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Income Taxes | 12 Months Ended
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Dec. 31, 2024
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes We recorded a provision for income taxes of $148.7 million during the year ended December 31, 2024, a provision for income taxes of $32.1 million during the year ended December 31, 2023 and a benefit from income taxes of $162.7 million during the year ended December 31, 2022. The provision for income taxes during the year ended December 31, 2024 was primarily due to the establishment of a valuation allowance against our U.S. federal and state deferred tax assets. The provision for income taxes during the year ended December 31, 2023 was primarily due to the federal and state income taxes in the United States largely driven by shortfall associated with equity compensation. The benefit from income taxes during the year ended December 31, 2022 was primarily due to the release of the valuation allowance on certain U.S. and state deferred tax assets. The following table presents our (provision for) benefit from income taxes (in thousands):
| Years Ended December 31,
| 2024 |  | 2023 |  | 2022
Current income taxes: |  |  |  |  |
Federal | $ | (234) |  |  | $ | (2,460) |  |  | $ | (113) |
State | (1,128) |  |  | (3,064) |  |  | (2,172) |
Foreign | (4,021) |  |  | (33) |  |  | (3,702) |
Total current provision for income taxes | (5,383) |  |  | (5,557) |  |  | (5,987) |
Deferred income taxes: |  |  |  |  |
Federal | (122,057) |  |  | (26,210) |  |  | 147,236 |
State | (17,558) |  |  | (1,634) |  |  | 19,995 |
Foreign | (3,704) |  |  | 1,269 |  |  | 1,448 |
Total deferred benefit from income taxes | (143,319) |  |  | (26,575) |  |  | 168,679 |
Total (provision for) benefit from income taxes | $ | (148,702) |  |  | $ | (32,132) |  |  | $ | 162,692 |
The following table presents our (loss) income before (provision for) benefit from income taxes (in thousands):
| Years Ended December 31,
| 2024 |  | 2023 |  | 2022
United States | $ | (297,183) |  |  | $ | 61,152 |  |  | $ | 123,269 |
Foreign | (391,183) |  |  | (10,840) |  |  | (19,323) |
Total (loss) income before (provision for) benefit from income taxes | $ | (688,366) |  |  | $ | 50,312 |  |  | $ | 103,946 |
The following table presents the differences between our (provision for) benefit from income taxes as presented in the accompanying consolidated statements of operations and the income tax expense computed at the federal statutory rate as a percentage of (loss) income before (provision for) benefit from income taxes (in percentages):
| Years Ended December 31,
| 2024 |  | 2023 |  | 2022
Income tax at U.S. statutory rate | 21.0 | % |  | 21.0 | % |  | 21.0 | %
State, net of federal benefit | 2.9 |  |  | 11.6 |  |  | 1.6 |
Taxes on foreign earnings | 1.7 |  |  | 0.7 |  |  | (1.1) |
Share-based compensation | (2.5) |  |  | 39.3 |  |  | 15.3 |
Non-deductible expenses | — |  |  | (2.5) |  |  | 1.6 |
Effect of flow-through entities | 12.5 |  |  | — |  |  | — |
Goodwill impairment | (17.1) |  |  | — |  |  | — |
Tax credits | — |  |  | 0.8 |  |  | (0.7) |
Change in valuation allowance | (40.1) |  |  | 4.2 |  |  | (210.5) |
Settlement of unrecognized tax benefits | — |  |  | (8.0) |  |  | — |
Foreign-derived intangible income | 0.1 |  |  | (5.2) |  |  | — |
Convertible senior notes | — |  |  | — |  |  | 15.0 |
Other | (0.1) |  |  | 2.0 |  |  | 1.3 |
Total | (21.6) | % |  | 63.9 | % |  | (156.5) | %
The following table presents a summary of our deferred tax assets (in thousands):
| December 31,
| 2024 |  | 2023 |  |
Deferred tax assets: |  |  |  |  |
Research and experimental expenditures capitalization | $ | 102,382 |  |  | $ | 69,362 |  |  |
Net operating loss and credits carryforwards | 80,413 |  |  | 92,302 |  |  |
Accrued expenses and reserves | 25,039 |  |  | 10,442 |  |  |
Share-based compensation | 3,414 |  |  | 11,200 |  |  |
Convertible senior notes | 1,790 |  |  | 5,566 |  |  |
Goodwill | 89,583 |  |  | — |  |  |
Property and equipment and intangible assets | 15,947 |  |  | — |  |  |
Other items | — |  |  | 6,133 |  |  |
Gross deferred tax assets | 318,568 |  |  | 195,005 |  |  |
Valuation allowance | (307,985) |  |  | (40,162) |  |  |
Total deferred tax assets | $ | 10,583 |  |  | $ | 154,843 |  |  |
Deferred tax liabilities: |  |  |  |  |
Property and equipment and intangibles assets | $ | — |  |  | $ | (2,621) |  |  |
Other | (11,396) |  |  | (13,134) |  |  |
Total deferred tax liabilities | $ | (11,396) |  |  | $ | (15,755) |  |  |
Net deferred tax (liability) asset | $ | (812) |  |  | $ | 139,088 |  |  |
As of December 31, 2024, we have determined our earnings in India are not permanently reinvested. As such, a cumulative net tax liability of $1.7 million has been accrued for taxes that would be incurred upon future repatriation of such earnings. During the year ended December 31, 2024, our subsidiary in India distributed $23.0 million to the United States, resulting in a remittance of $3.5 million in withholding tax, which was included within cash flows from financing activities on our consolidated statements of cash flows. The determination of the future tax consequences of the remittance of these earnings is not practicable. For our remaining foreign subsidiaries, to the extent we can repatriate cash with no significant tax cost, we have determined those earnings are not permanently reinvested. All other earnings have been determined to be permanently reinvested. Realization of the deferred tax assets is dependent upon future taxable income, the amount and timing of which are uncertain. The valuation allowance increased by approximately $267.8 million during the year ended December 31, 2024 and increased by approximately $4.0 million during the year ended December 31, 2023. We regularly assess the need for a valuation allowance against our deferred tax assets. In performing our assessment, we consider both positive and negative evidence related to the likelihood of realizing our deferred tax assets. During the second quarter of 2024, we determined that it is more likely than not that the deferred tax benefit will not be realized due to the available negative evidence outweighing the positive evidence, primarily resulting from the cumulative loss influenced by the impairment expense recorded. As of December 31, 2024, we had net operating loss carryforwards for federal and state income tax purposes of approximately $125 million and $207 million, respectively, which will begin to expire in years beginning 2030 and 2025, respectively. We also had net operating loss carryforwards for United Kingdom income tax purposes of approximately $109 million, which do not expire. As of December 31, 2024, we had tax credit carryforwards for federal and state income tax purposes of approximately $12.7 million and $17.8 million, respectively. The federal credits expire in various years beginning in 2038. The state credits do not expire. Utilization of our net operating losses and tax credit carryforwards may be subject to substantial annual limitations due to ownership change limitations provided by the Internal Revenue Code of 1986, as amended (IRC), and similar state provisions. Such annual limitations could result in the expiration of the net operating losses and tax credit carryforwards before utilization. We recognize interest and penalties related to uncertain tax positions as a component of income tax expense. As of December 31, 2024, there are no accrued interest and penalties related to uncertain tax positions. We file tax returns in U.S. federal, state, and certain foreign jurisdictions with varying statutes of limitations. Due to net operating loss and credit carryforwards, all of the tax years since inception through tax year 2024 remain subject to examination by the U.S. federal and some state authorities. Foreign jurisdictions remain subject to examination up to approximately five years from the filing date, depending on the jurisdiction. United Kingdom income tax remains subject to examination by the HM Revenue & Custom for all tax years due to net operating loss and credits carryforwards. The following table presents the reconciliation of the beginning and ending balances of the total amount of unrecognized tax benefits, excluding accrued interest and penalties (in thousands):
| Years Ended December 31,
| 2024 |  | 2023 |  | 2022
Beginning balance | $ | 12,400 |  |  | $ | 16,953 |  |  | $ | 16,805 |
Increase in tax positions for prior years | 13 |  |  | — |  |  | 333 |
Decrease in tax positions for prior years | — |  |  | (131) |  |  | (876) |
Decrease in tax positions for prior year settlement | — |  |  | (4,703) |  |  | (386) |
Decrease in tax positions for prior years due to statutes lapsing | — |  |  | — |  |  | — |
Increase in tax positions for current year | 295 |  |  | 281 |  |  | 1,520 |
Change due to translation of foreign currencies | — |  |  | — |  |  | (443) |
Ending balance | $ | 12,708 |  |  | $ | 12,400 |  |  | $ | 16,953 |
As of December 31, 2024, the unrecognized tax benefits of $12.7 million would not affect the effective tax rate, if recognized. The actual amount of any taxes due could vary significantly depending on the ultimate timing and nature of any settlement. We believe that the amount by which the unrecognized tax benefits may increase or decrease within the next 12 months is not estimable.

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