

	Fiscal Year Ended June 30,
	2020			2019			2018
United States	$	(1,667	)	$	(28,834	)	$	(39,278	)
Foreign	5,239			4,558			2,860
Income (loss) from continuing operations before provision for income taxes	3,572			(24,276		)	(36,418		)
Equity in net income of equity method investees	876			—			—
Loss on discontinued operations before provision for income taxes	(4,042		)	(6,929		)	(3,404		)
Total income (loss) before provision for income taxes	$	406		$	(31,205	)	$	(39,822	)



	Fiscal Year Ended June 30,
	2020			2019			2018
Current income taxes:
Federal	$	—		$	—		$	—
State	40			14			32
Foreign	2,047			1,598			1,048
Total current income taxes	2,087			1,612			1,080
Deferred income taxes:
Federal	—			17			—
State	—			—			—
Foreign	(751		)	(253		)	(68		)
Total deferred income taxes	(751		)	(236		)	(68		)
Total provision for income taxes	$	1,336		$	1,376		$	1,012



	Fiscal Year Ended June 30,
	2020			2019			2018
Tax at federal statutory tax rate	$	85		$	(5,098	)	$	(11,150	)
State taxes—net of federal benefit	40			15			32
Non-deductible expenses	157			110			88
Goodwill impairment	—			537			746
Foreign withholding taxes	486			340			527
Foreign income taxed at different rates	(289		)	(66		)	(309		)
Stock-based compensation expense	(87		)	1,002			653
Tax exempt income	(73		)	(94		)	(136		)
Change in valuation allowance	239			4,068			(8,396		)
One-time transition tax	—			—			44
Remeasurement of deferred tax assets and liabilities	—			—			18,900
FIN 48	—			114			15
GILTI inclusion	778			451			—
Other	—			(3		)	(2		)
Total provision for income taxes	$	1,336		$	1,376		$	1,012

Our provision for income taxes for continuing operations was $1.3 million in fiscal 2020 compared to $1.4 million in fiscal 2019. Our effective tax rate was 30% of income from continuing operations in fiscal 2020 compared to an effective tax rate of 6% of loss from continuing operations in fiscal 2019. Our effective tax rates in fiscal 2020, 2019 and 2018 were attributable primarily to foreign withholding taxes and income taxes in certain foreign jurisdictions.

Our effective tax rate of 30% of income from continuing operations in fiscal 2020 was greater than tax expense computed at the U.S. federal statutory income tax rate due primarily to the mix of foreign income and US losses, for which no tax benefit will be recognized on US losses since they are not more likely than not to be realized due to the lack of current and future income and the inability to carry back losses, and foreign withholding taxes for which no tax benefit will be recognized as a credit due to the lack of US income. Our effective tax rate of 6% of loss from continuing operations in fiscal 2019 was lower than the tax benefit computed at the U.S. federal statutory income tax rate due primarily to the mix of foreign income and US losses, for which no tax benefit will be recognized on US losses since they are not more likely than not to be realized due to the

lack of current and future income and the inability to carry back losses, and foreign withholding taxes for which no tax benefit will be recognized as a credit due to the lack of US income

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of our net deferred tax assets were as follows (in thousands):



	June 30,
	2020			2019
Deferred tax assets:
Federal, state and foreign net operating losses	$	38,569		$	57,809
Federal and state tax credits	15,861			14,104
Stock-based compensation	2,442			2,885
Accrued expenses and reserves	24,973			13,659
Capitalized expense	—			34
Unrealized losses	282			481
Property and equipment	37			43
Operating lease liabilities	1,437			—
Acquired intangible assets	953			768
Total deferred tax assets	84,554			89,783
Deferred tax liabilities:
Property and equipment	(66		)	(79		)
Capitalized software	(17,579		)	(17,848		)
Deferred revenue	(14,777		)	(22,486		)
Unrealized gains	(25		)	(236		)
Operating lease right-of-use assets	(1,196		)	—
Investments	(2,617		)	—
Total deferred tax liabilities:	(36,260		)	(40,649		)
Deferred tax assets, net of liabilities:	48,294			49,134
Valuation allowance — worldwide	(46,804		)	(48,370		)
Net deferred tax assets	$	1,490		$	764

All available evidence, both positive and negative, was considered to determine whether, based upon the weight of the evidence, a valuation allowance for deferred tax assets is needed. As of June 30, 2020, we recognized deferred tax assets of $1.5 million from foreign jurisdictions and a deferred tax liability of $25,000 from a foreign jurisdiction, for net deferred tax assets of $1.5 million.

Due to operating losses in previous years and continued earnings volatility, we maintain a valuation allowance on the majority of our deferred tax assets, net of liabilities, since the assets are not more likely than not to be realized based upon our assessment of all positive and negative evidence. Realization of deferred tax assets is dependent upon future taxable earnings and losses, the timing of which is uncertain. Due to losses in previous years and potentially future years in the U.S., we maintained a full valuation allowance on deferred tax assets in the U.S. Due to operating losses in previous years and expected losses in future years, we continued to maintain a full valuation allowance for our foreign deferred tax assets in the United Kingdom. Our valuation allowance increased (decreased) from the prior year by approximately $(1.6) million, $(19.3) million, and $13.9 million in fiscal 2020, 2019 and 2018, respectively.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted in response to the COVID-19 pandemic. The CARES Act, among other things, permits net operating loss (NOL) carryovers and carrybacks to offset 100% of taxable income for taxable years beginning before 2021. In addition, the CARES Act allows NOLs incurred in 2018, 2019, and 2020 to be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes. Due to the Company’s history of losses and previous carrybacks, we will not receive any tax benefit from the NOL carryback provisions of the CARES Act.

We provide for U.S. income taxes on the earnings of foreign subsidiaries unless the subsidiaries' earnings are permanently reinvested outside the U.S. As of June 30, 2020, the cumulative amount of earnings upon which U.S. income taxes have not been provided was approximately $5.0 million. The net unrecognized deferred tax liability for these earnings was $229,000, which is primarily due to withholding taxes imposed if the dividend was distributed.

As of June 30, 2020, we had federal and California net operating loss carryforwards for income tax purposes of $167.8 million and $11.1 million, respectively. Federal loss carryforwards of $33.2 million will begin to expire in fiscal 2029, while $134.5 million of federal loss carryforwards can be carried forward indefinitely. Loss carryforwards have begun to expire for California purposes. In addition, we had federal and California research and development tax credit carryforwards of $8.1 million and $12.9 million, respectively, as of June 30, 2020. The federal research credits will begin to expire in fiscal 2023 and the California research credits can be carried forward indefinitely. The loss carryforwards and certain credits are subject to annual limitation under Internal Revenue Code Section 382.

As of June 30, 2020, we also had foreign net operating loss carryforwards of $2.7 million, which can be carried forward indefinitely. Due to uncertainty regarding our ability to utilize the foreign net operating loss carryforwards in certain jurisdictions, we have placed a valuation allowance of $0.4 million on these deferred tax assets.



	Fiscal Year Ended June 30,
	2020		2019			2018
Unrecognized tax benefit—beginning of period	$	4,600	$	3,820		$	3,035
Increase in tax positions taken during the current period	753		825			785
Increase in tax positions taken during the prior period	—		181			—
Decrease in tax positions taken during the prior period	—		(128		)	—
Decrease in tax positions due to settlements	—		(98		)	—
Lapse of statute of limitations	—		—			—
Unrecognized tax benefit—end of period	$	5,353	$	4,600		$	3,820

We file income tax returns in the U.S. with the IRS, California, various states, and foreign tax jurisdictions in which we have subsidiaries. The statute of limitations remains open from fiscal 2017 for federal tax purposes, from fiscal 2016 in state jurisdictions, and from fiscal 2015 in foreign jurisdictions. Fiscal years outside the normal statute of limitation remain open to audit by tax authorities due to tax attributes generated in those early years which have been carried forward and may be audited in subsequent years when utilized.