XML 36 R21.htm IDEA: XBRL DOCUMENT
v3.24.3

Income Taxes | 12 Months Ended
--- | ---
Aug. 31, 2024
Income Taxes [Abstract] |
Income Taxes | 14. INCOME TAXES Our provision for income taxes consisted of the following (in thousands):
YEAR ENDED |  |  |  |  |  |  |  |
AUGUST 31, |  | 2024 |  |  | 2023 |  |  | 2022
Current: |  |  |  |  |  |  |  |
Federal | $ | (4,040) |  | $ | - |  | $ | -
State |  | (1,675) |  |  | (791) |  |  | (1,221)
Foreign |  | (2,174) |  |  | (2,389) |  |  | (2,202)
|  | (7,889) |  |  | (3,180) |  |  | (3,423)
Deferred: |  |  |  |  |  |  |  |
Federal |  | 2,309 |  |  | 1,545 |  |  | (9,339)
State |  | 730 |  |  | 225 |  |  | (889)
Foreign |  | (395) |  |  | 216 |  |  | 24
Operating loss carryforward |  | (3,245) |  |  | (7,201) |  |  | 7,150
Valuation allowance |  | (1,154) |  |  | 372 |  |  | 2,845
Foreign tax credit carryforward |  |  |  |  |  |  |  |
reduction |  | - |  |  | (65) |  |  | (2)
|  | (1,755) |  |  | (4,908) |  |  | (211)
| $ | (9,644) |  | $ | (8,088) |  | $ | (3,634)
The allocation of our total income tax provision is as follows (in thousands):
YEAR ENDED |  |  |  |  |  |  |  |
AUGUST 31, |  | 2024 |  |  | 2023 |  |  | 2022
Net income | $ | (9,644) |  | $ | (8,088) |  | $ | (3,634)
Other comprehensive income |  | (11) |  |  | (80) |  |  | 176
| $ | (9,655) |  | $ | (8,168) |  | $ | (3,458)
Income before income taxes was generated as follows (in thousands):
YEAR ENDED |  |  |  |  |  |  |  |
AUGUST 31, |  | 2024 |  |  | 2023 |  |  | 2022
United States | $ | 32,456 |  | $ | 23,574 |  | $ | 21,152
Foreign |  | 590 |  |  | 2,295 |  |  | 912
| $ | 33,046 |  | $ | 25,869 |  | $ | 22,064
‎ The differences between income taxes at the statutory federal income tax rate and the consolidated income tax rate reported in our consolidated income statements and statements of comprehensive income were as follows:
YEAR ENDED |  |  |  |  |  |  |  |  |
AUGUST 31, |  | 2024 |  |  | 2023 |  |  | 2022 |
Federal statutory income tax rate |  | (21.0) | % |  | (21.0) | % |  | (21.0) | %
State income taxes, net of federal effect |  | (4.0) |  |  | (4.7) |  |  | (3.9) |
Valuation allowance |  | (3.5) |  |  | 1.4 |  |  | 12.9 |
Foreign tax credit carryforward |  |  |  |  |  |  |  |  |
reduction |  | - |  |  | (0.3) |  |  | - |
Foreign jurisdictions tax differential |  | 0.1 |  |  | (0.2) |  |  | (1.1) |
Tax differential on income subject |  |  |  |  |  |  |  |  |
to both U.S. and foreign taxes |  | 1.5 |  |  | (1.4) |  |  | (0.2) |
Uncertain tax positions |  | (0.3) |  |  | (0.9) |  |  | (0.8) |
Non-deductible executive compensation |  | (9.7) |  |  | (3.6) |  |  | (5.5) |
Non-deductible meals and entertainment |  | (0.8) |  |  | (0.7) |  |  | (0.1) |
Other stock-based compensation |  | 7.7 |  |  | (0.4) |  |  | 2.5 |
Other |  | 0.8 |  |  | 0.5 |  |  | 0.7 |
|  | (29.2) | % |  | (31.3) | % |  | (16.5) | %
Our effective income tax expense rate for fiscal 2024 of 29.2% was higher than the statutory tax rate primarily due to tax expense of $3.2 million for non-deductible executive compensation and a $1.2 million increase in the valuation allowance against our deferred income tax assets, which were partially offset by a $2.6 million benefit for share-based compensation deductions in excess of the corresponding book expense and a $0.5 million benefit in tax differential on income subject to both U.S. and foreign taxes. Our effective income tax expense rate for fiscal 2023 of 31.3% was higher than the statutory tax rate primarily due to tax expense of $0.9 million for non-deductible executive compensation and $0.4 million in tax differential on income subject to both U.S. and foreign taxes, which were partially offset by a $0.4 million decrease in the valuation allowance against our deferred income tax assets. The effective income tax expense rate for fiscal 2022 of 16.5% was lower than the statutory tax rate primarily due to a $2.8 million decrease in the valuation allowance against our deferred income tax assets and a $0.6 million benefit for share-based compensation deductions in excess of the corresponding book expense. These tax benefits were partially offset by tax expense of $1.2 million for non-deductible executive compensation. We are subject to the anti-deferral provisions on Global Intangible Low-Taxed Income (GILTI) under the Tax Cut and Jobs Act of 2017. We have elected to treat taxes due on future U.S. inclusions in taxable income related to GILTI as a current period expense when incurred (the Period Cost Method). We recorded no income tax expense in fiscal 2024, income tax expense of $0.2 million in fiscal 2023, and an insignificant amount of income tax expense in fiscal 2022 under the GILTI provisions. ‎ The significant components of our deferred tax assets and liabilities were as follows (in thousands):
AUGUST 31, |  | 2024 |  |  | 2023
Deferred income tax assets: |  |  |  |  |
Stock-based compensation | $ | 3,760 |  | $ | 4,222
Net operating loss carryforward |  | 3,447 |  |  | 6,505
Foreign income tax credit |  |  |  |  |
carryforward |  | - |  |  | 4,253
Deferred revenue |  | 2,970 |  |  | 1,677
Capitalized development costs |  | 2,156 |  |  | 1,236
Bonus and other accruals |  | 1,317 |  |  | 1,517
Sale and financing of corporate |  |  |  |  |
headquarters |  | 1,041 |  |  | 1,899
Inventory and bad debt reserves |  | 923 |  |  | 1,094
Self-constructed tangible assets |  | 404 |  |  | -
Other |  | 174 |  |  | 458
Total deferred income tax assets |  | 16,192 |  |  | 22,861
Less: valuation allowance |  | (2,467) |  |  | (1,313)
Net deferred income tax assets |  | 13,725 |  |  | 21,548
Deferred income tax liabilities: |  |  |  |  |
Intangibles step-ups – indefinite lived |  | (5,433) |  |  | (5,522)
Intangibles step-ups – finite lived |  | (1,873) |  |  | (2,541)
Self-constructed tangible assets |  | - |  |  | (5,476)
Intangible asset amortization |  | (4,217) |  |  | (4,189)
Deferred commissions |  | (3,827) |  |  | (3,598)
Unremitted earnings of foreign |  |  |  |  |
subsidiaries |  | (505) |  |  | (521)
Property and equipment depreciation |  | (132) |  |  | (80)
Total deferred income tax liabilities |  | (15,987) |  |  | (21,927)
Net deferred income taxes | $ | (2,262) |  | $ | (379)
Deferred income tax amounts are recorded as follows in our consolidated balance sheets (in thousands):
AUGUST 31, |  | 2024 |  |  | 2023
Long-term assets | $ | 870 |  | $ | 1,661
Long-term liabilities |  | (3,132) |  |  | (2,040)
Net deferred income tax liability | $ | (2,262) |  | $ | (379)
‎ Our U.S. federal net operating loss carryforwards were comprised of the following at August 31, 2024 (in thousands):
|  | Loss Carryforward |  |  |  | Loss |  | Loss |  | Operating
Loss Carryforward |  | Expires |  |  |  | Deductions |  | Deductions |  | Loss Carried
for Year Ended |  | August 31, |  | Amount |  | in Prior Years |  | in Current Year |  | Forward
Acquired NOL - Jhana |  |  |  |  |  |  |  |  |  |
December 31, 2015 |  | 2034 | $ | 1,491 | $ | (1,491) | $ | - | $ | -
December 31, 2016 |  | 2035 |  | 3,052 |  | (909) |  | (215) |  | 1,928
July 15, 2017 |  | 2036 |  | 1,117 |  | - |  | - |  | 1,117
|  |  |  | 5,660 |  | (2,400) |  | (215) |  | 3,045
Acquired NOL - Strive |  |  |  |  |  |  |  |  |  |
December 31, 2018 |  | No Expiration |  | 947 |  | (947) |  | - |  | -
December 31, 2019 |  | No Expiration |  | 869 |  | (869) |  | - |  | -
December 31, 2020 |  | No Expiration |  | 1,133 |  | (160) |  | (840) |  | 133
April 25, 2021 |  | No Expiration |  | 553 |  | - |  | - |  | 553
|  |  |  | 3,502 |  | (1,976) |  | (840) |  | 686
August 31, 2022 |  | No Expiration |  | 40,996 |  | (27,787) |  | (13,209) |  | -
|  |  | $ | 50,158 | $ | (32,163) | $ | (14,264) | $ | 3,731
We have U.S. state net operating loss carryforwards generated in fiscal 2009 and before in various jurisdictions that expire primarily between September 1, 2024 and August 31, 2029. The U.S. state net operating loss carryforwards generated in fiscal 2017 and fiscal 2018 primarily expire on August 31, 2037 and 2038, respectively. The state net operating loss carryforwards acquired through the purchase of Jhana stock expire between August 31, 2035 and August 31, 2036. The state net operating loss carryforwards acquired through the purchase of Strive stock expire between August 31, 2040 and August 31, 2041. The state net operating loss carryforwards generated in fiscal 2022 primarily expire on August 31, 2042. During fiscal 2024 we utilized $4.5 million in U.S. foreign income tax credit carryforwards from prior years and $1.1 million in foreign tax credits generated during fiscal 2024. As of August 31, 2024, we have no remaining U.S. foreign tax credit carryforwards. The valuation allowance against our deferred income tax assets at August 31, 2021 related primarily to the U.S. foreign tax credit carryforward from fiscal 2011, which we expected to expire in fiscal 2022, and losses of certain foreign subsidiaries. During fiscal 2022 we were able to utilize the U.S. foreign tax credit carryforward from 2011. The remaining valuation allowance at August 31, 2022 related primarily to the losses of certain foreign subsidiaries. During fiscal 2023 we reversed the valuation allowance for certain foreign subsidiaries and increased the valuation allowance for certain other foreign subsidiaries, for a net decrease in our total valuation allowance. During fiscal 2024 we decreased the valuation allowance for a certain foreign subsidiary and increased the valuation allowance for certain other foreign subsidiaries, for a net increase in our total valuation allowance. The remaining valuation allowance at August 31, 2024 relates primarily to the losses of certain foreign subsidiaries which we expect will expire unused. Activity in our deferred income tax asset valuation allowance was as follows for the periods indicated (in thousands):
YEAR ENDED |  |  |  |  |  |  |  |
AUGUST 31, |  | 2024 |  |  | 2023 |  |  | 2022
Beginning balance | $ | 1,313 |  | $ | 1,685 |  | $ | 4,530
Charged to costs and expenses |  | 1,250 |  |  | 212 |  |  | 683
Deductions |  | (96) |  |  | (584) |  |  | (3,528)
Ending balance | $ | 2,467 |  | $ | 1,313 |  | $ | 1,685
Except for the deferred tax assets subject to valuation allowances, we have determined that projected future taxable income is adequate to allow for realization of all deferred tax assets. We considered sources of taxable income, including reversals of taxable temporary differences, future taxable income exclusive of reversing temporary differences and carryforwards, and reasonable, practical tax-planning strategies to generate additional taxable income. Based on the factors described above, we concluded that realization of our deferred tax assets, except those subject to the valuation allowances described above, is more likely than not at August 31, 2024. A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows (in thousands):
YEAR ENDED |  |  |  |  |  |  |  |
AUGUST 31, |  | 2024 |  |  | 2023 |  |  | 2022
Beginning balance | $ | 1,618 |  | $ | 1,597 |  | $ | 1,594
Additions based on tax positions |  |  |  |  |  |  |  |
related to the current year |  | 491 |  |  | 188 |  |  | 77
Additions for tax positions in |  |  |  |  |  |  |  |
prior years |  | 73 |  |  | 290 |  |  | 207
Reductions for tax positions of prior |  |  |  |  |  |  |  |
years resulting from the lapse of |  |  |  |  |  |  |  |
applicable statute of limitations |  | (255) |  |  | (186) |  |  | -
Other reductions for tax positions of |  |  |  |  |  |  |  |
prior years |  | (288) |  |  | (271) |  |  | (281)
Ending balance | $ | 1,639 |  | $ | 1,618 |  | $ | 1,597
The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate is $1.3 million at each of August 31, 2024 and 2023. Included in the ending balance of gross unrecognized tax benefits at August 31, 2024 is $1.0 million related to individual states’ net operating loss carryforwards. Interest and penalties related to uncertain tax positions are recognized as components of income tax expense. The net accruals and reversals of interest and penalties had an insignificant effect on our income tax expense in fiscal 2024 and increased our income tax expense by $0.1 million in each of fiscal 2023 and 2022. The balance of interest and penalties included in other long-term liabilities on our consolidated balance sheets was $0.4 million at each of August 31, 2024 and 2023. During the next 12 months, we expect an immaterial change in unrecognized tax benefits. We file United States federal income tax returns as well as income tax returns in various states and foreign jurisdictions. The tax years that remain subject to examinations for our major tax jurisdictions are shown below.
2017-2024 | Australia, Canada, and Japan
2016-2024 | China
2019-2024 | Germany, Switzerland, and Austria
2020-2024 | United Kingdom, Singapore
2020-2024 | United States – state and local income tax
2021-2024 | United States – federal income tax

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