v3.24.4
Income Taxes
 12 Months Ended
Nov. 30, 2024
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The components of income before income taxes are as follows:
 
Fiscal Year Ended
(in thousands)November 30, 2024November 30, 2023November 30, 2022
U.S.$73,746 $70,659 $103,917 
Foreign20,518 8,998 13,338 
Total$94,264 $79,657 $117,255 

The provision for income taxes is comprised of the following:
 
Fiscal Year Ended
(in thousands)November 30, 2024November 30, 2023November 30, 2022
Current:
Federal$23,768 $28,905 $20,118 
State4,635 4,373 5,039 
Foreign5,173 4,823 4,631 
Total current33,576 38,101 29,788 
Deferred
Federal(7,868)(22,763)(4,683)
State(163)(1,592)(1,537)
Foreign281 (4,286)(1,382)
Total deferred(7,750)(28,641)(7,602)
Total$25,826 $9,460 $22,186 
A reconciliation of the income taxes incurred at the U.S. federal statutory rate compared to the effective tax rate is as follows:
 
Fiscal Year Ended
(in thousands)November 30, 2024November 30, 2023November 30, 2022
Tax at U.S. federal statutory rate$19,795 $16,728 $24,624 
Foreign rate differences(728)(644)475 
Effects of foreign operations included in U.S. federal provision1,158 447 401 
State income taxes, net1,480 1,814 2,424 
Research credits(2,513)(894)(1,268)
Nondeductible stock-based compensation2,625 2,498 2,725 
Meals and entertainment155 162 185 
Compensation subject to 162(m)1,028 928 878 
Uncertain tax positions and tax settlements(108)(1,056)(163)
Net excess tax benefit from stock-based compensation plans(1,419)(2,058)(266)
Global intangible low tax inclusion797 244 17 
Foreign derived intangible deduction(10,218)(8,297)(7,769)
Tax on unremitted earnings13,889 — — 
Other(115)(412)(77)
Total$25,826 $9,460 $22,186 

The components of deferred tax assets and liabilities are as follows:
 
(in thousands)November 30, 2024November 30, 2023
Deferred tax assets:
Accounts receivable$163 $174 
Accrued compensation6,919 5,101 
Accrued liabilities and other5,638 2,511 
Deferred revenue40,199 20,204 
Stock-based compensation10,138 9,459 
Original issue discount12,055 5,135 
Tax credit and loss carryforwards23,654 34,948 
Operating lease liabilities6,335 3,208 
Capitalized research and development36,006 20,814 
Gross deferred tax assets141,107 101,554 
Valuation allowance(1,656)(2,381)
Total deferred tax assets139,451 99,173 
Deferred tax liabilities:
Goodwill(27,646)(25,454)
Right-of-use lease assets(5,200)(2,196)
Depreciation and amortization(34,385)(55,962)
Unremitted earnings of foreign subsidiaries(13,674)— 
Prepaid expenses(4,646)(4,083)
Total deferred tax liabilities(85,551)(87,695)
Total$53,900 $11,478 

Under provisions of the Tax Cuts and Jobs Act pursuant to Internal Revenue Code Section 174, beginning in fiscal year 2023 specific research and experimental ("R&E") expenditures are now required to be capitalized and amortized over five years for U.S. R&E and fifteen years for foreign R&E.
The valuation allowance primarily applies to net operating loss carryforwards in foreign jurisdictions under conditions where realization is not more likely than not. The $0.9 million decrease in the valuation allowance during fiscal year 2024 primarily relates to losses in a foreign subsidiary that have expired prior to utilization.

At November 30, 2024, we have federal and foreign net operating loss carryforwards of $35.2 million expiring on various dates through 2035 and $36.7 million that do not expire. In addition, we have state net operating loss carryforwards of $39.9 million expiring on various dates through 2043 and $15.6 million that do not expire. At November 30, 2024, we have state tax credit carryforwards of approximately $1.7 million expiring on various dates through 2039 and $3.2 million that may be carried forward indefinitely. In addition, we have federal tax credit carryforwards of approximately $5.9 million expiring on various dates through 2039.

During the fourth quarter of 2024, we made the determination that a substantial portion of unremitted foreign earnings are no longer indefinitely reinvested. We made the decision as a direct result of changes in business needs related to the acquisition of ShareFile. As a result of the acquisition, the Company plans to utilize worldwide cash based on the needs of the parent entity. These amounts will be repatriated as needed. At November 30, 2024 we maintain a deferred tax liability of $13.7 million for the U.S. federal, state and foreign withholding taxes expected to be imposed upon the repatriation of unremitted foreign earnings that are not considered indefinitely reinvested. There is approximately $30.0 million of unremitted foreign earnings which are deemed to be indefinitely reinvested to support the working capital requirements of our foreign subsidiaries. A determination of the deferred tax liability on this amount is not practicable due to the complexities, variables and assumptions inherent in the hypothetical calculations.

As of November 30, 2024, the total amount of unrecognized tax benefits was $5.2 million, of which $1.3 million was recorded in other noncurrent liabilities on the consolidated balance sheet and $3.9 million as a reduction of deferred tax assets, principally related to U.S net operating loss carry-forwards and federal and state research and development tax credits.

A reconciliation of the balance of our unrecognized tax benefits is as follows:
Fiscal Year Ended
(in thousands)November 30, 2024November 30, 2023November 30, 2022
Balance, beginning of year$5,172 $5,276 $5,471 
Tax positions related to a prior period416 19 — 
Tax positions acquired311 423 — 
Settlements with tax authorities— (367)(45)
Lapses due to expiration of the statute of limitations(665)(179)(150)
Balance, end of year$5,234 $5,172 $5,276 

If recognized, all amounts of unrecognized tax benefits would affect the effective tax rate.

We recognize interest and penalties related to uncertain tax positions as a component of our provision for income taxes. There was a minimal amount of estimated interest and penalties recorded in the provision for income taxes in the periods presented. We have accrued $0.3 million and $0.5 million of estimated interest and penalties at November 30, 2024 and 2023, respectively. We do not expect any significant changes to the amount of unrecognized tax benefits in the next twelve months.

Our federal income tax returns have been examined or are closed by statute for all years prior to fiscal year 2021. Our state income tax returns have been examined or are closed by statute for all years prior to fiscal year 2020, and we are no longer subject to audit for those periods. Tax authorities for certain non-U.S. jurisdictions are also examining tax returns for various years dating back to 2016 and the Company does not expect the results of these examinations to be material to our consolidated balance sheets, cash flows or statements of income. With some exceptions, we are generally no longer subject to tax examinations in non-U.S. jurisdictions for years prior to fiscal year 2019.