Income Taxes (Tables)

12 Months Ended

Dec. 31, 2022

Schedule of Components of Income Tax Expense (Benefit)

The components of our income tax expense are as follows (in thousands):


	Year Ended December 31,
	2022		2021		2020
Current
Federal	$	44,591	$	2,678	$	3,583
State	10,730		1,437		2,735
Foreign	680		894		438
Total Current	56,001		5,009		6,756
Deferred
Federal	(45,609)		(9,295)		(3,628)
State	(9,271)		(820)		372
Foreign	(159)		—		—
Total Deferred	(55,039)		(10,115)		(3,256)
Total	$	962	$	(5,106)	$	3,500

Schedule of Effective Income Tax Rate Reconciliation

The difference between the income tax expense at the federal statutory rate and income tax expense in the consolidated statements of operations is as follows:


	Year Ended December 31,
	2022		2021		2020
Federal statutory rate	21.0	%	21.0	%	21.0	%
State income tax expense, net of federal benefits	1.0		(1.0)		1.4
Nondeductible meals and entertainment	0.9		0.5		0.1

Foreign-derived intangible income deduction	(7.0)		(1.7)		(1.4)
Valuation allowance	0.4		1.1		1.3
Research and development tax credits	(16.5)		(17.7)		(9.4)
Tax windfall benefits	(3.0)		(18.8)		(8.8)

Foreign withholding tax	1.2		1.9		0.5
Nondeductible compensation	1.8		1.9		—
Other	1.9		1.7		(0.3)
Effective rate	1.7	%	(11.1)	%	4.4	%

Schedule of Components of Deferred Tax Assets and Liabilities

The components of our net deferred tax assets (liabilities) are as follows (in thousands):


	December 31,
	2022		2021
Deferred tax assets, non-current
Provision for credit losses on accounts receivable	$	1,073	$	847
Depreciation	445		281

Accrued expenses	5,288		4,749
Deferred revenue	2,274		2,061
Operating lease liabilities	9,757		10,619

Stock-based compensation	22,191		15,461
Acquisition costs	2,363		2,627
Subsidiary unit compensation	—		804

Inventory reserve	654		439
Debt issuance costs	—		402
Net operating losses	3,492		1,262
Tax credits	3,085		9,405

Capitalized research and development expenditures	53,901		—
Other	786		577
Total deferred tax assets, non-current prior to valuation allowance	105,309		49,534
Valuation allowance	(2,591)		(2,209)
Total deferred tax assets, non-current, net of valuation allowance	102,718		47,325
Deferred tax liabilities, non-current
Intangible assets and prepaid patent licenses	(4,354)		(2,905)
Operating lease right-of-use assets	(7,134)		(7,534)
Depreciation	(5,828)		(6,446)
Sales commissions	(1,138)		(896)

Internally developed software	—		(147)
Equity investments	(79)		(92)
Convertible debt discount	—		(15,758)
Total deferred tax liabilities, non-current	(18,533)		(33,778)
Net deferred tax assets, non-current	$	84,185	$	13,547

Schedule of Unrecognized Tax Benefits Roll Forward

A reconciliation of the beginning and ending amounts of unrecognized tax benefits (without related interest expense) is as follows (in thousands):


	Year Ended December 31,
	2022		2021		2020
Beginning balance	$	5,541	$	4,228	$	3,065
Additions based on tax positions of the current year	1,881		1,526		1,166
Additions based on tax positions of prior year	225		15		656
Decreases based on tax positions of prior year	(51)		(10)		(259)

Decreases due to lapse of applicable statute of limitations	—		(218)		(400)
Ending balance	$	7,596	$	5,541	$	4,228