Provision for Income Taxes

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Provision for Income Taxes

Provision for Income Taxes

The U.S. and non-U.S. components of loss before income taxes consisted of the following:

	December 31,
	2021		2020
U.S.	$	(114,127)	$	(138,119)
Non-U.S.	3,024		1,915
Loss before income taxes	$	(111,103)	$	(136,204)

The components of the Company's (benefit from) provision for income taxes consisted of the following:

	Year Ended December 31,
	2021		2020		2019
Current taxes:
Foreign	$	959	$	(104)	$	918
State	144		240		101
Total current taxes	$	1,103	$	136	$	1,019
Deferred taxes:
Federal	$	419	$	508	$	129
Change in valuation allowance - acquisitions	(74)		—		(14,994)
Foreign	(127)		180		(113)
State	322		592		1,472
Total deferred taxes	540		1,280		(13,506)
(Benefit from) provision for income taxes	$	1,643	$	1,416	$	(12,487)

The Company had federal net operating loss carryforwards of approximately $633.8 million and $536.5 million at December 31, 2021 and 2020, respectively, which $201.2 million will expire at various dates beginning in 2026, if not utilized, and $432.6 million have an indefinite carryforward period. Federal net operating losses generated during and after the year ended December 31, 2018 will have an indefinite carryforward period. The Company also held state tax credits of $3.0 million and $2.2 million for the years ended December 31, 2021 and 2020, respectively, and federal R&D tax credits of $8.9 million and $8.2 million for the years ended December 31, 2021 and 2020, respectively. The federal and state R&D tax credit carry overs will begin to expire in 2033, if not utilized.

Utilization of the net operating losses and credit carryforwards may be subject to a substantial annual limitation due to the "change in ownership" provisions of the Internal Revenue Code of 1986. The annual limitation may result in the expiration of net operating losses and credit carryforwards before utilization.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company's deferred taxes consisted of the following:

	December 31,
	2021		2020
Deferred tax assets:
NOL and credit carryforwards	$	161,425	$	140,897
Deferred revenue	16,406		14,197
Accrued expenses and other	8,093		8,254
Stock-based compensation	7,776		6,087
Lease liabilities	17,160		10,668
Interest expense carryforwards	14,795		13,550
Convertible debt hedge	15,074		19,518
Total deferred tax assets	240,729		213,171
Deferred tax liabilities:
Deferred expenses	(12,371)		(12,667)
Convertible debt	(28,615)		(36,044)
Depreciation and amortization	(27,779)		(29,675)
Capitalized software	(1,657)		(538)
Right of use assets	(12,737)		(8,478)
Total deferred tax liabilities	(83,159)		(87,402)
Deferred tax assets less tax liabilities	157,570		125,769
Less: valuation allowance	(159,778)		(127,362)
Net deferred tax liability	$	(2,208)	$	(1,593)

The Company has established a valuation allowance due to uncertainties regarding the realization of deferred tax assets based on the Company's lack of earnings history. During 2021, the valuation allowance increased by approximately $33.5 million due to continuing operations and $2.1 million due to the current year acquisition. The valuation allowance included a reduction of $3.2 million related to a convertible debt transaction and is recorded to paid in capital.

At December 31, 2021, the Company did not provide any U.S. income or foreign withholding taxes on approximately $5.7 million of certain foreign subsidiaries' undistributed earnings, as such earnings have been retained and are intended to be indefinitely reinvested. It is not practicable to estimate the amount of any taxes that would be payable upon remittance of these earnings, because such tax, if any, is dependent upon circumstances existing if and when remittance occurs.

The Company's benefit from (provision for) income taxes attributable to continuing operations differs from the expected tax benefit amount computed by applying the statutory federal income tax rate of 21% to income before taxes for each of the years ended December 31, 2021, 2020, and 2019, respectively, primarily as a result of the following:

	Year Ended December 31,
	2021		2020		2019
Income tax at U.S. statutory rate	21.0	%	21.0	%	21.0	%
Effect of:
Increase in deferred tax valuation allowance	(30.2)		(35.8)		(50.6)
Stock compensation	14.5		11.4		20.7
Acquisitions	(0.2)		(0.6)		15.8
R&D credit	—		0.1		4.8
State taxes, net of federal benefit	3.9		4.6		7.1
Change in uncertain tax positions	(2.2)		—		—
Executive compensation	(7.4)		(2.5)		(3.3)
Other permanent items	(0.9)		0.9		(0.4)
Income tax benefit (provision) effective rate	(1.5)	%	(0.9)	%	15.1	%

The Company files income tax returns in the U.S. federal jurisdiction, several state jurisdictions, and several foreign jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state or local income tax examinations by tax authorities for years before 2018. Operating losses generated in years prior to 2018 remain open to adjustment until the statute of limitations closes for the tax year in which the net operating losses are utilized. The tax years 2018 through 2021 remain open to examination by all the major taxing jurisdictions to which the Company is subject, and the Company is currently under examination by the state of Texas.

The total amount of uncertain tax positions as of December 31, 2021 and 2020 was $2.6 million and $0.4 million, respectively. The reconciliation of uncertain tax positions at the beginning and end of the year is as follows:

	Year Ended December 31,
	2021		2020
Beginning balance	$	358	$	10,738
Gross increase (decrease) related to prior year positions	2,568		(10,460)
Gross decrease related to settlements	(358)		—
Gross increase related to current year positions	—		80
Ending balance	$	2,568	$	358

At December 31, 2021, approximately $2.6 million, including interest, would reduce the Company's annual effective tax rate, if recognized. As of December 31, 2021, the Company had no accrued interest. The Company believes it is reasonably possible that $2.6 million of its unrecognized tax benefits will be resolved within the next 12 months due to amended state tax returns. The Company records any interest and penalties related to unrecognized tax benefits in income tax expense.