INCOME TAX

12 Months Ended

Mar. 31, 2025

Income Tax Disclosure [Abstract]

INCOME TAX

15. INCOME TAX:

Total income tax expense (benefit) was allocated as follows (dollars in thousands):

	For the twelve months ended March 31,
	2025		2024		2023
Continuing operations	$	25,342	$	24,270	$	5,252
Discontinued operations	(2,131)		(2,332)		(7,070)
	$	23,211	$	21,938	$	(1,818)

Income tax expense (benefit) attributable to continuing operations consists of (dollars in thousands): 

	For the twelve months ended March 31,
	2025		2024		2023
Current:
U.S. Federal	$	20,300	$	21,014	$	6,325
Non-U.S.	480		662		1086
State	4,869		3,384		(2,274)
	25,649		25,060		5,137
Deferred:
U.S. Federal	23		(101)		155
Non-U.S.	(300)		(387)		(83)
State	(30)		(302)		43
	(307)		(790)		115
Total	$	25,342	$	24,270	$	5,252

Income (loss) before income tax attributable to U.S. and non-U.S. continuing operations consists of (dollars in thousands):

	For the twelve months ended March 31,
	2025		2024		2023
U.S.	$	18,431	$	33,892	$	(122,994)
Non-U.S.	4,409		469		4,140
Total	$	22,840	$	34,361	$	(118,854)

Income (loss) before income taxes, as shown above, is based on the location of the entity to which such income (loss) is attributable.  However, since such income (loss) may be subject to taxation in more than one country, the income tax expense (benefit) shown above as U.S. or non-U.S. may not correspond to the income (loss) shown above.

Below is a reconciliation of expected income tax expense (benefit), computed by applying the U.S. federal statutory rate of 21.0% to income (loss) before income taxes, to actual income tax expense from continuing operations (dollars in thousands): 

	For the twelve months ended March 31,
	2025		2024		2023
Computed expected income tax expense (benefit)	$	4,797	$	7,216	$	(24,959)
Increase (reduction) in income taxes resulting from:
State income taxes, net of federal benefit	4,407		2,494		(2,440)
Research and other tax credits	(3,621)		(3,012)		(4,363)
Nondeductible expenses	1,114		2,169		669
Stock-based compensation	4,056		2,013		3,486
Non-U.S. subsidiaries taxed at other rates	(757)		(1,036)		491
Adjustment to valuation allowances	12,460		14,209		33,197
Other, net	2,886		217		(829)
	$	25,342	$	24,270	$	5,252

On March 27, 2020, the U.S. enacted The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). The CARES Act included several significant changes and clarifications to existing tax law, including changes to the treatment of net operating losses (“NOLs”). Under the CARES Act, NOLs arising in tax years beginning after December 31, 2017, and before January 1, 2021, may be carried back to each of the five tax years preceding the tax year of the loss. The Company carried back its fiscal 2021 NOL, resulting in a refund of approximately $29 million, which was received during fiscal 2024.

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities at March 31, 2025 and 2024 are presented below (dollars in thousands).  

	March 31,
	2025		2024
Deferred tax assets:
Accrued expenses	$	5,072	$	5,849
Lease liabilities	8,453		10,107
Net operating loss carryforwards	35,268		30,408
Stock-based compensation	8,734		7,346
Nonqualified deferred compensation	2,788		2,809
Tax credit carryforwards	10,641		9,764
Capitalized research and development	58,556		45,499
Other	2,236		1,477
Total deferred tax assets	131,748		113,259
Less valuation allowance	(105,040)		(81,284)
Net deferred tax assets	26,708		31,975
Deferred tax liabilities:
Prepaid expenses	(3,546)		(2,821)
Property and equipment	(1,412)		(1,976)
Right-of-use assets	(4,657)		(6,186)
Intangible assets	(4,019)		(7,118)
Deferred commissions	(11,153)		(12,098)
Other	(181)		(364)
Total deferred tax liabilities	(24,968)		(30,563)
Net deferred tax assets	$	1,740	$	1,412

At March 31, 2025, the Company has net operating loss carryforwards of approximately $20.6 million and $113.6 million for U.S. federal and state income tax purposes, respectively. The federal net operating loss carryforwards can be carried forward indefinitely. Of the state net operating loss carryforwards, $18.8 million will not expire and the remainder will expire in various amounts and will completely expire if not used by 2043. The Company has foreign net operating loss carryforwards of approximately $89.1 million. Of this amount, $77.4 million will not expire. The remainder expires in various amounts and will completely expire if not used by 2031. The Company has U.S. federal credit carryforwards of $1.0 million, which will expire if not used by 2044. The Company has U.S. state credit carryforwards of $13.7 million, of which $12.1 million will not expire and the remainder will expire in various amounts and will completely expire if not used by 2039.

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. Realization of the Company’s net deferred tax assets is dependent upon its generation of sufficient taxable income of the proper character in future years in appropriate tax jurisdictions to obtain benefit from the reversal of temporary differences and the use of net operating loss and credit carryforwards. 

Based upon the weight of available evidence, including the Company’s history of losses from continuing operations, management believes that it is not more likely than not the Company will realize the benefits of its deductible temporary differences and net operating loss and credit carryforwards. Accordingly, the Company has established a full valuation allowance against its net U.S. federal and state deferred tax assets as of March 31, 2025 and 2024, respectively.

Based upon the Company's history of losses in certain non-U.S. jurisdictions, the Company has not recorded a benefit for current foreign losses in these jurisdictions. In addition, management believes it is not more likely than not the Company will realize the benefits of certain foreign net operating loss carryforwards and has established valuation allowances in the amount of $21.5 million against deferred tax assets in such jurisdictions. No valuation allowance has been established against deferred tax assets in non-U.S. jurisdictions in which historical profits and forecasted continuing profits exist.

The current year increase in the valuation allowance is primarily attributable to the impact of the capitalization of research and development expenditures in accordance with IRC Section 174, as modified by the Tax Cuts and Jobs Act of 2017.

The following table sets forth changes in the total gross unrecognized tax benefits for the twelve months ended March 31, 2025, 2024 and 2023 (dollars in thousands):

	For the twelve months ended March 31,
	2025		2024		2023
Balance at beginning of period	$	22,922	$	21,624	$	23,817
Increases related to prior year tax positions	460		741		93
Decreases related to prior year tax positions	—		(246)		(522)
Increases related to current year tax positions	3,036		1,179		2,229
Settlements with taxing authorities	—		—		(166)
Lapse of statute of limitations	—		(376)		(3,827)
Balance at end of period	$	26,418	$	22,922	$	21,624

Gross unrecognized tax benefits as of March 31, 2025 was $26.4 million, of which $22.1 million would reduce the Company’s effective tax rate in future periods if and when realized. The Company reports accrued interest and penalties related to unrecognized tax benefits in income tax expense. The combined amount of accrued interest and penalties related to tax positions on tax returns was approximately $8.6 million as of March 31, 2025. Accrued interest and penalties increased by $2.2 million during fiscal 2025.

The Company files a consolidated U.S. federal income tax return and tax returns in various state and local jurisdictions.  The Company’s subsidiaries also file tax returns in various foreign jurisdictions in which they operate.  In the U.S., the statute of limitations for Internal Revenue Service examinations remains open for the Company’s federal income tax returns for fiscal years after 2015. The Company’s federal income tax return for fiscal year 2019 is currently under Internal Revenue Service examination. The status of other U.S. state and foreign tax examinations varies by jurisdiction.