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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2020

Schedule of Income before Income Tax, Domestic and Foreign

Income (loss) before income taxes included the following components for the years ended December 31 (in thousands):


	2020		2019		2018
United States	$	(11,529)	$	(1,449)	$	25,751
Foreign		5,238		3,519		2,353
Total	$	(6,291)	$	2,070	$	28,104

Significant Components of the Provision for Income Taxes

Significant components of the provision for income taxes are as follows for the years ended December 31 (in thousands):


	2020		2019		2018
Current:
Federal	$	5,277	$	4,247	$	4,900
State		3,886		2,414		1,377
Foreign		1,943		1,533		228
Total current		11,106		8,194		6,505
Deferred:
Federal		(10,175)		(6,060)		(8,382)
State		(3,111)		(1,665)		(364)
Foreign		(3,131)		(264)		(3)
Total deferred		(16,417)		(7,989)		(8,749)
Tax impact of unrecorded tax benefits liability		744		983		1,143
Provision for income taxes (Income tax benefit)	$	(4,567)	$	1,188	$	(1,101)

Reconciliation of the Company's Effective Income Tax Rate to the Federal Statutory Rate

A reconciliation of our effective income tax rate to the federal statutory rate follows for the years ended December 31 (in thousands):


	2020			2019			2018
Federal income tax at the statutory rate	$	(1,321)		$	435		$	5,902
State income taxes, net of federal benefit		935			526			(215)
Difference between statutory and foreign tax rates		(86)			43			7
Permanent differences ⁽¹⁾		794			1,356			1,029
Foreign derived intangible income deduction		(902)			(217)			(304)
Executive compensation limitation		15,463			7,596			1,167
Research and development		(10,246)			(4,911)			(6,908)
Return to provision adjustment		(1,078)			(9)			1,780
Change in liability for unrecognized tax benefits		987			1,191			1,768
Excess stock-based compensation benefit		(9,002)			(4,999)			(8,907)
Change in valuation allowance		163			368			1,984
Tax effects of intercompany transactions		(389)			16			1,004
Other		115			(207)			592
Provision for income taxes (Income tax benefit)	$	(4,567)		$	1,188		$	(1,101)
Effective tax rate		72.6	%		57.4	%		(3.9)	%

(1)	Permanent differences include certain expenses that are not deductible for tax purposes including meals and entertainment, certain transaction costs, lobbying fees, and taxable income as a result of global intangible low-tax income ("GILTI").

Components of Deferred Income Tax Assets and Liabilities

Significant components of our deferred income tax assets and liabilities are as follows at December 31 (in thousands):


	2020		2019
Deferred income tax assets:
Net operating loss carryforward	$	1,834	$	2,341
Deferred revenue		21,055		15,348
Deferred compensation		1,175		971
Lease liability		5,730		2,460
Inventory reserve		511		1,258
Stock-based compensation		18,890		10,769
Amortization		2,436		1,133
Research and development tax credit carryforward		6,654		4,957
Reserves, accruals, and other		7,274		3,394
Total deferred income tax assets		65,559		42,631
Deferred income tax liabilities:
Contract asset		(1,150)		(883)
Right of use asset		(5,237)		(2,228)
Depreciation		(5,363)		(3,715)
Amortization		—		(62)
Investment in unconsolidated affiliate		(321)		—
Prepaid expenses		(874)		(600)
Other		(185)		(637)
Total deferred income tax liabilities		(13,130)		(8,125)
Net deferred income tax assets before valuation allowance		52,429		34,506
Valuation allowance		(7,308)		(7,172)
Net deferred income tax assets	$	45,121	$	27,334

Roll Forward of Liability for Unrecognized Tax Benefits Exclusive of Accrued Interest

The following table presents a roll forward of our liability for unrecognized tax benefits, exclusive of accrued interest, as of December 31 (in thousands):


	2020		2019		2018
Balance, beginning of period	$	6,861	$	6,058	$	4,243
Increase (decrease) in previous year tax positions		(34)		(615)		213
Increase in current year tax positions		950		1,749		1,982
Decrease due to lapse of statutes of limitations		(120)		(331)		(380)
Balance, end of period	$	7,657	$	6,861	$	6,058