v3.25.0.1
Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The components of income/(loss) before income taxes consist of the following:
 Year ended December 31,
 202420232022
Domestic$72,286 $100,905 $80,949 
Foreign189,061 137,036 109,150 
$261,347 $237,941 $190,099 
Income tax expense/(benefit) consists of the following:
 Year ended December 31,
 202420232022
Current provision:
Domestic$41,230 $51,450 $43,416 
Foreign41,591 33,828 23,701 
$82,821 $85,278 $67,117 
Deferred provision/(benefit):
Domestic$(19,172)$(32,024)$(17,624)
Foreign(713)282 (1,928)
(19,885)(31,742)(19,552)
Income tax expense$62,936 $53,536 $47,565 

Deferred income taxes recognized in OCI were as follows:
Year ended December 31,
202420232022
Deferred taxes benefit / (expense) recognized on:
Unrealized gain/(loss) on cash flow hedges$2,559 $(3,313)$5,860 
Reclassification adjustment for cash flow hedges339 (797)455 
Retirement benefits402 (63)(231)
Reclassification adjustment for retirement benefits33 (74)(179)
Currency translation adjustments3,129 (156)10,032 
Total$6,462 $(4,403)$15,937 
The effective income tax rate differs from the amount computed by applying the U.S. federal statutory income tax rate to income before income taxes approximately as follows:
 Year ended December 31,
 202420232022
Expected tax expense$54,883 $49,968 $39,921 
Foreign tax rate differential1,164 5,333 (1,136)
Unrecognized tax benefits704 (187)273 
State taxes, net of Federal taxes10,724 11,640 7,730 
Non-deductible expenses10,330 8,655 10,087 
Excess tax benefit on stock-based compensation(9,714)(15,055)(5,881)
Research and development credits(5,257)(5,350)(2,733)
Others102 (1,468)(696)
Tax expense$62,936 $53,536 $47,565 
The effective tax rate increased from 22.5% during the year ended December 31, 2023 to 24.1% during the year ended December 31, 2024. The Company recorded income tax expense of $62,936 and $53,536 for the years ended December 31, 2024 and 2023, respectively. The increase in income tax expense was primarily as a result of higher profit, increase in non-deductible expenses and lower excess tax benefits related to stock-based compensation, partially offset by decrease in foreign tax rate differential during the year ended December 31, 2024 compared to the year ended December 31, 2023.
During the year ended December 31, 2024, some of the Company’s foreign subsidiaries repatriated $38,161 (net of $2,649 withholding taxes) to the United States. As of December 31, 2024, and December 31, 2023, accumulated net earnings generated by our foreign operations were approximately $658,454 and $546,828 respectively, of which $635,396 and $546,828 respectively, are indefinitely reinvested. Because most of the accumulated net earnings generated by our foreign operations has already been taxed for U.S. federal and state income tax purposes, any additional taxes due with respect to the repatriation of such earnings would generally be limited to the tax effect of currency gains or losses recognized on repatriation and foreign withholding taxes.
The components of the deferred tax balances were as follows:
 As of
 December 31, 2024December 31, 2023
Deferred tax assets:
Tax credit carry forwards$8,058 $9,954 
Depreciation and amortization expense18,178 14,569 
Capitalized research and development expenses54,844 47,276 
Stock-based compensation10,902 8,506 
Accrued employee costs and other expenses33,897 21,670 
Net operating loss carry forwards281 212 
Net unrealized foreign exchange loss20,242 15,447 
Right-of-use assets20,125 19,042 
Others339 414 
166,866 137,090 
Valuation allowance(3,172)(482)
Deferred tax assets$163,694 $136,608 
Deferred tax liabilities:
Intangible assets$29,883 $27,095 
Net unrealized gain on investments4,018 3,704 
Capitalized costs7,665 5,999 
Lease liability16,586 16,188 
Others2,198 2,190 
      Deferred tax liabilities$60,350 $55,176 
Net deferred tax assets$103,344 $81,432 
    
Deferred tax assets and liabilities are recognized for future tax consequences attributable to temporary differences between the financial statement carrying values of assets and liabilities and their respective tax bases and operating loss carry forwards. The Company performed an analysis of the realizability of deferred tax assets as of December 31, 2024, and 2023, and recorded a valuation allowance of $3,172 and $482, respectively.
The Company has state research and development tax credit carryforwards as of December 31, 2024 of $4,083 (tax effected $3,226, net of federal benefit) that will expire by 2034, if not utilized. The Company has state net operating loss carryforwards as of December 31, 2024 of $5,515 (tax effected $281, net of federal benefit) of which $4,992 (tax effected $174, net of federal benefit) is allowed to be carried forward indefinitely and the balance will expire by 2039, if not utilized.
The Company’s income tax expense also includes provisions established for uncertain income tax positions determined in accordance with ASC Topic 740, Income Taxes. The Company monitors and adjusts these reserves in light of changing facts and circumstances. To the extent that the final tax outcome of these matters differs from the amounts recorded, such differences will impact the income tax expense in the period in which such determination is made.
The following table summarizes the activity related to the unrecognized tax benefits:
Year ended December 31,
202420232022
Balance as of January 1$1,262 $1,449 $1,068 
Additions based on tax positions related to the current year561 423 223 
Additions based on tax positions of prior years316 112 158 
Reductions for tax positions due to lapse of statutes of limitations(173)(722)— 
Balance as of December 31$1,966 $1,262 $1,449 
The unrecognized tax benefits as of December 31, 2024 of $1,966, if recognized, would impact the effective tax rate.
For the years ended December 31, 2024 and 2023, the Company has not accrued interest and penalties relating to unrecognized tax benefits.