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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes
16. Income Taxes
For the years ended December 31, 2024, 2023, and 2022, the geographical breakdown of our income (loss) before income taxes is as follows:
Year ended December 31,
202420232022
(in thousands)
Domestic income (loss)$(493,371)$(92,627)$(162,330)
Foreign income (loss)8,164 5,604 4,402 
Income (loss) before income taxes$(485,207)$(87,023)$(157,928)
For the years ended December 31, 2024, 2023, and 2022, income tax expense (benefit) consisted of the following:
Year ended December 31,
202420232022
(in thousands)
Current income tax expense (benefit):
Federal$(141)$1,290 $859 
State474 1,133 610 
Foreign851 1,468 1,231 
Total current income tax expense (benefit)1,184 3,891 2,700 
Deferred income tax expense (benefit):
Federal(237)— (1,767)
Foreign(1,878)(90)(311)
Total deferred income tax expense (benefit)(2,115)(90)(2,078)
Total income tax expense (benefit)$(931)$3,801 $622 
Our effective tax rate, as a percentage of pre-tax income (loss), differs from the statutory federal rate as follows:
Year ended December 31,
202420232022
Statutory federal income tax rate21.0 %21.0 %21.0 %
State income taxes, net of federal benefit5.3 1.2 2.3 
Non-deductible compensation
(14.0)— — 
Stock-based compensation44.4 3.9 0.6 
Research and development credits14.6 13.5 14.1 
Change in valuation allowance(71.0)(41.1)(37.4)
Other(0.2)(2.9)(1.0)
Effective tax rate0.1 %(4.4)%(0.4)%
Deferred income taxes reflect the net tax effect of temporary differences between amounts recorded for financial reporting purposes and the amounts used for tax purposes. The major components of deferred tax assets and liabilities were as follows:
December 31,
2024		December 31,
2023
(in thousands)
Deferred tax assets:
Net operating loss carryforwards$149,735 $56,938 
Stock-based compensation28,586 21,364 
Lease liability6,206 5,819 
Capitalized research and development costs268,232 98,267 
Research and development credits124,116 53,946 
Other13,351 4,216 
Gross deferred tax assets590,226 240,550 
Valuation allowance(572,894)(228,001)
Total deferred tax assets, net of valuation allowance17,332 12,549 
Deferred tax liabilities:
Right-of-use asset(5,436)(5,426)
Acquired intangibles(9,727)(6,895)
Total deferred tax liabilities(15,163)(12,321)
Net deferred tax assets (liabilities)$2,169 $228 
As of December 31, 2024, we had $590.4 million and $399.9 million, respectively, of gross federal and state net operating loss carryforwards available to reduce future taxable income. The federal net operating loss carryforwards are able to be carried forward indefinitely but are limited to 80% of taxable income. The state carryforwards will begin to expire in 2025.
As of December 31, 2024, we had federal research and development credit carryforwards of $123.9 million that will begin to expire in 2039 and state research and development credit carryforwards of $49.3 million that do not expire.
Utilization of the net operating loss and tax credit carryforwards may be subject to a substantial annual limitation due to the ownership change limitations provided by Section 382 of the Code and similar state tax regulations. Under Section 382 of the Code, substantial changes in our ownership and in the ownership of acquired companies may limit the amount of net operating loss and tax credit carryforwards that are available to offset taxable income. The annual limitation may result in the expiration of net operating losses and tax credits before utilization. Accordingly, our ability to utilize these carryforwards may be limited as a result of such ownership change.
We assessed the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use our existing federal and state deferred tax assets. Based on the weight of the available evidence, including our history of losses, we provided a full valuation allowance against our federal and state deferred tax assets as of December 31, 2024. The amount of the deferred tax asset considered realizable could be adjusted in future periods if objective negative evidence in the form of cumulative losses is no longer present and additional weight may be given to subjective evidence such as our projections for growth.
As of December 31, 2024, we had an immaterial amount of unremitted earnings related to foreign subsidiaries. We intend to reinvest these foreign earnings indefinitely and do not expect to incur any significant taxes related to such amounts.
Uncertain Tax Positions
The following table summarizes the activity related to our gross unrecognized tax benefits during the years ended December 31, 2024, 2023, and 2022:
Year ended December 31,
202420232022
(in thousands)
Beginning balance of unrecognized tax benefits$19,236 $16,428 $8,982 
Increases/(decreases) related to prior year tax positions 1,444 (1,750)1,925 
Increases/(decreases) related to current year tax positions 23,181 4,558 5,521 
Ending balance of unrecognized tax benefits$43,861 $19,236 $16,428 
Substantially all of the unrecognized tax benefits were recorded as reductions in our gross deferred tax assets, offset by a corresponding reduction in our valuation allowance. The unrecognized tax benefits, if recognized, would not materially affect the effective tax rate due to the full valuation allowance recorded against our federal and state deferred tax assets.
Our policy is to recognize interest and penalties associated with unrecognized tax benefits as income tax expense. During the year ended December 31, 2024, we had no interest expense or penalties related to uncertain tax positions. As of December 31, 2024, we had no accrued balances of interest and penalties related to uncertain tax positions.
Due to our net operating loss carryforwards, we are subject to examination by taxing authorities in the United States for all tax years. In our foreign jurisdictions, we are subject to examination for tax years ending on or after December 31, 2019. As of December 31, 2024, we had not identified any gross unrecognized tax benefits where it was reasonably possible we would recognize a significant increase or decrease within the next 12 months.