Income Taxes (Tables)

12 Months Ended

Dec. 31, 2022

Income Taxes

Schedule of Income (Loss) before Income Tax, Domestic and Foreign

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

	2022		2021		2020
United States	$	191,631	$	(146,995)	$	(11,529)
Foreign		4,887		5,620		5,238
Total	$	196,518	$	(141,375)	$	(6,291)

Significant Components of the Provision (Benefit) for Income Taxes

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

	2022		2021		2020
Current:
Federal	$	10,804	$	(331)	$	5,277
State		10,118		85		3,886
Foreign		2,892		(60)		1,943
Total current		23,814		(306)		11,106
Deferred:
Federal		26,238		(65,557)		(10,175)
State		(2,002)		(15,266)		(3,111)
Foreign		(2,146)		478		(3,131)
Total deferred		22,090		(80,345)		(16,417)
Tax impact of unrecorded tax benefits liability		3,475		(706)		744
Provision for income taxes (Income tax benefit)	$	49,379	$	(81,357)	$	(4,567)

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):

	2022			2021			2020
Federal income tax at the statutory rate	$	41,283		$	(29,691)		$	(1,321)
State income taxes, net of federal benefit		7,928			(12,717)			935
Difference between statutory and foreign tax rates		(428)			(155)			(86)
Other permanent differences (1)		1,771			1,842			794
Foreign derived intangible income deduction		(2,597)			—			(902)
Executive compensation limitation		5,784			180,509			15,463
R&D credits		(13,340)			(34,376)			(10,246)
Return to provision adjustment		(757)			204			(1,078)
Change in liability for unrecognized tax benefits		3,215			10,188			987
Excess stock-based compensation benefit		(4,616)			(205,483)			(9,002)
Change in valuation allowance		10,216			8,961			163
Tax effects of intercompany transactions		(417)			96			(389)
Other		1,337			(735)			115
Provision for income taxes (Income tax benefit)	$	49,379		$	(81,357)		$	(4,567)
Effective tax rate		25.1	%		57.5	%		72.6	%

(1) Other permanent differences include certain expenses that are not deductible for tax purposes including meals and entertainment, 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):

	2022		2021
Deferred income tax assets:
Net operating loss carryforward	$	4,874	$	68,353
Deferred revenue		47,586		27,031
Deferred compensation		1,575		1,414
Lease liability		9,973		5,886
Inventory reserve		1,279		684
Stock based compensation		15,374		10,913
Amortization		2,820		2,672
R&D tax credit carryforward		12,826		29,249
Reserves, accruals, and other		17,732		14,717
R&D capitalization, net		46,122		—
Convertible debt, net		48,378		—
Total deferred income tax assets		208,539		160,919
Deferred income tax liabilities:
Customer contract asset		(552)		(1,104)
Right of use asset		(8,748)		(5,008)
Depreciation		(10,272)		(8,938)
Strategic investments		(4,615)		(2,653)
Prepaid expenses		(1,119)		(594)
Other		—		(72)
Total deferred income tax liabilities		(25,306)		(18,369)
Net deferred income tax assets before valuation allowance		183,233		142,550
Valuation allowance		(26,368)		(16,168)
Net deferred income tax assets	$	156,865	$	126,382

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):

	2022		2021		2020
Balance, beginning of period	$	18,249	$	7,657	$	6,861
Increase (decrease) in previous year tax positions		232		22		(34)
Increase in current year tax positions		3,343		11,416		950
Decrease due to lapse of statutes of limitations		(332)		(846)		(120)
Balance, end of period	$	21,492	$	18,249	$	7,657