XML 34 R20.htm IDEA: XBRL DOCUMENT v3.24.0.1
Income Taxes
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The components of the Company's loss before income taxes for the years ended December 31, 2023, 2022, and 2021 were as follows:
Year Ended December 31,
202320222021
(in thousands)
Domestic$(210,547)$(219,586)$(272,995)
Foreign32,685 28,853 25,019 
Total loss before income taxes$(177,862)$(190,733)$(247,976)
The components of the Company's provision for (benefit from) income taxes for the years ended December 31, 2023, 2022, and 2021 were as follows:
Year Ended December 31,
202320222021
(in thousands)
Current expense:
Federal$513 $332 $722 
State324 1 143 
Foreign2,986 2,455 2,730 
Total current provision for income taxes$3,823 $2,788 $3,595 
Deferred expense (benefit):
Federal— (1,124)— 
State— (573)— 
Foreign2,264 1,557 8,738 
Total deferred provision for (benefit from) income taxes$2,264 $(140)$8,738 
Total provision for income taxes
$6,087 $2,648 $12,333 
A reconciliation of the U.S. federal statutory rate to the Company's effective tax rate is as follows:
Year Ended December 31,
202320222021
Expected benefit at U.S. federal statutory rate21.0 %21.0 %21.0 %
State income taxes, net of federal tax benefits(0.1)0.2 — 
Foreign income or losses taxed at different rates1.0 1.1 (2.5)
Stock-based compensation12.4 18.7 43.6 
Change in valuation allowance(30.6)(41.2)(66.4)
Withholding taxes(0.3)(0.2)(0.3)
Gain/loss on convertible senior notes
(5.1)— (0.4)
Miscellaneous permanent items(1.7)(1.0)— 
Total provision for income taxes
(3.4)%(1.4)%(5.0)%

In 2023, the difference in the Company's effective tax rate and the U.S. federal statutory tax rate was primarily due to the recording of a full valuation allowance on the Company's U.S. and U.K. deferred tax assets and income tax expense from profitable foreign jurisdictions.

In 2022, the difference in the Company's effective tax rate and the U.S. federal statutory tax rate was primarily due to the recording of a full valuation allowance on the Company's U.S. and U.K. deferred tax assets and income tax
expense from profitable foreign jurisdictions, offset by a partial release of the U.S. valuation allowance related to acquisitions.

In 2021, the difference in the Company's effective tax rate and the U.S. federal statutory tax rate was primarily due to the recording of a full valuation allowance on the Company's U.S. and U.K. deferred tax assets, income tax expense from profitable foreign jurisdictions, and income tax expense related to an acquisition.
The components of the Company's deferred tax assets and liabilities as of December 31, 2023 and 2022 were as follows:
Year Ended December 31,
20232022
(in thousands)
Deferred tax assets:
Net operating loss carryforwards$390,405 $373,655 
Tax credit carryforwards65,390 51,925 
Capitalized research and development expenditures71,617 36,886 
Operating lease liabilities36,609 33,790 
Business interest carryforwards1,244 15,762 
Stock-based compensation35,786 27,766 
Accrued expenses and reserves4,650 2,770 
Capitalized contract expenditures32,425 — 
Depreciation and amortization129 3 
Other2,106 919 
Gross deferred tax assets640,361 543,476 
Valuation allowance(552,165)(477,638)
Total deferred tax assets$88,196 $65,838 
Deferred tax liabilities:
Right-of-use assets(33,337)(31,586)
Deferred commissions(32,807)(23,039)
Capitalized internal-use software(3,909)(4,638)
Depreciation and amortization(25,045)(11,197)
Other(57)(73)
Total deferred tax liabilities$(95,155)$(70,533)
Net deferred tax liabilities
$(6,959)$(4,695)
In determining the need for a valuation allowance, the Company weighs both positive and negative evidence in the various jurisdictions in which it operates to determine whether it is more likely than not that its deferred tax assets are realizable. A full valuation allowance has been established in the United States and United Kingdom and no deferred tax assets and related tax benefits have been recognized in the consolidated financial statements. There is no valuation allowance associated with any other jurisdiction as of December 31, 2023.

The worldwide valuation allowance as of December 31, 2023 and 2022 was $552.2 million and $477.6 million, respectively. The net change in the worldwide valuation allowance for the years ended December 31, 2023, 2022, and 2021 was an increase of $74.6 million, an increase of $208.1 million and an increase of $194.4 million, respectively. The increase in the Company’s valuation allowance compared to the prior year was primarily due to an increase in taxable losses generated in the United States and United Kingdom, the capitalization and amortization of research and development expenses, and the capitalization of certain customer contract expenses.
As of December 31, 2023 and 2022, the Company had net operating loss carryforwards for federal income tax purposes of $1,385.1 million and $1,338.5 million, respectively, that will begin to expire in 2029. The Company had federal research and development tax credit carryforwards as of December 31, 2023 and 2022 of $63.6 million and $49.7 million, respectively, that will begin to expire in 2029.
In addition, as of December 31, 2023 and 2022, the Company had net operating loss carryforwards for state income tax purposes of $756.1 million and $757.4 million, respectively, that will begin to expire in 2030. The Company had state research and development tax credit carryforwards as of December 31, 2023 and 2022 of $29.8 million and $25.9 million, respectively, that will begin to expire in 2039.

As of December 31, 2023 and 2022, the Company had net operating loss carryforwards for U.K. income tax purposes of $207.2 million and $178.5 million, respectively, that can be carried forward indefinitely.

As of December 31, 2023 and 2022, the Company had foreign tax credit carryforwards for federal income tax purposes of $1.8 million. The federal foreign tax credit carryforwards will expire, if not utilized, beginning in the year 2024.
Utilization of net operating losses and tax credit carryforwards may be subject to substantial annual limitations due to the ownership change limitations provided by Section 382 of the Internal Revenue Code and similar state provisions. Such a limitation could result in the expiration of the net operating loss carryforwards and tax credits before utilization.
A reconciliation of the beginning and ending amount of the Company's total gross unrecognized tax benefits was as follows:
Year Ended December 31,
202320222021
(in thousands)
Balance as of the beginning of the period$23,940 $12,590 $5,682 
Increases for tax positions related to the prior year590 5,753 1,784 
Decreases for tax positions related to the prior year(243)— — 
Additions for tax positions related to the current year4,752 5,597 5,124 
Balance as of the end of the period$29,039 $23,940 $12,590 
The Company classifies uncertain tax positions as non-current income tax liabilities unless expected to be paid within one year or otherwise directly related to an existing deferred tax asset, in which case the asset is recorded net of the uncertain tax position on the consolidated balance sheet. As of December 31, 2023, $0.3 million of the Company’s gross unrecognized tax benefits, if recognized, would affect the effective tax rate and $28.7 million would result in an adjustment to deferred tax assets with corresponding adjustments to valuation allowance. The Company does not expect significant changes to its uncertain tax positions within the next 12 months.
The Company’s policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. The Company did not recognize any income tax expense related to interest and penalties in the years ended December 31, 2023, 2022, and 2021, respectively.
The Company’s significant tax jurisdictions include the United States, Australia, Canada, France, Germany, Netherlands, Portugal, Singapore, and the United Kingdom. Because of the net operating loss carryforwards, substantially all of the Company’s tax years remain open to U.S. federal and state tax examination. The Company’s foreign tax returns are open to audit under the statutes of limitations of the respective foreign countries in which the subsidiaries are located.
The Company generally does not provide deferred income taxes for the undistributed earnings of its foreign subsidiaries where the Company intends to reinvest such earnings indefinitely. Should circumstances change and it becomes apparent that some or all of the undistributed earnings will no longer be indefinitely reinvested, the Company will accrue for income taxes not previously recognized, where applicable.