Income Taxes (Tables)

12 Months Ended

Dec. 31, 2023

Schedule of Income before Income Tax, Domestic and Foreign

The domestic and foreign components of income before provision for income taxes were as follows (in thousands):


	December 31,
	2023		2022		2021
Domestic	$	5,371	$	32,945	$	61,822
Foreign	5,134		4,522		2,981
Income before provision for income taxes	$	10,505	$	37,467	$	64,803

Schedule of Components of Income Tax Expense (Benefit)

The provision for income taxes consisted of the following (in thousands):


	December 31,
	2023		2022		2021
Current provisions for income taxes:
Federal	$	11,059	$	11,379	$	2,437
State	2,026		2,060		714
Foreign	1,947		1,349		295
Total current tax expense	15,032		14,788		3,446

Deferred tax expense (benefit):
Federal	(11,825)		(5,491)		4,513
State	(1,391)		(769)		251
Foreign	(192)		234		(11)
Total deferred tax expense (benefit)	(13,408)		(6,026)		4,753
Total provision for income taxes	$	1,624	$	8,762	$	8,199

Schedule of Effective Income Tax Rate Reconciliation

The following table presents a reconciliation of the U.S. federal statutory income tax rate to the Company’s effective tax rate for the periods presented:


	December 31,
	2023		2022		2021
Federal statutory income tax rate	21.00	%	21.00	%	21.00	%
State after-tax rate	2.82		3.45		1.49
Stock options	19.25		2.67		(10.38)
Research credit	(10.20)		(4.51)		(1.37)
Transfer pricing reserve	1.54		0.76		(1.26)
Foreign rate differential	4.64		(0.02)		0.73
GILTI	(11.62)		3.30		—
Foreign derived intangible income	(22.57)		(5.43)		(0.48)
Section 162(m) limitation	7.18		2.59		2.49
Acquisition-related costs	1.22		(0.65)		—
Other	2.18		0.27		0.42
Effective tax rate	15.44	%	23.43	%	12.64	%

Schedule of Deferred Tax Assets and Liabilities

Significant components of the Company’s deferred tax assets and liabilities were as follows (in thousands):


	December 31,
	2023		2022		2021
Deferred tax assets:
Net operating loss carryforwards	$	811	$	263	$	56
Accruals and allowances	1,489		1,067		1,104
Tax credits	2,023		1,954		1,396
Stock-based compensation	6,967		4,907		3,171
Unrealized gain on equity investment	—		124		—
Intangibles assets	816		907		1,010
Lease obligation	4,081		5,074		5,226
R&D capitalization	15,419		—		—
Other	931		1,222		808
Total deferred tax assets	32,537		15,518		12,771
Valuation allowance	(2,023)		(1,954)		(1,396)
Total deferred tax assets, net of valuation allowance	30,514		13,564		11,375
Deferred tax liabilities:
Property, equipment, and software	(9,273)		(3,905)		(8,316)
Goodwill	(956)		(843)		(749)
Prepaid expense	(1,023)		(1,188)		(1,365)
Right-of-use asset	(3,933)		(5,158)		(5,201)
Acquired intangibles	(1,449)		(1,996)		—
Unrealized loss on equity investment	—		—		(1,296)
Total deferred tax liabilities	(16,634)		(13,090)		(16,927)
Net deferred income tax asset (liabilities)	$	13,880	$	474	$	(5,552)

Summary of Income Tax Contingencies

The activity related to the unrecognized income tax benefits is as follows (in thousands):


	Year Ended December 31,
	2023		2022		2021
Gross unrecognized income tax benefits — beginning balance	$	4,303	$	2,364	$	3,208
Increases related to tax positions taken during the current year	1,104		1,788		649

Increases related to tax positions taken during the prior years	—		386		—
Decreases related to tax positions taken during the prior years	(1,026)		(235)		(1,493)
Gross unrecognized income tax benefits — ending balance	$	4,381	$	4,303	$	2,364