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Income Taxes
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The components of income before provision for income taxes were as follows for the years ended December 31, 2023, 2022 and 2021 (in thousands):
 
202320222021
U.S.$20,146 $61,383 $70,300 
Foreign632,381 596,620 657,921 
Income before provision for income taxes$652,527 $658,003 $728,221 

The provision for income taxes consisted of the following for the years ended December 31, 2023, 2022 and 2021 (in thousands):
 
202320222021
Current tax provision:
Federal$23,406 $49,808 $11,824 
State6,731 9,214 8,515 
Foreign99,223 172,645 90,026 
Deferred tax benefit:
Federal(18,213)(73,826)(33,366)
State(6,692)(18,657)(14,611)
Foreign(2,536)(16,595)(4,358)
Change in valuation allowance4,454 4,107 4,541 
Total$106,373 $126,696 $62,571 
The Company’s effective tax rate differed from the U.S. federal statutory tax rate as follows for the years ended December 31, 2023, 2022 and 2021:
 
202320222021
U.S. federal income tax rate21.0 %21.0 %21.0 %
State taxes1.0 0.7 0.7 
Stock-based compensation3.6 2.0 0.1 
U.S. federal, state and foreign research and development credits(4.7)(5.1)(3.7)
Foreign earnings(6.5)(6.6)(7.3)
Nondeductible (nontaxable) foreign items(0.2)0.7 — 
Global intangible low-taxed income1.1 2.5 0.5 
Release of uncertain tax position reserve(0.4)(0.7)(1.0)
Intercompany sale of intellectual property0.6 4.0 — 
Valuation allowance0.7 0.6 0.6 
Foreign-derived intangible income
(1.1)(0.8)(0.5)
Other1.2 1.0 (1.8)
16.3 %19.3 %8.6 %

The components of the net deferred tax assets and liabilities and the related valuation allowance as of December 31, 2023 and 2022 were as follows (in thousands):
 
20232022
Accrued bonus$3,716 $21,181 
Deferred revenue14,223 11,925 
Operating lease liabilities116,752 125,567 
Stock-based compensation42,856 19,874 
NOLs19,791 18,172 
Tax credit carryforwards96,020 93,672 
Capitalized research and development costs108,592 43,215 
Convertible senior notes interest111,509 75,603 
Depreciation and amortization66,053 79,595 
Other21,856 28,879 
Deferred tax assets601,368 517,683 
Acquired intangible assets(12,126)(530)
Operating lease right-of-use assets(103,392)(113,118)
Deferred commissions(14,752)(12,949)
Capitalized internal-use software development costs(31,719)(30,559)
Deferred tax liabilities(161,989)(157,156)
Valuation allowance(45,704)(41,250)
Net deferred tax assets$393,675 $319,277 

As summary of activity in the valuation allowance on deferred tax assets for the years ended December 31, 2023, 2022 and 2021 is as follows (in thousands):

202320222021
Beginning balance$41,250 $37,143 $32,602 
Charges to income tax expense4,814 4,392 4,707 
Release of valuation allowance(360)(285)(166)
Ending balance$45,704 $41,250 $37,143 
Valuation allowances will be recognized on deferred tax assets if it is more-likely-than-not that some or all of the deferred tax assets will not be utilized. In measuring deferred tax assets, the Company considers all available evidence, both positive and negative, to determine whether a valuation allowance is needed. As of December 31, 2023, the Company recorded a $45.7 million valuation allowance against deferred tax assets related to state and foreign tax credits, foreign tax deductions and state and foreign NOLs in which it is more-likely-than-not that such attributes will expire prior to utilization. The increase in the valuation allowance during 2023 was $4.5 million. The increase in the valuation allowance is primarily related to state tax credits and foreign tax deductions.

The Company's NOL and tax credit carryforwards in U.S. federal, state and foreign jurisdictions as of December 31, 2023 and 2022 were as follows (in thousands, except years):

20232022Expirations at Various Dates Through:
NOL carryforwards:
Federal$32,700 $30,100 2037
State33,100 22,400 2043
Foreign42,600 40,100 2039
Federal and state research and development tax credit and other credit carryforwards125,200 121,300 2038

A portion of the Company's U.S. federal, state and foreign NOL carryforwards relate to acquisitions completed between 2012 and 2023.

As of December 31, 2023, accumulated earnings outside the U.S. totaled $2.1 billion, the majority of which have been taxed due to the one-time transition tax on the mandatory deemed repatriation of cumulative foreign earnings and the tax on global intangible low-taxed income required by the U.S. Tax Cuts and Jobs Act ("TCJA"). No provision for U.S. state income taxes and foreign withholding taxes has been provided for any remaining undistributed foreign earnings not subject to tax under the TCJA, or any additional basis differences inherent in the Company's international subsidiaries, as these amounts continue to be indefinitely reinvested. Determination of the amount of the unrecognized deferred tax liability on outside basis differences is not practicable because of the complexity of laws and regulations, the varying tax treatment of alternative repatriation scenarios and the variation due to multiple potential assumptions relating to the timing of any future repatriation.

The changes in the Company’s unrecognized tax benefits for the years ended December 31, 2023, 2022 and 2021 were as follows (in thousands):

202320222021
Balance at beginning of year$67,958 $22,563 $24,105 
Gross increases – tax positions of prior periods2,074 3,880 4,293 
Gross increases – current period tax positions4,091 45,975 3,607 
Gross decreases – tax positions of prior periods(3,685)(688)(816)
Gross decreases – lapse of applicable statute of limitations(1,780)(3,772)(8,626)
Balance at end of year$68,658 $67,958 $22,563 

As of December 31, 2023, 2022 and 2021, the Company had $39.1 million, $38.3 million and $23.1 million of unrecognized tax benefits, respectively. Total interest and penalties for unrecognized tax benefits includes $11.0 million, $8.6 million and $7.2 million as of December 31, 2023, 2022 and 2021, respectively. Interest and penalties related to unrecognized tax benefits are recorded in the provision for income taxes and were $2.4 million, $2.0 million and $0.5 million for the years ended December 31, 2023, 2022 and 2021, respectively. The amount of unrecognized tax benefits that, if recognized, would impact the effective income tax rate is $36.0 million.

As of December 31, 2023, it is reasonably possible that $3.8 million of unrecognized tax benefits may be recognized within the next 12 months due to the expiration of local statutes of limitations. Certain U.S. state and foreign income tax returns from 2015 through 2021 are currently under audit. The Company has reserved for those positions that are not more-likely-than-not to be sustained.