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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The following is a geographical breakdown of income (loss) before income taxes:
Year Ended December 31,
202420232022
(In thousands)
Domestic$19,757 $(28,105)$369 
Foreign5,836 7,997 (2,822)
Income (loss) before income taxes$25,593 $(20,108)$(2,453)
The provision for (benefit from) income taxes consisted of the following:
Year Ended December 31,
202420232022
(In thousands)
Current:
Federal$21,805 $8,556 $17,973 
State4,964 1,471 8,024 
Foreign846 840 192 
Total current income taxes27,615 10,867 26,189 
Deferred:
Federal(14,416)(8,002)(25,753)
State115 (2,261)(7,976)
Foreign(252)(341)(561)
Total deferred income taxes(14,553)(10,604)(34,290)
Total provision for (benefit from) income taxes$13,062 $263 $(8,101)
The provision for (benefit from) income taxes differs from the amount computed by applying the statutory federal tax rate as follows:
Year Ended December 31,
202420232022
(In thousands)
U.S. federal tax provision at statutory rate$5,375 $(4,223)$(515)
State taxes4,037 (624)38 
Section 162(m) limitation531 1,286 3,071 
Non-deductible expenses510 531 134 
Uncertain tax positions(881)(620)(776)
Share-based compensation tax expense (benefit)6,078 7,384 (3,264)
Research tax credits(3,531)(4,587)(6,948)
Gain on extinguishment of debt477 — — 
Foreign-derived intangible income deduction(229)(325)(753)
Global intangible low-taxed income inclusion826 — 960 
Foreign rate differential122 219 186 
Foreign branch taxes(7)6 (51)
Transaction cost— — 68 
Provision to return true up(244)697 (84)
State rate true up— 528 (135)
Other(2)(9)(32)
Total provision for (benefit from) income taxes$13,062 $263 $(8,101)
The Organization for Economic Co-Operation and Development (OECD) introduced Base Erosion and Profit Shifting (BEPS) Pillar Two rules that impose a global minimum tax rate of 15% on multi-national corporations. The rules are effective for the Company’s financial year beginning January 1, 2024. Numerous countries have enacted or substantively enacted legislation to implement these rules. While the Company did not have an impact from Pillar Two on its tax provision or effective tax rate as of the year ended December 31, 2024, the Company continues to monitor evolving tax legislation in the jurisdictions in which it operates.
Significant components of the Company’s deferred tax assets (liabilities) were as follows:
December 31,
20242023
(In thousands)
Deferred tax assets (liabilities):
Deferred revenues$23,550 $11,343 
Share-based compensation9,915 11,763 
Inventory-related items6,055 5,136 
Tax credit carryforwards12,843 12,505 
Reserves and accruals8,384 5,660 
Loss carryforwards6,493 7,802 
Lease liability10,615 11,457 
Convertible debt11,276 9,649 
Capitalized research and development49,380 41,635 
Other, net1,580 591 
Gross deferred tax assets140,091 117,541 
Valuation allowance— — 
Total net deferred tax assets140,091 117,541 
Intangibles(27,057)(30,366)
Depreciation and amortization(35,759)(35,402)
Prepaid expenses(14,466)(13,858)
Right-of-use assets(6,448)(6,626)
Other, net— (8)
Total deferred tax liabilities(83,730)(86,260)
Net deferred tax assets $56,361 $31,281 
Deferred income tax assets (liabilities) are provided for temporary differences that will result in future tax deductions or future taxable income, as well as the future benefit of tax credit carryforwards. The Company recognizes deferred tax assets to the extent that it believes these assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing temporary differences, projected future taxable income, tax planning strategies, and results of recent operations. As of December 31, 2024 and 2023, the Company does not have a valuation allowance against any of its deferred tax assets.
As of December 31, 2024, the Company had no federal net operating loss carryforward and $9.5 million of state net operating loss carryforwards. The Company also has $18.7 million of foreign net operating losses carried forward indefinitely. For income tax purposes, the Company had no federal research tax credit carryforward and a California research tax credit carryforward of $21.6 million. California research tax credits are carried forward indefinitely to reduce cash taxes payable.
It is the Company’s practice and intention to reinvest the earnings of its non-U.S. subsidiaries in those operations. As of December 31, 2024, the Company has not made a provision for U.S. federal income, withholding, and state income taxes on the outside basis difference related to certain foreign subsidiaries because earnings are intended to be indefinitely reinvested in operations outside the U.S.
The Company files income tax returns in the United States and various state and foreign jurisdictions. In the normal course of business, the Company is subject to examinations by taxing authorities, including major jurisdictions such as the United States, Germany, Italy, France, the United Kingdom and India. With few exceptions, as of December 31, 2024, the Company was no longer subject to U.S., state, and foreign tax examinations for years before 2021, 2020, and 2020, respectively.
The following table summarizes the aggregate change in the balance of gross unrecognized tax benefit, which excludes interest and penalties:
(In thousands)
Balance as of December 31, 2021$8,961 
Increases related to tax positions taken during a prior period3 
Decreases related to tax positions taken during the prior period(59)
Increases related to tax positions taken during the current period1,629 
Decreases related to expiration of statute of limitations(1,238)
Balance as of December 31, 20229,296 
Increases related to tax positions taken during a prior period750 
Decreases related to tax positions taken during the prior period(161)
Increases related to tax positions taken during the current period1,566 
Decreases related to expiration of statute of limitations(703)
Balance as of December 31, 202310,748 
Increases related to tax positions taken during a prior period
4 
Decreases related to tax positions taken during the prior period(138)
Increases related to tax positions taken during the current period1,163 
Decreases related to settlements(333)
Decreases related to expiration of statute of limitations(952)
Balance as of December 31, 2024$10,492 
The total amount of gross unrecognized tax benefit that, if realized, would favorably affect the Company’s effective income tax rate in future periods, was $10.5 million and $10.7 million as of December 31, 2024 and 2023, respectively. The Company recognizes interest and penalties related to uncertain tax positions in interest and other income (expense), net in the Consolidated Statements of Operations, accruing $0.3 million, $0.2 million, and $0.2 million for the years ended December 31, 2024, 2023, and 2022, respectively. Accrued interest and penalties are included within other long-term liabilities on the Consolidated Balance Sheets. The combined amount of cumulative accrued interest and penalties was approximately $0.6 million, $0.4 million, and $0.2 million for the years ended December 31, 2024, 2023, and 2022, respectively. The Company does not believe there will be any significant changes in its unrecognized tax positions over the next twelve months.