Income Taxes

12 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The components of the loss before income taxes were as follows (in thousands):

	Year Ended December 31,
	2024		2023
Domestic	$	(62,999)	$	(87,409)
Foreign	(3,778)		(3,321)
Total loss before provision for income taxes	$	(66,777)	$	(90,730)

The components of the provision for income taxes were as follows (in thousands):

	Year Ended December 31,
	2024		2023
Current:
State	$	969	$	777
Total current	$	969	$	777
Deferred:
Federal	$	144	$	122
State	(47)		(80)
Total deferred	$	97	$	42
Total provision for income taxes	$	1,066	$	819

Reconciliation of the statutory federal income tax to the Company's effective tax is as follows (amounts in thousands):

	Year Ended December 31,
	2024				2023
Tax provision at U.S. statutory rate	$	(14,023)	21.0	%	$	(19,053)	21.0	%
State income taxes(1)	(3,458)		5.2		(1,747)		1.9
Foreign taxes in excess of the U.S. statutory rate	(6)		—		175		(0.2)
Change of valuation allowance(1)	15,350		(23.0)		11,076		(12.2)
Share-based compensation(1)	448		(0.7)		3,394		(3.7)
Section 162(m) limitation	4,742		(7.1)		3,354		(3.7)
Change in fair value of warrant liabilities	(1,979)		3.0		1,892		(2.1)
Tax credits	—		—		1,913		(2.1)
Other	(8)		—		(185)		0.2
Tax Expense	$	1,066	(1.6)	%	$	819	(0.9)	%

(1) Immaterial corrections of $4.2 million related to the change of valuation allowance, $3.4 million to share based compensation and $0.8 million to state income taxes for the year ended December 31, 2023. This correction had no impact on the consolidated balance sheet as of December 31, 2024 and the consolidated statements of operations, stockholders' equity, and cash flows for the year ended December 31, 2023.

Significant components for the Company's net deferred tax liabilities included in accrued expenses and other current liabilities in the consolidated balance sheets are as follows (in thousands):

	Year Ended December 31,
	2024		2023
Deferred tax assets
Net operating loss carryforwards	$	40,388	$	28,430
Section 174 capitalization	16,273		12,730
Share-based compensation(1)	3,403		4,165
Accrued compensation	2,193		1,919
Operating lease liability	1,864		1,322
Tax credits	1,702		1,702
Allowance for bad debt	377		306
Other	375		404
Total deferred tax assets	$	66,575	$	50,978
Valuation allowance(1)	(62,535)		(47,186)
Net deferred tax assets	$	4,040	$	3,792
Deferred tax liabilities
Depreciation and amortization	$	(3,296)	$	(3,245)
Operating lease assets	(1,336)		(1,107)
Other	(65)		—
Total deferred tax liabilities	$	(4,697)	$	(4,352)
Net deferred tax liabilities	$	(657)	$	(560)

(1) The components of the Company's deferred tax assets and valuation allowance as of December 31, 2023 have been adjusted to reflect immaterial corrections identified during the year ended December 31, 2024. This correction had no impact on the consolidated balance sheet as of December 31, 2023 and the consolidated statements of operations, stockholders' equity, and cash flows for the year ended December 31, 2023.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management believes it is more likely than not that the deferred tax assets will not be realized; accordingly, a valuation allowance has been established on U.S. and foreign gross deferred tax assets. The Company's valuation allowance increased by $15.3 million during the year ended December 31, 2024 and increased by $11.1 million during the year ended December 31, 2023.

As of December 31, 2024, the Company has net operating loss carryforwards for federal income tax purposes of $125.6 million available to reduce future income subject to income taxes. Federal net operating loss carryforwards of $11.1 million will begin to expire, if not utilized, in fiscal year 2037. The remaining amount of federal net operating loss carryforwards will be carried forward indefinitely. In addition, the Company has $126.3 million of net operating loss carryforwards available to reduce future taxable income subject to California state income taxes and all other applicable state jurisdictions. The state net operating loss carryforwards will begin to expire, if not utilized, in fiscal year 2036. The foreign net operating loss carryforwards of $7.9 million will be carried forward indefinitely. The federal and California research and development credit carryforwards are $0.9 million and $0.8 million, respectively. The federal credit carryforward will begin to expire, if not utilized, in fiscal year 2037. The California credit carryforward will 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 will be subject to annual limitations. However, it is not expected that the annual limitations will result in the expiration of the tax attribute carryforwards prior to utilization.

Changes in our unrecognized tax benefits are summarized as follows (in thousands):

	Year Ended December 31,
	2024		2023
Beginning Balance, January 1	$	822	$	1,629
Additions for current year items	9		13
Reductions for prior year items	—		(820)
Ending Balance, December 31	$	831	$	822

During the years ended December 31, 2024 and 2023, interest and penalties were immaterial. The Company does not expect any significant change in its unrecognized tax benefits during the next twelve months that would be material to the consolidated financial statements. All of the unrecognized tax benefits would impact the effective tax rate.

The Company is subject to taxation in the United States and various state and foreign jurisdictions The federal statute of limitations remains open for the tax periods ending December 31, 2021 and thereafter. The statute of limitations for California and various other state jurisdictions remains open for the tax periods ending December 31, 2020 and thereafter. Furthermore, as of December 31, 2024, all tax years remain open to examination in the foreign jurisdictions where we operate in.