XML 45 R22.htm IDEA: XBRL DOCUMENT v3.25.0.1
Income Tax
 12 Months Ended
Dec. 31, 2024
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,
202420232022
United States$28,872 $(231,790)$(185,612)
Foreign(792)1,215 730 
Income (loss) before income tax expense$28,080 $(230,575)$(184,882)
The components of income tax expense (benefit) were as follows:
Year Ended December 31,
202420232022
Current:
Federal$— $— $— 
State126 83 353 
Foreign569 (139)18 
695 (56)371 
Deferred:
Federal — (6,347)— 
State— (2,025)— 
Foreign98 815 (473)
98 (7,557)(473)
Total:
Federal — (6,347)— 
State126 (1,942)353 
Foreign667 676 (455)
Income tax expense (benefit)$793 $(7,613)$(102)
The reconciliation of the Company's effective tax rate to the statutory federal rate is as follows:
Year Ended December 31,
202420232022
Taxes at federal statutory rate21.0 %21.0 %21.0 %
State taxes, net of federal effect5.9 %6.5 %4.6 %
Share-based compensation14.0 %(3.1)%3.9 %
Executive compensation
(77.2)%(11.0)%(13.8)%
Research and development credits
(32.5)%17.0 %— %
Change in uncertain tax positions
8.1 %(4.2)%— %
Mergers and acquisitions
1.7 %3.5 %— %
Nondeductible compensation
33.3 %(7.4)%— %
Other1.6 %(1.6)%1.4 %
Change in valuation allowance26.9 %(17.4)%(17.0)%
Effective tax rate2.8 %3.3 %0.1 %
Deferred tax assets and liabilities consist of the following:
December 31,
2024		December 31,
2023
Deferred tax assets:
Federal and state net operating losses$46,108 $50,498 
Research and development credits34,556 27,729 
Property and equipment940 586 
Accruals and other10,675 9,016 
Share-based compensation8,087 10,484 
Research and development capitalization expenditures
40,453 36,743 
Reserve for contract contingencies and processing errors
465 951 
Deferred revenue1,174 1,018 
Lease liability1,277 2,288 
Total deferred tax assets143,735 139,313 
Less valuation allowance(135,697)(128,150)
Total deferred tax assets, net of valuation allowance8,038 11,163 
Deferred tax liabilities:
Intangibles
(7,061)(9,025)
Right-of-use asset(581)(1,643)
Total deferred tax liabilities(7,642)(10,668)
Net deferred tax assets$396 $495 
In accordance with ASC 740 and based on all available evidence on a jurisdictional basis, the Company believes that it is more likely than not that its U.S. deferred tax assets will not be utilized and has recorded a full valuation allowance against its net deferred tax assets in the U.S. jurisdiction. The Company assesses on a periodic basis the likelihood that it will be able to recover its deferred tax assets. The Company considers all available evidence, both positive and negative, including historical levels of income or losses and expectations and risks associated with estimates of future taxable income in assessing the need for the valuation allowance. If it is not more likely than not that the Company expects to recover its deferred tax assets, the Company will increase its provision for taxes by recording a valuation allowance against the deferred tax assets that it estimates will not ultimately be recoverable. The available negative evidence at December 31, 2024 and 2023 included historical and projected future operating losses. As a result, the Company concluded that an additional valuation allowance of $7.5 million and $29.3 million was required to reflect the change in its deferred tax assets prior to valuation allowance during 2024 and 2023, respectively. As of December 31, 2024 and 2023, the Company considered it more likely than not that substantially all of its deferred tax assets would not be realized.
As of December 31, 2024, the Company had net operating loss carryforwards of approximately $175.6 million and $153.1 million for federal and state tax purposes, respectively. Of the Company's federal net operating loss carryforwards as of December 31, 2024, $157.5 million can be carried forward indefinitely but is limited to 80% of taxable income. If not utilized, the federal and state net operating carryforwards will begin to expire in 2035 and 2025, respectively.
In addition, the Company had research and development tax credit carryforwards of approximately $34.6 million for federal income tax purposes and $14.2 million for California tax purposes. If not utilized, the federal research and development tax credit carryforwards will begin to expire in 2031. The California state research credit 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, 2024, the Company has concluded that it has experienced ownership changes since inception and that its utilization of net operating loss carryforwards and other tax attributes will be subject to annual limitations.
The Company files federal, state, and foreign income tax returns in jurisdictions with varying statutes of limitations. To the extent the Company has tax attributes carryforwards, the tax years in which the attribute was generated may still be adjusted upon examination by the federal, state, or foreign tax authorities to the extent utilized in a future period.
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 recognizes tax benefits from uncertain tax positions only if the Company believes that it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. The Company makes adjustments to the reserves in accordance with the income tax accounting guidance when facts and circumstances change, such as the closing of a tax audit or the refinement of an estimate.
A reconciliation of the total amounts of unrecognized tax benefits was as follows:
Year Ended December 31,
202420232022
Beginning balance
$9,800 $— $— 
Additions based on uncertain tax positions related to the current period
2,399 3,238 — 
Additions based on uncertain tax positions related to the prior periods
— 6,562 — 
Ending balance
$12,199 $9,800 $— 
The Company’s policy is to include interest and penalties related to unrecognized tax benefits within our tax provision for income taxes. The Company did not accrue any interest or penalties during the year ended December 31, 2024. The Company had $12.2 million of gross unrecognized tax benefits as of December 31, 2024, which would not affect its effective tax rate if recognized due to the Company’s valuation allowance. The Company expects no significant increases or decreases to its unrecognized benefits within the next twelve months.