Income Taxes (Tables)

9 Months Ended

12 Months Ended

Jun. 30, 2022

Jun. 30, 2023

Income Tax Disclosure [Abstract]

Income before provision for income taxes

(Loss) income before provision for income taxes consists of the following:

	Year Ended June 30, 2023		Nine Months Ended June 30, 2022		Year Ended September 30, 2021
	(Dollars in Thousands)
Domestic	$	(201,620)	$	29,905	$	(86,550)
Foreign	21,054		10,056		20,637
(Loss) income before provision for income taxes	$	(180,566)	$	39,961	$	(65,913)

Provision for income taxes

The (benefit) for income taxes shown in the accompanying consolidated and combined statements of operations is composed of the following:

	Year Ended June 30, 2023		Nine Months Ended June 30, 2022		Year Ended September 30, 2021
	(Dollars in Thousands)
Federal—
Current	$	112,181	$	59,162	$	2,702
Deferred	(184,400)		(70,046)		(48,043)
State—
Current	6,333		4,385		1,004
Deferred	(7,301)		(10,431)		(4,980)
Foreign—
Current	9,293		3,465		4,191
Deferred	(8,912)		280		(179)
	$	(72,806)	$	(13,185)	$	(45,305)

Income tax reconciliation based on federal statutory rate

The (benefit) for income taxes differs from that based on the federal statutory rate due to the following:

	Year Ended June 30, 2023		Nine Months Ended June 30, 2022		Year Ended September 30, 2021
	(Dollars in Thousands)
Taxes at U.S. statutory rate (21%)	$	(37,919)	$	8,392	$	(13,842)
State and local taxes, net of federal tax benefit	(1,762)		(7,003)		(3,141)
Foreign derived intangible income (FDII)	(36,436)		(17,150)		—
Global Intangible Low-Taxed Income (GILTI)	3,027		446		—
Foreign taxes and rate differences	(2,943)		2,669		1,181
Uncertain tax positions	405		(2,556)		(2,522)
Stock-based compensation	4,828		152		—
Return to Provision	4,070		498		—
Tax credits	(396)		(3,385)		(523)
Change in valuation allowance	(5,680)		5,287		(27,953)
Other	—		(535)		1,495
(Benefit) for income taxes	$	(72,806)	$	(13,185)	$	(45,305)

The Company's tax benefit for the fiscal 2023 was favorably impacted primarily by the Foreign-Derived Intangible Income (“FDII”) deduction, the benefit from the deduction of state taxes, the difference in foreign tax rates, and the change in valuation allowance on certain jurisdictions, offset by Global Intangible Low-Taxed Income (“GILTI”), stock-based compensation, and return to provision adjustment. Assuming certain requirements are met, the FDII deduction is a benefit for U.S. companies that sell their products or services to customers for use outside the U.S.

Deferred tax assets and liabilities

Net deferred tax liabilities consist of the following at June 30, 2023 and 2022:

	June 30,
	2023		2022
	(Dollars in Thousands)
Deferred tax assets:
Federal, state and foreign credits	$	7,171	$	10,162
Net operating loss carryforwards	10,720		11,557
Deferred revenue	15,962		11,783
Other reserves and accruals	22,346		23,429
Intangible assets	19,369		19,215
Capitalized research and development	46,693		2,479
Property, leasehold improvements and other basis differences	4,186		5,135
Other temporary differences	2,660		3,615
Total gross deferred tax assets	129,107		87,375
Valuation allowance	(15,995)		(24,110)
Total net deferred tax assets	113,112		63,265
Deferred tax liabilities:
Intangible assets	(1,005,672)		(1,099,532)
Contract assets and costs	(41,643)		(91,298)
Deferred revenue	(3,315)		(1,092)
Property, leasehold improvements, and other basis differences	(5,820)		(7,634)
Other temporary differences	(3,935)		(4,180)
Total gross deferred tax liabilities	(1,060,385)		(1,203,736)
Net deferred tax (liabilities)	$	(947,273)	$	(1,140,471)

Reflected in the deferred tax assets above at June 30, 2023, the Company has foreign net operating loss carryforwards of $45.3 million, with unlimited carryforwards, federal and state research & development (R&D) credits of $6.7 million and foreign R&D credits of $0.5 million which begin to expire in 2027.

The Company's valuation allowance for deferred tax assets was $16.0 million and $24.1 million as of June 30, 2023 and 2022, respectively. The significant items of the valuation allowance as of June 30, 2023 are attributable to a reserve against foreign deferred tax assets of $3.2 million, foreign net operating losses of $5.7 million and state R&D credits of $6.4 million.

For fiscal 2023, the Company's income tax provision included amounts determined under the provisions of ASC 740 intended to satisfy additional income tax assessments, including interest and penalties, that could result from any tax return positions for which the likelihood of sustaining the position on audit does not meet a threshold of “more likely than not.” Tax liabilities were recorded as a component of their income taxes payable and other non-current liabilities. The ultimate amount of taxes due will not be known until examinations are completed and settled or the audit periods are closed by statutes.

Reconciliation of reserve for uncertain tax positions

A reconciliation of the reserve for uncertain tax positions, excluding interest and penalties, is as follows:

	Year Ended June 30,
	2023		2022
	(Dollars in Thousands)
Beginning balance	$	6,716	$	8,032
Additions for current year tax positions	1,011		396
Additions for prior year tax positions	1,657		1,761
Reductions for prior year tax positions	—		(2,250)
Reductions for settlements with tax authorities	—		—
Reductions for expirations of statute of limitations	(1,823)		(1,223)
Uncertain tax positions, excluding interest and penalties, end of year	$	7,561	$	6,716