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INCOME TAXES | 12 Months Ended
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Dec. 31, 2024
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES Domestic and foreign components of loss before income taxes are as follows (in thousands):
| Year Ended December 31,
| 2024 |  | 2023 |  | 2022
Domestic | $ | (179,555) |  |  | $ | (122,026) |  |  | $ | (455,202) |
Foreign | (9,749) |  |  | (12,676) |  |  | (11,508) |
Loss before income taxes | $ | (189,304) |  |  | $ | (134,702) |  |  | $ | (466,710) |
The significant components of income tax (expense) benefit are as follows (in thousands):
| Year Ended December 31,
| 2024 |  | 2023 |  | 2022
Current: |  |  |  |  |
Federal | $ | — |  |  | $ | — |  |  | $ | — |
State | — |  |  | — |  |  | — |
Foreign | — |  |  | — |  |  | — |
Total current | — |  |  | — |  |  | — |
Deferred: |  |  |  |  |
Federal | 10,391 |  |  | 10,236 |  |  | 38,508 |
State | 833 |  |  | 335 |  |  | 6,317 |
Foreign | 3,118 |  |  | 961 |  |  | 3,075 |
Change in uncertain tax positions | (625) |  |  | (1,320) |  |  | (587) |
Change in valuation allowance | (13,717) |  |  | (10,212) |  |  | (45,867) |
Total deferred | — |  |  | — |  |  | 1,446 |
Income tax benefit | $ | — |  |  | $ | — |  |  | $ | 1,446 |
The following table summarizes the significant differences between the U.S. federal statutory tax rate and our effective tax rate:
| Year Ended December 31,
| 2024 |  | 2023 |  | 2022
Tax benefit at federal statutory rate | 21.00 | % |  | 21.00 | % |  | 21.00 | %
State income taxes, net of federal benefit | — | % |  | (0.01) | % |  | 0.08 | %
Change in federal and state statutory rate | 1.69 | % |  | 0.01 | % |  | 0.15 | %
Foreign rate differential | 0.06 | % |  | (0.22) | % |  | 0.01 | %
Goodwill impairment | (13.06) | % |  | (10.94) | % |  | (17.82) | %
Contingent liability remeasurement | (0.78) | % |  | (0.81) | % |  | 5.71 | %
Other adjustments | (1.61) | % |  | (1.40) | % |  | 1.03 | %
Valuation allowance | (7.24) | % |  | (7.54) | % |  | (9.87) | %
Income tax benefit | 0.06 | % |  | 0.09 | % |  | 0.29 | %
The significant components of deferred income taxes are as follows (in thousands):
| December 31,
| 2024 |  | 2023
Net operating loss carry-forwards | $ | 161,418 |  |  | $ | 158,916 |
Allowance for credit losses | 1,474 |  |  | 809 |
Depreciation and amortization | 23,233 |  |  | 11,574 |
Stock-based compensation | 3,025 |  |  | 3,566 |
Deferred costs | 740 |  |  | 3,735 |
ROU asset | (1,457) |  |  | (1,565) |
Lease liability | 1,867 |  |  | 1,856 |
Other tax credit carry-forward | 11,625 |  |  | 9,641 |
Other temporary differences | 1,451 |  |  | 1,129 |
Valuation allowance | (203,377) |  |  | (189,660) |
Net long-term deferred tax asset | $ | — |  |  | $ | — |
We have generated historical net losses and recorded a full valuation allowance against our net deferred tax assets, and we expect to maintain a full valuation allowance in the near term. Realization of any of our net deferred tax assets depends upon future earnings, the timing and amount of which are uncertain. During 2022, we released $1.4 million of our valuation allowance related to net deferred tax liabilities arising from the acquisitions of Bridg resulting in an income tax benefit of $1.4 million reflected on our consolidated statements of operations. Deferred tax liabilities for Bridg primarily related to acquired intangible assets. The following table presents changes in our valuation allowance (in thousands):
| Year Ended December 31,
| 2024 |  | 2023 |  | 2022
Beginning balance | $ | (189,660) |  |  | $ | (179,448) |  |  | $ | (123,867) |
Allowance for domestic and foreign net operating loss carry-forwards | (299) |  |  | (2,442) |  |  | (13,360) |
Rate change on domestic net operating loss carry-forwards | (3,241) |  |  | (424) |  |  | 235 |
Convertible debt additional paid-in capital tax adjustment - valuation allowance impact | — |  |  | — |  |  | (9,714) |
Other changes | (10,177) |  |  | (7,346) |  |  | (32,742) |
Ending balance | $ | (203,377) |  |  | $ | (189,660) |  |  | $ | (179,448) |
As of December 31, 2024 and 2023, we have $631.6 million and $628.7 million, respectively, of gross U.S. federal net operating loss carry-forwards that will begin to expire in the 2028 tax year. Additionally, we have $269.1 million and $267.3 million of gross state net operating loss carry-forwards as of December 31, 2024 and 2023, respectively that will expire between the 2024 and 2044 tax years for states that do not have indefinite carry-forward periods for net operating losses generated in recent years. Ownership changes, as defined by IRC Section 382, may limit the amount of net operating losses that a company may utilize to offset future taxable income and taxes payable. Pursuant to IRC Section 382, an ownership change occurs when the stock ownership of 5% stockholders increases by more than 50% over a testing period of three years. We have experienced ownership changes in the past, with the last identified ownership change occurring on April 2, 2020. We have analyzed whether we have experienced an additional ownership change through December 31, 2023 and have not identified an ownership change. It is possible that we have experienced an ownership change during 2024 or that we may experience an ownership change in the future. Any such ownership change may limit our ability to utilize net operating losses. Our results during the years ended December 31, 2023 and 2022 reflect state tax credits related to hiring and research activities that are utilized through the reduction of state payroll tax withholdings totaling $1.4 million and $0.9 million, respectively. During the year ended December 31, 2024, we recognized an expense in research and development expense of $1.4 million primarily from a revision to previously recognized credits. As of December 31, 2024 and 2023, Cardlytics UK had gross net operating losses of $50.0 million and $55.7 million, respectively. Foreign net operating loss carry-forwards expire according to the rules of each country. In the U.K., there is an indefinite carry-forward period. As of December 31, 2024, Cardlytics UK held cash and cash equivalents of $4.1 million. While our investment in Cardlytics UK is not considered to be permanently invested, we do not plan to repatriate these funds. Further, although the tax basis of our investment in Cardlytics UK exceeds its book basis, we have not recorded a deferred tax asset since we do not believe that a reversal of this temporary difference will occur in the foreseeable future. The following table summarizes the activity related to our gross unrecognized tax benefits that would affect our effective tax rate, if recognized (in thousands):
| Year Ended December 31,
| 2024 |  | 2023 |  | 2022
Beginning balance | $ | 2,925 |  |  | $ | 1,606 |  |  | $ | 1,128 |
Increase related to current year tax position | 625 |  |  | 1,319 |  |  | 478 |
Ending balance | $ | 3,550 |  |  | $ | 2,925 |  |  | $ | 1,606 |
All such positions, if recognized, would impact our effective tax rate. We do not currently anticipate any of our positions to change significantly in the next 12 months. Our tax filings from inception remain subject to income tax examinations.

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