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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes

NOTE 14 – INCOME TAXES

The components of income (loss) before taxes are as follows (in thousands):

 

 

Year Ended December 31,

 

 

 

2024

 

 

2023

 

 

2022

 

U.S.

 

$

(31,758

)

 

$

(142,447

)

 

$

(667,612

)

Foreign

 

 

43,337

 

 

 

12,801

 

 

 

(80,005

)

Income (loss) before taxes

 

$

11,579

 

 

$

(129,646

)

 

$

(747,617

)

The provision for income taxes consisted of the following (in thousands):

 

 

Year Ended December 31,

 

 

 

2024

 

 

2023

 

 

2022

 

Current:

 

 

 

 

 

 

 

 

 

U.S. federal

 

$

3,696

 

 

$

1,398

 

 

$

—

 

Foreign

 

 

12,161

 

 

 

16,546

 

 

 

21,252

 

State and local

 

 

(476

)

 

 

694

 

 

 

1,723

 

Total current

 

 

15,381

 

 

 

18,638

 

 

 

22,975

 

Deferred:

 

 

 

 

 

 

 

 

 

U.S. federal

 

 

(10

)

 

 

19

 

 

 

(5,431

)

Foreign

 

 

(2,748

)

 

 

(8,113

)

 

 

(3,871

)

State and local

 

 

(175

)

 

 

(502

)

 

 

(84

)

Total deferred

 

 

(2,933

)

 

 

(8,596

)

 

 

(9,386

)

Provision for income taxes

 

$

12,448

 

 

$

10,042

 

 

$

13,589

 

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, 2024, the Company released $1.3 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,

 

 

 

2024

 

 

2023

 

Deferred tax assets:

 

 

 

 

 

 

Loss carryforward

 

$

33,497

 

 

$

22,442

 

Research credits

 

 

14,998

 

 

 

10,513

 

Foreign tax credits

 

 

10,026

 

 

 

5,796

 

Accrued expenses

 

 

16,377

 

 

 

25,729

 

Fixed and intangible assets

 

 

6,216

 

 

 

38,899

 

Deferred revenue

 

 

9,768

 

 

 

10,652

 

Capitalized R&D

 

 

95,281

 

 

 

87,465

 

Lease liability

 

 

8,981

 

 

 

11,075

 

Other tax credits

 

 

2,378

 

 

 

2,318

 

Other

 

 

1,668

 

 

 

—

 

Gross deferred tax assets

 

 

199,190

 

 

 

214,889

 

Valuation allowance

 

 

(152,235

)

 

 

(157,595

)

Net deferred tax assets

 

 

46,955

 

 

 

57,294

 

Deferred tax liabilities:

 

 

 

 

 

 

Acquired intangible assets

 

 

(27,391

)

 

 

(36,416

)

Revenue recognition

 

 

—

 

 

 

(4,574

)

Operating ROU assets

 

 

(7,603

)

 

 

(9,758

)

Other

 

 

(6,224

)

 

 

(8,436

)

Gross deferred tax liabilities

 

 

(41,218

)

 

 

(59,184

)

Net deferred tax assets (liabilities)

 

$

5,737

 

 

$

(1,890

)

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, 2024, 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

 

$

22,075

 

 

2027—2030

State (post-apportionment)

 

$

93,782

 

 

2025—Indefinite

As of December 31, 2024, the Company had recorded deferred tax assets for the tax effects of the following gross capital loss carryforwards (in thousands):

 

 

Carry forward Amount

 

 

Years of Expiration

Federal

 

$

78,975

 

 

2029

State (post-apportionment)

 

$

14,563

 

 

2029—2039

 

As of December 31, 2024, 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

 

$

12,671

 

 

2031—2044

State research and development credits

 

$

20,326

 

 

Indefinite

Foreign tax credits

 

$

12,404

 

 

2033—2034

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,

 

 

 

2024

 

 

2023

 

 

2022

 

Balance at beginning of period

 

$

157,595

 

 

$

111,779

 

 

$

101,529

 

Charged (credited) to expenses

 

 

(5,051

)

 

 

46,397

 

 

 

19,321

 

Charged (credited) to other accounts

 

 

(309

)

 

 

(581

)

 

 

(9,071

)

Balance at end of period

 

$

152,235

 

 

$

157,595

 

 

$

111,779

 

Income tax expense differed from the amounts computed by applying the U.S. federal income tax rate to income (loss) before income taxes as a result of the following (in thousands):

 

 

Year Ended December 31,

 

 

 

2024

 

 

2023

 

 

2022

 

U.S. federal statutory rate

 

$

2,432

 

 

$

(27,226

)

 

$

(157,032

)

State, net of federal benefit

 

 

501

 

 

 

532

 

 

 

1,974

 

Stock-based compensation

 

 

5,390

 

 

 

6,758

 

 

 

2,036

 

Executive compensation limitation

 

 

560

 

 

 

1,911

 

 

 

2,286

 

Research tax credit

 

 

(3,998

)

 

 

(6,983

)

 

 

(5,225

)

Foreign withholding tax

 

 

11,051

 

 

 

12,811

 

 

 

8,079

 

Goodwill impairment

 

 

—

 

 

 

—

 

 

 

107,831

 

Restructuring and transaction costs

 

 

1,394

 

 

 

649

 

 

 

293

 

Divestiture-related activity

 

 

5,339

 

 

 

(26,915

)

 

 

—

 

Foreign rate differential

 

 

(10,651

)

 

 

(7,354

)

 

 

19,337

 

Foreign tax credit

 

 

(10,338

)

 

 

(10,124

)

 

 

(977

)

Change in valuation allowance

 

 

5,412

 

 

 

50,314

 

 

 

20,491

 

Effect of cross-border tax laws

 

 

2,580

 

 

 

10,151

 

 

 

7,656

 

Unrecognized tax benefits

 

 

(238

)

 

 

746

 

 

 

6,798

 

Change in estimates

 

 

3,387

 

 

 

3,844

 

 

 

(1,802

)

Change in other comprehensive income

 

 

(826

)

 

 

—

 

 

 

—

 

Non-deductible expense

 

 

184

 

 

 

—

 

 

 

—

 

Others

 

 

269

 

 

 

928

 

 

 

1,844

 

Total

 

$

12,448

 

 

$

10,042

 

 

$

13,589

 

At December 31, 2024, 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 $33.1 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.

The following table summarizes the total unrecognized tax benefits and the amounts of which that would affect the effective tax rate upon recognition of such as of December 31, 2024, 2023, and 2022 (in thousands):

 

 

December 31,

 

 

 

2024

 

 

2023

 

 

2022

 

Total unrecognized tax benefits

 

$

15,376

 

 

$

23,587

 

 

$

19,354

 

Amount affecting the effective tax rate upon recognition of unrecognized tax benefits

 

$

1,198

 

 

$

9,592

 

 

$

8,791

 

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, 2024, 2023 and 2022 is as follows (in thousands):

 

 

Year Ended December 31,

 

 

 

2024

 

 

2023

 

 

2022

 

Total unrecognized tax benefits at January 1

 

$

23,587

 

 

$

19,354

 

 

$

8,438

 

Changes due to Separation, mergers, and dispositions

 

 

(6,858

)

 

 

—

 

 

 

1,682

 

Increases for tax positions related to the current year

 

 

2,009

 

 

 

4,070

 

 

 

8,793

 

Increases for tax positions related to prior years

 

 

33

 

 

 

961

 

 

 

444

 

Decreases for tax positions related to prior years

 

 

(3,395

)

 

 

(798

)

 

 

(3

)

Total unrecognized tax benefits at December 31

 

$

15,376

 

 

$

23,587

 

 

$

19,354

 

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 years ended December 31, 2024, 2023, and 2022, we recognized interest and penalties related to unrecognized tax benefits of an immaterial amount, $0.3 million, and an immaterial amount, respectively. As of December 31, 2024 and 2023, accrued interest and penalties were $0.1 million and $0.4 million, respectively.

With few exceptions, the Company’s 2020 through 2024 tax years are open to examination in the United States, any net operating losses or credits that were generated in prior years, but not yet fully utilized in a year that is closed under the statute of limitations, may also be subject to examination.