Income Taxes (Tables)

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

Schedule of Income before Income Tax, Domestic and Foreign

The following are the domestic and foreign components of the Company’s income before income taxes (in thousands):

	Year Ended   December 31,
	2019		2018		2017
Domestic	$	14,544	$	36,157	$	(16,583	)
Foreign	66,102		18,921		48,848
Income before income taxes	$	80,646	$	55,078	$	32,265

Income Tax Benefit

The income tax benefit is comprised of the following (in thousands):

	Year Ended   December 31,
	2019			2018			2017
Current:
Federal	$	(3,967	)	$	709		$	(6,397	)
State	1,053			(578		)	79
Foreign	352			600			476
Total current	(2,562		)	731			(5,842		)
Deferred:
Federal	(19,734		)	(3,343		)	(34,948		)
State	(1,564		)	3,496			(8,778		)
Foreign	8,612			(23,297		)	33
Total deferred	(12,686		)	(23,144		)	(43,693		)
Total income tax benefit	$	(15,248	)	$	(22,413	)	$	(49,535	)

Reconciliation of the Income Tax Benefit

A reconciliation of the income tax benefit at the U.S. federal statutory income tax rate to the Company’s total income tax benefit is as follows (in thousands):

	Year Ended   December 31,
	2019			2018			2017
Income tax provision at the federal statutory rate (a)	$	16,936		$	11,566		$	11,308
State and local income taxes net of federal benefit	973			3,839			(691		)
Foreign income tax rate differential	(5,454		)	(298		)	(11,878		)
Stock-based compensation	(16,281		)	(11,717		)	(12,584		)
Research and development credit	(9,864		)	(4,115		)	(1,098		)
U.S. tax reform (b)	(4,197		)	3,897			(31,063		)
Non-deductible expenses	1,784			(329		)	168
Uncertain tax positions	380			382			789
Change in valuation allowance (c)	—			(28,733		)	(4,673		)
Return to provision adjustment	500			3,293			167
Other	(25		)	(198		)	20
Total income tax benefit	$	(15,248	)	$	(22,413	)	$	(49,535	)

(a) The income tax provision at the U.S. federal statutory rate is computed using 21% in 2019 and 2018 and 35% in 2017. Refer to footnote (b) below.

(b) On December 22, 2017, the U.S. government enacted the TCJA, as described above, which includes significant changes to the taxation of business entities. These changes include, among others, (1) a permanent reduction to the corporate income tax rate, (2) Global Intangible Low-Taxed Income (“GILTI”), a new tax on worldwide income, and (3) Foreign Derived Intangible Income (“FDII”) a deduction provided with respect to certain foreign earned income. Effective January 1, 2018, the Company is subject to several provisions of the TCJA including computations under GILTI and FDII.

For the year ended December 31, 2017, primarily as a result of the permanent change in U.S. corporate income tax rate, the Company recognized a net income tax benefit of $31.1 million associated with the TCJA.

For the years ended December 31, 2019 and 2018, the Company has accounted for the impact of the new TCJA provisions, as well as any adjustments with respect to the re-measurement of its deferred taxes, as part of its income tax benefit using the currently available regulations and technical guidance on the interpretations of the TCJA. The Company has elected to account for GILTI as a period cost. The Company is not currently subject to the Base Erosion and Anti-Abuse Tax (“BEAT”) or Section 163(j) Interest Limitation. The Company will continue to monitor the forthcoming regulations and additional guidance of the GILTI, FDII, and BEAT provisions under the TCJA, which are complex and subject to continuing regulatory interpretation by the Internal Revenue Service (“IRS”).

(c) For the year ended December 31, 2018, the Company released valuation allowance recorded against deferred tax assets in certain foreign jurisdictions as it had achieved three years of cumulative pre-tax income.

Significant Components of Deferred Tax Assets and Liabilities

Significant components of the Company’s deferred tax assets (liabilities) are as follows (in thousands):

	As of December 31,
	2019			2018
Deferred tax assets:
Net operating loss carryforwards	$	19,599		$	13,347
Research and development credit carryforwards	13,133			7,567
Lease liability (a)	18,666			—
Stock-based compensation expense	7,642			6,623
Excess tax basis in intangible assets	3,572			12,109
Accrued bonus	4,065			1,049
Deferred rent (a)	—			529
Other deferred tax assets	3,944			1,858
Total deferred tax assets	70,621			43,082
Less: valuation allowance	883			1,673
Total net deferred tax asset	69,738			41,409
Deferred tax liabilities:
Excess book basis in intangible assets	(39,500		)	(362		)
Restructuring liability	(29,635		)	(33,730		)
Convertible debt	(22,839		)	(7,283		)
Right-of-use asset (a)	(17,596		)	—
Depreciation (a)	(10,328		)	(6,933		)
Other deferred tax liabilities	(80		)	(92		)
Total deferred tax liabilities	(119,978		)	(48,400		)
Net deferred tax liabilities	$	(50,240	)	$	(6,991	)

(a) As part of the Company’s adoption of ASC 842 beginning in 2019, the Company recorded adjustments to the GAAP basis of certain assets and liabilities and established other assets and liabilities (i.e., right-of-use asset and lease liability). The net adjustment was recorded as a retrospective adjustment to retained earnings. The adoption of ASC 842 does not change the Company’s tax basis in these assets and liabilities. However, as a result of the adoption, an adjustment was recorded to the historic deferred taxes,

through retained earnings, to account for the change in GAAP basis as well as establishing deferred taxes on the newly established right-of-use assets and lease liabilities.

Summary of Tax Credit Carryforwards

As of December 31, 2019, the Company had the following operating loss and tax credit carryforwards available to offset taxable income in future years:

	December 31, 2019		Expiration Period
U.S. Federal net operating loss carryforwards	$	30,403	2035-Unlimited
U.S. Federal credit carryforwards	13,054		2035-2039
U.S. State net operating loss carryforwards	21,150		2027-2039
U.S. State credit carryforwards	184		2020-2024
Non-U.S. net operating loss carryforwards	91,440		Unlimited

Summary of Operating Loss Carryforwards

As of December 31, 2019, the Company had the following operating loss and tax credit carryforwards available to offset taxable income in future years:

	December 31, 2019		Expiration Period
U.S. Federal net operating loss carryforwards	$	30,403	2035-Unlimited
U.S. Federal credit carryforwards	13,054		2035-2039
U.S. State net operating loss carryforwards	21,150		2027-2039
U.S. State credit carryforwards	184		2020-2024
Non-U.S. net operating loss carryforwards	91,440		Unlimited

Summary of Valuation Allowance

The following table summarizes the valuation allowance activity for the periods indicated (in thousands):

	Year Ended   December 31,
	2019			2018			2017
Balance as of the beginning of period	$	1,673		$	32,455		$	13,839
Additions charged to expense	504			—			16,743
Deletions credited to expense	(4		)	(28,733		)	—
Currency translation and other balance sheet activity	(1,290		)	(2,049		)	1,873
Balance as of the end of period	$	883		$	1,673		$	32,455

Schedule of Unrecognized Tax Benefits Activity

The following table summarizes the unrecognized tax benefit activity for the periods indicated (in thousands):

	As of December 31,
	2019			2018			2017
Balance as of the beginning of period	$	18,819		$	17,013		$	23,574
Additions based on tax positions related to the current year	1,847			921			732
Additions for tax positions of prior years	3,620			946			118
Reductions for tax provisions of prior years	(2,423		)	(61		)	(7,411		)
Lapse of Statute of Limitation	(184		)	—			—
Additions recorded through goodwill as part of business combination	1,334			—			—
Settlements	(3,080		)	—			—
Balance as of the end of period	$	19,933		$	18,819		$	17,013