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Income taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income taxes Income taxes
Income/(loss) before provision for income taxes
The following table showed income/(loss) before provision for income taxes based on geographical location to which such income was attributable for the periods indicated:
For the years ended December 31,
202420232022
(in thousands)
United States$(13,393)$(6,107)$(23,490)
International24,448 10,945 3,037 
Total income/(loss) before provision for income taxes$11,055 $4,838 $(20,453)
Provision/(benefit) for income taxes
Provision./(benefit) for the income taxes consisted of the following components:
For the years ended December 31,
202420232022
(in thousands)
Current
Federal$4,900 $3,619 $6,951 
State1,051 941 1,774 
International5,096 6,183 3,681 
Deferred
Federal(3,463)(2,265)(2,740)
State(92)(474)(315)
International(478)(1,401)(590)
Total tax expense$7,014 $6,603 $8,761 
The Company’s provision for income taxes does not include provisions for foreign withholding taxes associated with the repatriation of undistributed earnings of certain foreign subsidiaries that we intend to reinvest indefinitely in our foreign subsidiaries.
Deferred income taxes
Deferred income taxes reflect the net tax effects of (a) temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, and (b) operating losses and tax credit carryforwards.
The tax effects of significant items comprising the Company’s deferred taxes as of December 31, 2024 and 2023 were as follows:
As of December 31,
20242023
(in thousands)
Deferred tax assets
Stock-based compensation$5,365 $3,833 
R&D capitalization4,559 3,968 
Accrued compensation and benefits
2,502 1,950 
Operating lease liabilities577 636 
Other285 635 
Total deferred tax assets$13,288 $11,022 
Deferred tax liabilities
Intangible assets$(12,751)$(6,908)
Operating lease right-of-use assets(546)(597)
Other(131)(373)
Total deferred tax liabilities(13,428)(7,878)
Net deferred taxes$(140)$3,144 
As part of the 2017 Tax Cuts and Jobs Act, Section 174 was amended to require that specified research and experimental (“SR&E”) expenditures be capitalized and amortized but delayed the effective date of this amendment to tax years beginning January 1, 2022 or later. The amortization period is 5 years for domestic research expenditures and 15 years for foreign research expenditures using a half-year convention. The Company evaluated its R&D expenses both in the U.S. and foreign jurisdictions and determined there were approximately $10.2 million of expenses worldwide subject to capitalization and treated as a temporary adjustment.
The Company assessed its ability to realize the benefits of its domestic deferred tax assets (“DTA”) by evaluating all available positive and negative evidence, objective and subjective in nature, including (1) cumulative results of operations in recent years, (2) sources of recent pre-tax income, (3) estimates of future taxable income, and (4) the length of net operating loss (“NOL”) carryforward periods. The Company determined it is in a 4-year cumulative taxable income position as of December 31, 2024, and expects to continue to be in a taxable income position in the long-term foreseeable future.
After an evaluation of all available qualitative and quantitative evidence, both positive and negative in nature, the Company concluded it is more likely than not that sufficient future taxable income will be generated to realize the benefits of its DTAs prior to expiration. As a result, the Company determined that no valuation allowance was needed as of December 31, 2024.
Net operating losses and tax credit carryforwards as of December 31, 2024 were as follows:
AmountExpiration years
(in thousands)
Net operating losses, federal$362 N/A
Net operating losses, state$7,005 
2040
Effective tax rate reconciliation
The effective tax rate of the Company differs from the federal statutory rate as follows:
For the years ended December 31,
202420232022
U.S. federal statutory rate21.0 %21.0 %21.0 %
State taxes, net of federal benefit
8.4 10.1 (7.5)
Permanent and other items1.7 (9.9)(1.0)
Stock-based compensation7.2 39.3 4.4 
Tax credits(30.6)(120.0)13.9 
Foreign tax rate differential(4.1)7.2 (11.9)
Foreign inclusion adjustments29.4 74.7 (10.8)
Foreign intangible amortization0.2 10.2 (2.3)
162M limitation30.2 103.9 (48.6)
Total63.4 %136.5 %(42.8)%
Unrecognized tax benefits
As of December 31, 2024, the Company has approximately $1.4 million of unrecognized tax benefits. Approximately all of the unrecognized tax benefits, if recognized, would affect the effective tax rate. A reconciliation of beginning to ending amounts of unrecognized tax benefits is as follows:
For the years ended December 31,
202420232022
(in thousands)
Unrecognized tax benefit as of January 1$1,162 $1,151 $780 
Changes related to prior year tax positions(35)(101)168 
Changes related to current year tax positions244 112 203 
Unrecognized tax benefit as of December 31$1,371 $1,162 $1,151 
Unrecognized tax benefits may change during the next twelve months for items that arise in the ordinary course of business. The Company does not anticipate a material change to its unrecognized tax benefits over the next twelve months.
The Company’s policy is to recognize interest expense and penalties related to income tax matters as tax expense. There was no interest or penalties accrued as of December 31, 2024 and 2023.
The Company is subject to income taxes in U.S. federal and various state, local and foreign jurisdictions. For federal and states, tax years subsequent to 2021 remain open to examination due to the carryover of unused net operating losses or tax credits. With respect to foreign jurisdictions, tax years 2017 and after remain open.