were to be audited.

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