Income Taxes

12 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Income (loss) before taxes consisted of the following:

	For the Years Ended December 31,
(In thousands)	2024		2023		2022
Domestic	$	190,382	$	154,434	$	(16,663)
Foreign	9,661		32,726		8,838
	$	200,043	$	187,160	$	(7,825)

The provision for (benefit from) income taxes was comprised of:

	For the Years Ended December 31,
(In thousands)	2024		2023		2022
Federal:
Current	$	2,760	$	1,075	$	183
Deferred	(9,447)		(126,734)		2,479
State:
Current	468		893		(215)
Deferred	1,245		(17,264)		24
Foreign:
Current	26,869		(3,362)		5,828
Deferred	(1,673)		(1,352)		(1,814)
	$	20,222	$	(146,744)	$	6,485

The differences between the Company’s effective tax rate and the U.S. federal statutory regular tax rate were as follows:

	For the Years Ended December 31,
	2024		2023		2022
U.S. federal statutory rate	21.0	%	21.0	%	21.0	%
State income tax expense (benefit)	0.9		(8.7)		6.1
Withholding tax	8.4		3.9		(36.6)
Foreign rate differential	(1.4)		(2.6)		(28.3)
Research and development credit	(1.9)		(2.9)		4.8
Executive compensation	4.0		3.9		(49.0)
Stock-based compensation	(6.1)		(5.2)		47.9
Foreign tax credit	(8.4)		(2.5)		57.4
Foreign-derived intangible income deduction	(6.8)		(1.9)		70.5
Acquisition	(0.1)		1.6		(25.1)
Debt extinguishment	—		—		(226.7)
Other	0.5		0.3		(1.0)
Valuation allowance	—		(85.3)		76.1
	10.1	%	(78.4)	%	(82.9)	%

The components of the net deferred tax assets (liabilities) were as follows:

	As of December 31,
(In thousands)	2024		2023
Deferred tax assets:
Lease liabilities	$	6,384	$	6,607
Other timing differences, accruals and reserves	3,893		5,306
Deferred equity compensation	6,678		3,973
Net operating loss carryovers	12,003		14,578
Capitalized research	96,739		77,244
Tax credits	47,960		50,445
Total gross deferred tax assets	173,657		158,153
Deferred tax liabilities:
Lease right-of-use assets	(4,498)		(4,589)
Depreciation and amortization	(9,077)		(5,078)
Total gross deferred tax liabilities	(13,575)		(9,667)
Total net deferred tax assets	160,082		148,486
Valuation allowance	(26,790)		(25,056)
Net deferred tax assets	$	133,292	$	123,430

	As of December 31,
(In thousands)	2024		2023
Reported as:
Non-current deferred tax assets	$	136,466	$	127,892
Non-current deferred tax liabilities	(3,174)		(4,462)
Net deferred tax assets	$	133,292	$	123,430

The Company periodically evaluates the realizability of its net deferred tax assets based on all available evidence, both positive and negative. The realizability of the Company’s net deferred tax assets is dependent on its ability to generate sufficient future taxable income during periods prior to the expiration of tax attributes to fully utilize these assets. During 2023, based on all available positive and negative evidence, the Company determined that it was appropriate to release the valuation allowance on the majority of the Company’s U.S. federal and other state deferred tax assets. The Company recognized a $177.9 million tax benefit during the year ended December 31, 2023 as a result of the valuation allowance release.

Upon considering the relative impact of all evidence during 2024, both negative and positive, and the weight accorded to each, the Company concluded that it was more likely than not that the majority of its deferred tax assets would be realizable, with the exception of primarily its California research and development credits that have not met the “more likely than not” realization threshold criteria. As a result, the Company continues to maintain a valuation allowance on only those deferred tax assets that it does not think will be realizable.

The following table presents the tax valuation allowance information for the years ended December 31, 2024, 2023 and 2022:

(In thousands)	Balance at Beginning of Period		Charged (Credited) to Operations	Charged to Other Account*	Valuation Allowance Release	Balance at End of Period
Tax Valuation Allowance
Year ended December 31, 2022	$	206,874	(7,233)	2,242	—	$	201,883
Year ended December 31, 2023	$	201,883	1,776	(717)	(177,886)	$	25,056
Year ended December 31, 2024	$	25,056	1,784	(50)	—	$	26,790

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*    Amounts not charged to operations are charged to other comprehensive income or retained earnings.

As of December 31, 2024, the Company had California net operating loss carryforwards of $171.9 million. As of December 31, 2024, the Company had federal research and development tax credit carryforwards of $41.6 million and foreign tax credits of $1.0 million. As of December 31, 2024, the Company had California research and development tax credit carryforwards of $30.0 million and California alternative minimum tax credit carryforwards of $0.5 million. The federal research and development tax credits begin to expire in 2028. The Company’s foreign tax credits will continue to carryover and do not begin to expire until 2028, if unused. The California net operating losses begin to expire in 2031. The California research and development credits carry forward indefinitely.

In the event of a change in ownership, as defined under federal and state tax laws, the Company’s net operating loss and tax credit carryforwards could be subject to annual limitations. The annual limitations could result in the expiration of the net operating loss and tax credit carryforwards prior to utilization.

As of December 31, 2024, the Company had $203.8 million of unrecognized tax benefits, before interest accrual, including $22.8 million recorded as a reduction of long-term deferred tax assets, $74.8 million recorded as a reduction of other assets associated with refundable withholding taxes previously withheld from licensees in South Korea and $106.2 million recorded to long-term income taxes payable, which are primarily comprised of $105.1 million in income taxes payable related to withholding taxes previously withheld from licensees in South Korea.

As a result of recent court rulings in 2023, the Company determined that it is more likely than not that withholding taxes paid in South Korea in the preceding five years are recoverable. In October 2023, the Company filed refund claims for withholding taxes paid in South Korea in the amount of $82.7 million related to the period from the fourth quarter of 2018 through the third quarter of 2023. The Company intends to file additional refund claims in the future for $4.2 million of withholding taxes paid in the fourth quarter of 2023 and $18.2 million paid in 2024. Therefore, the Company recorded long-term tax receivables of $110.0 million and $88.8 million as of December 31, 2024 and 2023, respectively.

If the South Korea withholding taxes are recovered through the refund claim process, the U.S. foreign tax credit claimed for these withholding taxes on historical federal tax returns will be forfeited. Therefore, during the year ended December 31, 2023, the Company recorded a long-term tax payable in the amount of $72.6 million and a reduction to deferred tax assets related to foreign tax credits in the amount of $10.1 million. During the year ended December 31, 2024, the Company utilized most of the foreign tax credits. Therefore, the Company recorded a long-term tax payable of $105.1 million as of December 31, 2024. These amounts exclude interest and reflect the future U.S. federal tax liability in the event of filing amended federal tax returns to revise the foreign tax credit amounts.

The recovery of South Korea withholding taxes paid before the fourth quarter of 2018 of $74.8 million is uncertain due to the statute of limitations for filing a refund claim. Thus, the Company did not record a long-term tax receivable and included the amount in the uncertain tax benefit disclosure below.

As of December 31, 2023, the Company had $185.7 million of unrecognized tax benefits, including $31.7 million recorded as a reduction of long-term deferred tax assets, $75.0 million recorded as a reduction of other assets associated with refundable withholding taxes previously withheld from licensees in South Korea and $78.9 million recorded to long-term income taxes payable, which were primarily comprised of $77.1 million in income taxes payable related to withholding taxes previously withheld from licensees in South Korea.

A reconciliation of the beginning and ending amounts of unrecognized income tax benefits for the years ended December 31, 2024, 2023 and 2022 was as follows:

	For the Years Ended December 31,
(In thousands)	2024		2023		2022
Balance as of January 1	$	184,921	$	164,531	$	146,215
Tax positions related to current year:
Additions	19,844		19,403		18,515
Tax positions related to prior years:
Additions	—		1,378		—
Reductions	(971)		(391)		(199)
Balance as of December 31	$	203,794	$	184,921	$	164,531

The Company recognizes interest and penalties related to uncertain tax positions as a component of the income tax provision (benefit). As of December 31, 2024 and 2023, an immaterial amount of interest and penalties was included in long-term income taxes payable.

Rambus files income tax returns for the U.S., California, India and various other state and foreign jurisdictions. The U.S. federal returns are subject to examination from 2021 and forward. The California returns are subject to examination from 2020 and forward. In addition, any research and development credit carryforward or net operating loss carryforward generated in prior years and utilized in these or future years may also be subject to examination. The India returns are under examination by the Indian tax administration for tax years beginning with 2011, except for 2012 through 2016, which were assessed in the Company’s favor, and are subject to examination from 2017 and forward. These examinations may result in proposed adjustments to the income taxes as filed during these periods. Management regularly assesses the likelihood of outcomes resulting from income tax examinations to determine the adequacy of their provision for income taxes and believes their provision for unrecognized tax benefits is adequate. The estimated potential reduction in the Company’s unrecognized tax benefits in the next 12 months would not be material.

As of December 31, 2024, no other income taxes (state or foreign) have been provided on undistributed earnings of approximately $58.0 million from the Company’s international subsidiaries since these earnings have been, and under current plans will continue to be, indefinitely reinvested outside the United States, with the exception of France. If the non-France earnings were distributed, the Company would incur approximately $1.4 million of foreign withholding taxes and an immaterial amount of U.S. taxes.