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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The following table presents components of loss before provision for (benefit from) income taxes for the periods presented (in thousands):
Year Ended December 31,
202420232022
United States$(275,057)$(571,265)$(445,720)
International1,174 1,692 453 
Loss before provision for (benefit from) income taxes$(273,883)$(569,573)$(445,267)
Provision for (benefit from) income taxes for the periods presented consisted of (in thousands):
Year Ended December 31,
202420232022
Current:
U.S. federal$— $(150)$— 
U.S. state— (56)— 
Foreign(161)1,966 440 
Total current:(161)1,760 440 
Deferred:
U.S. federal(431)(43)204 
U.S. state(151)(21)28 
Total deferred:(582)(64)232 
Total provision for (benefit from) income taxes$(743)$1,696 $672 
The reconciliation between the U.S. federal statutory income tax rate of 21% to the Company’s effective tax for the periods presented is as follows:
Year Ended December 31,
202420232022
U.S. federal provision at statutory rate21.0 %21.0 %21.0 %
State income taxes5.6 5.2 5.7 
Foreign taxes
0.1 (0.1)0.0 
Tax credits0.9 1.0 2.4 
Fair value of financial instruments0.1 0.1 0.4 
Stock-based compensation expense(6.9)(3.7)(3.4)
Executive compensation(2.0)(0.5)(0.8)
Other permanent items0.0 (0.2)0.2 
Unrecognized tax benefits
0.0 0.3 (1.4)
Change in valuation allowance(18.5)(23.4)(24.3)
Effective tax rate0.3 %(0.3 %)(0.2 %)
The Company’s effective tax rates differ from the federal statutory rate primarily due to the change in valuation allowance, non-deductible stock-based compensation expense net of excess windfall stock compensation deductions, nondeductible executive compensation, R&D tax credits, state income taxes, unrecognized tax benefits and the fluctuation of fair value on instruments treated as debt for GAAP and equity for tax purposes, which is not taxable/deductible for income tax purposes, for 2024, 2023 and 2022.
The Company’s deferred income tax assets and liabilities as of December 31, 2024 and 2023 were as follows (in thousands):
Year Ended December 31,
20242023
Deferred tax assets:
Net operating loss carry forward$246,178 $235,624 
Tax credits29,595 27,311 
Accruals and reserves881 3,473 
Stock-based compensation expense6,134 17,029 
Lease liability (ASC 842)8,666 12,333 
Section 174 R&D capitalization101,876 78,673 
Inventory reserves9,113 4,584 
Depreciation and amortization15,380 9,924 
Basis difference on debt obligation
9,692 — 
Deferred interest expense
3,698 — 
Unrealized Gain3,451 — 
Other515 24 
Total deferred tax assets435,179 388,975 
Valuation allowance(427,222)(377,214)
Total deferred tax asset7,957 11,761 
Deferred tax liabilities:
Other— 124 
ROU asset (ASC 842)7,957 11,637 
Total deferred tax liabilities7,957 11,761 
Net deferred tax assets (liabilities)$— $— 
The Company assesses the realizability of deferred tax assets based on the available evidence, including a history of taxable income and estimates of future taxable income. In assessing the realizability of deferred tax assets, the Company considers whether it is more likely than not that all or some portion of deferred tax assets will not be realized. Due to the history of losses incurred by the Company, management believes it is not more likely than not that substantially all of the U.S. domestic deferred tax assets can be realized. Accordingly, the Company established and recorded a full valuation allowance on its U.S. domestic net deferred tax assets of $427.2 million and $377.2 million as of December 31, 2024 and 2023, respectively. The valuation allowance increased by $50.0 million in 2024.
No deferred tax liabilities for foreign withholding taxes have been recorded relating to the earnings of the Company’s foreign subsidiaries since all such earnings are intended to be indefinitely reinvested.
Utilization of the net operating loss and tax credit carryforwards is subject to a substantial annual limitation due to the “ownership change” limitations provided by Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (“IRC”) and other similar state provisions. Any annual limitation may result in the expiration of net operating loss and tax credit carryforwards before utilization. As of December 31, 2024, the Company had $855.3 million of U.S. federal net operating loss carryforwards available to reduce future taxable income, of which $812.1 million will be carried forward indefinitely for U.S. federal tax purposes. The federal net operating loss carryforwards, if not utilized, will begin to expire in 2035. The Company also has $891.4 million of U.S. state net operating loss carryforwards. State net operating loss carryforwards, if not utilized, will begin to expire on various dates starting 2028.
The Company also has federal and state research and development (“R&D”) tax credit carryforwards of $29.7 million and $7.3 million, respectively, as of December 31, 2024. The federal research credit carryforwards will begin expiring in 2035 unless previously utilized. A portion of the state research credit carryforwards will begin expiring in 2025 and the California research credits do not expire.
The following is a reconciliation of the beginning and ending amount of unrecognized tax benefits (in thousands):
Year Ended December 31,
202420232022
Unrecognized tax benefits as of the beginning of the year$6,828 $8,604 $6,296 
Increases related to prior year tax positions70 65 — 
Decreases related to prior year tax provisions(677)(4,230)(3,723)
Increase related to current year tax positions1,253 2,389 6,031 
Unrecognized tax benefits as of the end of the year$7,474 $6,828 $8,604 
The Company has considered the amounts and probabilities of the outcomes that can be realized upon ultimate settlement with the tax authorities and determined unrecognized tax benefits primarily related to credits that should be established as noted in the summary roll forward above. The unrecognized tax benefits, if recognized and in absence of full valuation allowance, would impact the income tax provision by $7.5 million in the year ended December 31, 2024. It would impact the tax provision for year ended December 31, 2023 by $6.8 million.
As of December 31, 2024, the Company does not believe that it is reasonably possible that its unrecognized tax benefits would significantly change in the following 12 months. The Company’s policy is to recognize interest and penalties associated with uncertain tax benefits as part of the income tax provision and include accrued interest and penalties with the related income tax liability on its consolidated balance sheet. To date, the Company has not recognized any interest and penalties in its consolidated statements of operations, nor has it accrued for or made payments for interest and penalties.