Income Taxes

12 Months Ended

Mar. 31, 2025

Income Tax Disclosure [Abstract]

Income Taxes

Note 11 — Income Taxes

The components of income (loss) before income taxes by jurisdiction were as follows:

	Fiscal Years Ended
	March 31,  2025			March 31,  2024			March 31,  2023
	(In thousands)
United States	$	(329,591	)	$	(859,006	)	$	(94,019	)
Foreign		(215,703	)		(334,940	)		(68,136	)
	$	(545,294	)	$	(1,193,946	)	$	(162,155	)

The (provision for) benefit from income taxes included the following:

	Fiscal Years Ended
	March 31,  2025			March 31,  2024			March 31,  2023
	(In thousands)
Current tax (provision) benefit:
Federal	$	(28,247	)	$	(12,128	)	$	(11,494	)
State		(2,661	)		(1,010	)		(5,231	)
Foreign		(117,042	)		(27,028	)		(5,965	)
		(147,950	)		(40,166	)		(22,690	)
Deferred tax (provision) benefit:
Federal		16,770			74,404			40,889
State		(102	)		5,166			(80,715	)
Foreign		132,223			100,070			13,098
		148,891			179,640			(26,728	)
Total (provision for) benefit from income taxes	$	941		$	139,474		$	(49,418	)

Significant components of the Company’s net deferred tax assets were as follows:

	As of
	March 31,  2025			March 31,  2024
	(In thousands)
Deferred tax assets:
Net operating loss carryforwards	$	252,589		$	198,548
Tax credit carryforwards		159,806			141,015
Capitalized research and development costs		136,191			143,581
Operating lease liabilities		99,877			94,360
Interest carryforwards		105,182			88,269
Other		198,071			201,160
Valuation allowance		(430,501	)		(353,642	)
Total deferred tax assets		521,215			513,291
Deferred tax liabilities:
Intangible assets		(576,599	)		(683,366	)
Property, equipment and satellites		(689,880	)		(725,990	)
Operating lease assets		(88,083	)		(80,258	)
Other		(75,918	)		(88,357	)
Total deferred tax liabilities		(1,430,480	)		(1,577,971	)
Net deferred tax assets (liabilities)	$	(909,265	)	$	(1,064,680	)

A reconciliation of the benefit from (provision for) income taxes to the amount computed by applying the statutory federal income tax rate to income (loss) before income taxes is as follows:

	Fiscal Years Ended
	March 31,  2025			March 31,  2024			March 31,  2023
	(In thousands)
Tax (provision) benefit at federal statutory rate	$	114,512		$	250,728		$	34,047
State tax provision, net of federal benefit		8,908			28,621			202
Tax credits		16,004			28,574			23,925
Change in federal valuation allowances		(49,566	)		(105,968	)	—
Change in state valuation allowances		(10,880	)		(27,251	)		(73,600	)
Non-deductible compensation		(2,459	)		(5,240	)		(3,096	)
Non-deductible transaction costs		(40	)		(18,911	)		(167	)
Non-deductible meals and entertainment		(1,112	)		(1,077	)		(693	)
Stock-based compensation		(12,932	)		(12,182	)		(12,032	)
Change in state effective tax rate		(452	)		292			458
Base Erosion and Anti-Abuse Tax (BEAT)		(30,448	)	—				(8,610	)
Foreign effective tax rate differential, net of valuation allowance		(9,185	)		6,199			(5,769	)
Unremitted subsidiary gains		(7,043	)		(1,586	)		(887	)
Withholding taxes		(6,852	)		(4,981	)		(1,591	)
Other		(7,514	)		2,256			(1,605	)
Total (provision for) benefit from income taxes	$	941		$	139,474		$	(49,418	)

As of March 31, 2025, the Company had federal and state R&D tax credit carryforwards of $138.4 million and $203.4 million, respectively, which begin to expire in fiscal year 2040 and fiscal year 2026, respectively. As of March 31, 2025, the Company had federal and state net operating loss carryforwards of $597.2 million and $303.0 million, respectively, which begin to expire in fiscal year 2029 and fiscal year 2026, respectively.

Beginning in fiscal year 2023, for federal income tax purposes, the Company is required to capitalize and amortize domestic R&D expenditures over five years and foreign R&D expenditures over 15 years under the Tax Cuts and Jobs Act of 2017, which delays the deductibility of these expenditures.

In accordance with ASC 740, net deferred tax assets are reduced by a valuation allowance if, based on all the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. Future realization of existing deferred tax assets ultimately depends on future profitability and the existence of sufficient taxable income of appropriate character (for example, ordinary income versus capital gains) within the carryforward period available under tax law. In the event that the Company’s estimate of taxable income is less than that required to utilize the full amount of any deferred tax asset, a valuation allowance is established, which would cause a decrease to income in the period such determination is made. A valuation allowance of $430.5 million at March 31, 2025 and $353.6 million at March 31, 2024 has been established relating to federal, state and foreign net operating loss carryforwards, federal and state R&D tax credit carryforwards, foreign tax credit carryforwards, and other federal and state net deferred tax assets for cumulative timing differences that, based on management’s estimate of future taxable income attributable to such jurisdictions and generation of additional research credits, are considered more likely than not to expire unused.

During the fourth quarter of fiscal year 2025, the Company released $10.3 million of valuation allowance previously recorded against U.S. deferred tax assets. The Company evaluated both the positive and negative evidence and released valuation allowance equal to the expected benefit from the deferred tax liabilities recorded for legacy Inmarsat U.S. entities in connection with a tax planning strategy to file a consolidated U.S. federal tax return.

During the second quarter of fiscal year 2024, in evaluating the Company’s ability to realize its U.S. net deferred tax assets, the Company considered all available positive and negative evidence, including but not limited to operating results, forecasted ranges of future taxable income, and its recent satellite anomalies. ASC 740 places more weight on the objectively verifiable evidence of current pre-tax losses and recent events than forecasts of future profitability. Therefore, the Company determined it is more likely than not that its U.S. net deferred tax assets will not be realized, excluding its deferred tax assets and liabilities related to the separate U.S. tax return filings of Trellisware and the legacy Inmarsat entities. As a result, the Company’s tax benefit for fiscal year 2024 was reduced by a valuation allowance recorded against such U.S. deferred tax assets.

In evaluating the Company's ability to realize the deferred tax asset for California R&D tax credits, the Company considered all available positive and negative evidence, including operating results and forecasted ranges of future taxable income, and determined it is more likely than not that a majority of its California R&D tax credits will not be realized due to reduced taxable income apportioned to California in connection with the Link-16 TDL Sale. During the second quarter of fiscal year 2023, the Company determined it is more likely than not that a majority of its California R&D tax credits will not be realized due to reduced taxable income apportioned to California in connection with the Link-16 TDL Sale. As a result, during the second quarter of fiscal year 2023, the Company recorded a valuation allowance of $69.0 million. The Company will continue to monitor its business strategies, weighing positive and negative evidence in assessing its realization of this asset in the future. In the event there is a need to release the valuation allowance, a tax benefit will be recorded.

The following table summarizes the activity related to the Company’s unrecognized tax benefits:

	As of
	March 31,  2025			March 31,  2024			March 31,  2023
	(In thousands)
Balance, beginning of fiscal year	$	185,595		$	129,738		$	112,806
Increase related to prior year tax positions		1,571			2,728			2,549
Decrease related to prior year tax positions		(253	)		(190	)		(632	)
Increase related to current year tax positions		14,017			15,608			16,123
Increase related to business combinations	—				54,193		—
Expiration of the statute of limitations for the assessment of taxes		(12,744	)		(16,482	)		(1,108	)
Balance, end of fiscal year	$	188,186		$	185,595		$	129,738

Of the total unrecognized tax benefits at March 31, 2025, $13.6 million would reduce the Company’s annual effective tax rate if recognized, based on the Company's valuation allowance position at March 31, 2025. It is reasonably possible that there will not be a significant change in uncertain tax balances in the next 12 months.

The Company’s policy is to recognize interest expense and penalties related to income tax matters as a component of income tax expense. As of March 31, 2025 and 2024, the Company had accrued interest and penalties of approximately $14.4 million and $16.9 million, respectively. Approximately $19.2 million was recorded through goodwill as part of the purchase accounting for the Inmarsat Acquisition at March 31, 2024. The Company recognized a tax benefit of $2.5 million, $2.0 million and $1.1 million for reductions of interest and penalties in income tax expense for fiscal years 2025, 2024 and 2023, respectively.

The Company is subject to periodic audits by domestic and foreign tax authorities. By statute, the Company’s U.S. federal and state income tax returns are subject to examination by the tax authorities for fiscal years 2022 and thereafter. Additionally, net operating loss and R&D tax credit carryovers that were generated in prior years may also be subject to examination. With few exceptions, fiscal years 2021 and thereafter remain open to examination by foreign tax authorities. Calendar years 2007, 2018 and thereafter remain open in the U.K. for certain entities currently under enquiry. Calendar years 2014 and thereafter remain open in Norway for certain entities currently under enquiry. The Company believes that it has appropriate support for the income tax positions taken on its tax returns and its accruals for tax liabilities are adequate for all open years based on an assessment of many factors, including past experience and interpretations.