Income Taxes

12 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The provision for (benefit from) income taxes consists of:

	Year Ended December 31,
(in thousands)	2024		2023		2022
Current income tax:
State	$	1,357	$	502	$	666
Foreign	2,361		1,149		840
	3,718		1,651		1,506
Deferred income tax:
Federal	(5,576)		59		(221)
State	(707)		138		(151)
Foreign	(2,203)		—		—
	(8,486)		197		(372)
Provision for (benefit from) income taxes	$	(4,768)	$	1,848	$	1,134

The components of net loss before income taxes consisted of the following:

(in thousands)	2024		2023		2022
United States	$	(77,811)	$	(65,972)	$	(73,939)
International	(16,867)		(13,799)		(4,999)
Total net loss before income taxes	$	(94,678)	$	(79,771)	$	(78,938)

Deferred tax (liabilities) assets are comprised of the following at:

	December 31,
(in thousands)	2024		2023
Deferred tax liabilities:
Operating lease assets	$	(1,588)	$	(989)
Software development costs	(2,788)		(1,394)
Intangible assets	(29,776)		(17,172)
481(a) adjustment	(950)		(1,466)
Depreciation on property, plant and equipment	(1,901)		(1,269)
Partnership basis difference	(4,993)		—
Gross deferred tax liabilities	(41,996)		(22,290)
Deferred tax assets:
Allowances for bad debts and inventory	2,896		2,539
Capitalized inventory costs	17		223
Employee benefit accruals	5,096		7,773
Interest expense limitation under section 163 (j)	2,594		6,501
Operating lease liabilities	1,730		1,015
Federal net operating loss carryforward	29,339		38,357
State net operating loss carryforward	11,020		8,403
Foreign net operating loss carryforward	11,117		4,406
Federal and state tax credit carryforwards	16,435		14,804
R&D capitalization	28,484		22,108
Other	900		3,274
Gross deferred tax assets	109,628		109,403
Less valuation allowance	(85,100)		(87,943)
Non-current net deferred tax liabilities	$	(17,468)	$	(830)

The non-current net deferred tax liabilities are included within other long-term liabilities on the Company's consolidated balance sheets. The Company has a federal operating loss carryforward of $139.6 million with an unlimited carryforward period. The Company also has state tax credits of $1.4 million and net operating loss carryforwards that vary by jurisdiction, ranging from zero to $71.9 million, and expire in various tax years through 2044. The Company has foreign net operating loss carryforwards of $52.2 million expiring through 2031 and $17.2 million with an indefinite carryforward period. The Company has a federal interest limitation carryforward of $5.6 million with an indefinite carryforward period.

In evaluating our ability to recover our deferred tax assets, management considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and results of recent operations. A valuation allowance is required to the extent it is more likely than not that the future benefit associated with certain Federal, state, and foreign deferred tax assets including tax loss carryforwards will not be realized.

As of December 31, 2024, management believes that it is more likely than not that the benefit from its deferred tax assets will not be realized except for the estimated amount of future tax associated with indefinite lived intangible assets in certain jurisdictions. In calculating the valuation allowance, the Company was only permitted to use its existing deferred tax liabilities related to its indefinite-lived intangible assets (i.e. “naked credit deferred tax liabilities”) as a source of taxable income to support the realization of its existing indefinite-lived deferred tax assets.

As a result of this analysis, management determined that the Company's United States, Switzerland, and Australia jurisdictions should maintain a full valuation allowance.

No provision is made for certain taxes applicable to the undistributed earnings of the Company's foreign subsidiaries as it is the intention of management to fully utilize those earnings in the operations of foreign subsidiaries.

The Tax Cuts and Jobs Act created a new requirement that certain income earned by foreign subsidiaries, known as global intangible low-tax income ("GILTI"), must be included in the gross income of their U.S. shareholder. The FASB allows an accounting policy election of either recognizing deferred taxes for temporary differences expected to reverse as GILTI in future years or recognizing such taxes as a current-period expense when incurred. The company elected to treat the tax effect of GILTI as a current-period expense when incurred.

In the current year, the income tax provision includes a decrease in deferred tax assets and corresponding decrease in U.S. valuation allowance of $10.1 million primarily related to the impact of non-deductible stock-based compensation and deferred tax liabilities recorded as a result of the Stuzo Acquisition and Delaget Acquisition. The foreign valuation allowance increased $7.2 million due to increased PAR Ordering NOL’s and Australia NOL’s acquired in the Task Group Acquisition which did not have any impact on tax expense.

In 2023, the income tax provision includes an increase in deferred tax assets and corresponding increase in valuation allowance of $10.8 million related to the capitalization of R&D expenses for tax purposes and an increase in deferred tax assets and corresponding increase in valuation allowance of $3.3 million from foreign net operating loss carryforwards related to the MENU Acquisition.

In 2022, the income tax provision included a reduction in deferred tax liabilities and corresponding increase in valuation allowance of $20.0 million related to subordinated debt as a result of the adoption of ASU No. 2020-06, an increase in deferred tax assets and corresponding increase in valuation allowance of $11.3 million related to the capitalization of R&D expenses for tax purposes, and an increase in deferred tax assets and corresponding increase in valuation allowance of $2.0 million from foreign net operating loss carryforwards related to the MENU Acquisition.

The Company records the benefits relating to uncertain tax positions only when it is more likely than not (likelihood of greater than 50%), based on technical merits, that the position would be sustained upon examination by taxing authorities. Tax positions that meet the more likely than not threshold are measured using a probability-weighted approach as the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement. At December 31, 2024, the Company had no reserve for uncertain tax positions and the Company believes the Company has adequately provided for its tax-related liabilities. The Company is no longer subject to federal income tax audits for years before 2020.

The following table reconciles the Company's effective tax rate from the U.S. federal statutory tax rate of 21%:

	Year Ended December 31,
	2024		2023		2022
Federal statutory tax rate	21.0	%	21.0	%	21.0	%
State taxes, net of federal benefit	(0.5)		(0.7)		(0.5)
Contingent consideration revaluation	0.1		2.4		1.2
Nondeductible expenses	(1.4)		(0.2)		(0.5)
Tax credits (including R&D)	2.8		1.5		1.3
Foreign income tax rate differential	(3.9)		(4.9)		(2.2)
Stock based compensation	(1.6)		(1.2)		(1.2)
Valuation allowance	(11.0)		(20.1)		(20.5)
Other	(0.5)		(0.1)		(0.1)
	5.0	%	(2.3)	%	(1.5)	%

The effective income tax rate was 5.0%, (2.3)% and (1.5)% during the years ended December 31, 2024, December 31, 2023, and December 31, 2022 respectively. The decrease in 2024 compared to the statutory tax rate of 21.0% was primarily due to the decrease in valuation allowance, executive compensation limitations, and the foreign income tax rate differential. The decrease in 2023 and 2022 compared to the statutory tax rate of 21.0% was primarily due to the increase in valuation allowance and the foreign income tax rate differential.