Income Tax

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income Tax

Income Tax

The components of loss before income taxes by tax jurisdiction were as follows:

	Year Ended December 31,
	2021		2020		2019
United States	$	(165,160)	$	(47,911)	$	(58,985)
Foreign	591		303		820
Loss before income taxes	$	(164,569)	$	(47,608)	$	(58,165)

The components of income tax expense (benefit) were as follows:

	Year Ended December 31,
	2021		2020		2019
Current:
Federal	$	—	$	—	$	—
State	38		18		3
Foreign	—		147		74
	38		165		77
Deferred:
Federal	—		—		—
State	—		—		—
Foreign	(678)		(78)		(42)
	(678)		(78)		(42)
Total:
Federal	—		—		—
State	38		18		3
Foreign	(678)		69		32
Income tax expense (benefit)	$	(640)	$	87	$	35

The reconciliation of the Company's effective tax rate to the statutory federal rate is as follows:

	Year Ended December 31,
	2021		2020		2019
Taxes at federal statutory rate	21.0	%	21.0	%	21.0	%
State taxes, net of federal effect	4.0	%	4.4	%	3.4	%
Share-based compensation	4.5	%	(8.5)	%	(6.5)	%
Section 162(m) limitation	(8.3)	%	—	%	—	%
Other	(0.3)	%	(0.1)	%	(6.2)	%
Change in valuation allowance	(20.5)	%	(17.0)	%	(11.8)	%
Effective tax rate	0.4	%	(0.2)	%	(0.1)	%

Deferred tax assets and liabilities consist of the following:

	December 31
	2021		2020
Deferred tax assets:
Federal and state net operating losses	$	41,418	$	27,269
Research and development credits	77		77
Accruals and other	16,173		3,536
Share-based compensation	7,124		1,674
Reserve for contract contingencies and processing errors	818		2,334
Deferred revenue	3,132		695
Lease liability	3,730		4,458
Total deferred tax assets	72,472		40,043
Less valuation allowance	(68,847)		(36,327)
Total deferred tax assets, net of valuation allowance	3,625		3,716
Deferred tax liabilities:
Property and equipment	(47)		(309)
Right-of-use asset	(2,728)		(3,281)
Total deferred tax liabilities	(2,775)		(3,590)
Net deferred tax assets	$	850	$	126

The Company believes that it is more likely than not that its U.S. deferred tax assets will not be realized and has recorded a full valuation allowance against its net U.S. deferred tax assets. The available negative evidence as of December 31, 2021 and 2020 included historical and projected future operating losses.

As of December 31, 2021, the Company had net operating loss carryforwards of approximately $169.0 million and $88.5 million for federal and state tax purposes, respectively. If not utilized, these carryforwards will begin to expire in 2030. Of the Company's federal net operating loss carryforwards as of December 31, 2021, $121.4 million can be carried forward indefinitely. Under Section 382 of the Internal Revenue Code of 1986, as amended , the Company's ability to utilize net operating loss carryforwards or other tax attributes in any taxable year may be limited if the Company has experienced an ownership change. As of December 31, 2021, the Company has concluded that it has experienced ownership changes since inception and that its utilization of net operating loss carryforwards will be subject to annual limitations. However, it is not expected that the annual limitations will result in the expiration of tax attribute carryforwards prior to utilization.

The Company files federal and various state tax returns in the U.S., as well as tax returns in the U.K. As of December 31, 2021, the Company’s federal tax returns for 2017 and earlier, and the state tax returns for 2016 and earlier were no longer subject to examination by the taxing authorities. However, tax periods closed in a prior period may be subject to audit and re-examination by tax authorities for which tax carryforwards are utilized in subsequent years.

The Company did not have any material unrecognized tax benefits in 2021, 2020, and 2019.

The Company made an accounting policy election to provide for the Global Intangible Low-Taxed Income (GILTI) tax expense in the year the tax is incurred as a period cost. The Company elected and applied the tax law ordering approach when considering GILTI as part of its valuation allowance.

The Company did not incur any interest expenses or penalties or have outstanding liabilities on the balance sheets associated with unrecognized tax benefits for the year ended December 31, 2021. The Company does not expect any significant increases or decreases to its unrecognized benefits within the next twelve months.