v3.25.0.1
Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
(Loss) income before income tax expense (benefit) for the years ended December 31, 2024, 2023 and 2022 is as follows (in thousands):
 202420232022
(Loss) income before income tax expense (benefit):
Domestic$(43,086)$(62,489)$(90,058)
Foreign(37,589)(34,608)(69,284)
Total$(80,675)$(97,097)$(159,342)
Income tax expense (benefit)
Current:   
Federal$(35)$— $(41)
State581 391 176 
Foreign79 — 17 
Total current tax expense$625 $391 $152 
Deferred:
Federal$(340)$(373)$614 
State9 602 (647)
Foreign(2,243)(9,749)(15,211)
Total deferred tax benefit$(2,574)$(9,520)$(15,244)
Total tax benefit$(1,949)$(9,129)$(15,092)
A reconciliation of the differences between the effective tax rate and the federal statutory tax rate for the years ended December 31, 2024, 2023 and 2022 is as follows:
 202420232022
Federal statutory tax rate21.00 %21.00 %21.00 %
State income taxes, net of federal income tax benefit0.62 %1.01 %2.06 %
Transaction Costs(0.08)%(0.03)%(0.01)%
Penalties(0.04)%— %(0.03)%
Compensation expense(6.49)%(4.13)%(2.17)%
Uncertain Tax Positions(0.29)%— %— %
Capped call interest— %— %4.50 %
Tax credits(0.18)%0.90 %1.32 %
Return to provision and other deferred tax adjustments0.17 %(0.04)%(0.22)%
Foreign tax rate differential3.58 %1.20 %1.20 %
Enacted Rate Changes(0.19)%1.02 %— %
Other, net(0.77)%(0.08)%(0.12)%
Valuation allowance(14.91)%(11.45)%(18.07)%
Effective tax rate2.42 %9.40 %9.46 %
At December 31, 2024 and 2023, deferred income tax assets and liabilities consisted of the following (in thousands):
 20242023
Deferred tax assets:
Accrued compensation$9,712 $9,157 
Net operating loss carry-forwards110,887 114,856 
Tax credits11,487 11,076 
Stock-based compensation3,860 2,622 
Operating lease liabilities16,238 18,764 
Interest expense— 1,026 
Convertible debt discount3,262 4,319 
Research expenditures7,275 5,234 
Other2,772 3,313 
     Gross deferred tax assets165,493 170,367 
     Less: valuation allowance(83,893)(76,281)
Total deferred tax assets$81,600 $94,086 
Deferred tax liabilities:
Operating lease right-of-use assets$(15,166)$(18,088)
Intangible assets (85,809)(94,004)
Property and equipment(2,135)(6,279)
Total deferred tax liabilities $(103,110)$(118,371)
Net deferred income tax liabilities$(21,510)$(24,285)
At December 31, 2024, the Company has federal net operating loss carry forwards of approximately $254.7 million, foreign net operating loss carryforwards of approximately $231.2 million, including $216.6 million in the United Kingdom, and state net operating loss carry forwards of approximately $174.6 million. Federal net operating loss (“NOLs”) carry forwards will begin to expire in 2034. Under the Tax Act, as modified by the CARES Act, the Company’s federal NOLs generated in tax years ending after December 31, 2017 may be carried forward indefinitely, however, the deductibility of such federal net NOLs in tax years beginning after December 31, 2020, is limited to 80% of taxable income. State tax NOLs began to expire in 2026. NOLs in Switzerland and China begin to expire in 2029 and 2026, respectively, if not utilized in future periods. The NOLs in Singapore and the United Kingdom do not expire. As of December 31, 2024, the Company has federal R&D and other credit carryforwards of approximately $8.3 million that begin to expire in 2036 and state research and investment credit carryforwards of approximately $5.7 million that do not expire.
An ownership change of more than 50 percent could result in a limitation of the use of net operating loss carryforwards and credit carryforwards under IRC Section 382, IRC Section 383, and the regulations thereunder. Based on a completed formal study, there were no ownership changes in prior periods that would materially limit the use of the Company’s net operating loss carryforwards and credit carryforwards under IRC Section 382 and IRC Section 383.
Management assesses the recoverability of its deferred tax assets as of the end of each quarter, weighing all positive and negative evidence, and is required to establish and maintain a valuation allowance for these assets if it is more likely than not that some or all of the deferred tax assets will not be realized. The weight given to the evidence is commensurate with the extent to which the evidence can be objectively verified. If negative evidence exists, positive evidence is necessary to support a conclusion that a valuation allowance is not needed. As of December 31, 2024 and 2023, management determined that sufficient positive evidence did not exist and concluded that it is more likely than not that a valuation allowance is required against deferred tax assets. Accordingly, for 2024, management established a valuation allowance of $67.2 million related to the Company’s domestic operations, a valuation of $14.1 million related to the Company's United Kingdom operations, and a full valuation allowance of $2.8 million related to the Company’s China, Switzerland and Singapore operations.
The Company files income tax returns in the United States, as well as Singapore, Switzerland, China, United Kingdom and in various state jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment. For U.S. federal purposes, the Company has open tax years ended December 31, 2011 to December 31, 2024. For the United Kingdom the Company has open tax years ended December 31, 2023 to December 31, 2024.
The Company applied the accounting standard for uncertain tax positions and recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more likely than not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. Increases or decreases to the unrecognized tax benefits could result from management’s belief that a position can or cannot be sustained upon examination based on subsequent information or potential lapse of the applicable statute of limitation for certain tax positions.
The following are the unrecognized tax benefits as of December 31, 2024, 2023, and 2022 (in thousands):
202420232022
Unrecognized tax benefits - January 1$7,953 $3,159 $2,351 
Increases in prior year positions— — 82 
Reversals of prior year positions(1,010)— — 
Increases in tax positions taken in current year5,451 4,794 726 
Statute expirations— — — 
Unrecognized tax benefits - December 31$12,394 $7,953 $3,159 
Due to the valuation allowance, the majority of unrecognized tax benefits at December 31, 2024, if recognized, would not impact the Company’s effective tax rate. The interest and penalties related to the unrecognized tax benefit are immaterial. Interest and tax penalties related to unrecognized tax benefits are included in income tax expense. Although the timing and outcome of audit settlements are uncertain, it is unlikely there will be a significant reduction of the uncertain tax benefits in the next twelve months.