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Income Taxes
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
    The following are the domestic and foreign components of the Company’s income (loss) before income taxes for the years ended December 31, 2021, 2020, and 2019:
Year Ended
December 31, 2021December 31, 2020December 31, 2019
(in thousands)
Domestic$(105,168)$(57,253)$(28,063)
International10,180 4,514 1,073 
Loss before income taxes$(94,988)$(52,739)$(26,990)
    The following are the components of the provision (benefit) for income taxes for the years ended December 31, 2021, 2020, and 2019:
Year Ended
December 31, 2021December 31, 2020December 31, 2019
(in thousands)
Current:
Federal$128 $(144)$(153)
State1,515 15 28 
Foreign2,275 1,117 281 
Total current provision3,918 988 156 
Deferred:
Federal(89,404)9 (762)
State(8,296)(12)(174)
Foreign(1,271)(292)(732)
Total deferred benefit(98,971)(295)(1,668)
Total provision (benefit) for income taxes$(95,053)$693 $(1,512)
    The Company recorded an income tax benefit of $95.1 million for the year ended December 31, 2021 compared to an income tax expense of $0.7 million and income tax benefit of $1.5 million for the years ended December 31, 2020 and 2019, respectively. The tax benefit for the year ended December 31, 2021 was primarily the result of the deferred tax liability associated with acquisitions that occurred during the year and the tax liability associated with foreign subsidiaries. The tax expense for the year ended December 31, 2020 was primarily the result of the domestic valuation allowance and the tax liability associated with the foreign subsidiaries. The tax benefit for the year ended December 31, 2019 was the result of a deferred tax liability associated with the RTK.io acquisition, the release of a foreign valuation allowance resulting from a change to a cost-plus arrangement for a foreign subsidiary, the domestic valuation allowance, and the tax liability associated with foreign subsidiaries.
    Set forth below is a reconciliation of the components that caused the Company’s provision (benefit) for income taxes to differ from amounts computed by applying the U.S. Federal statutory rate of 21% for the years ended December 31, 2021, 2020, and 2019:
Year Ended
December 31, 2021December 31, 2020December 31, 2019
U.S. federal statutory income tax rate21.0 %21.0 %21.0 %
State income taxes, net of federal benefit5.6 %(0.2)%(0.1)%
Foreign loss at other than U.S. rates(0.5)%(0.5)%(4.3)%
Stock-based compensation expense31.7 %11.4 %3.5 %
Meals and entertainment(0.1)%(0.1)%(0.9)%
Other permanent items(1.6)%(1.1)%(1.2)%
Change in valuation allowance58.0 %(19.5)%(7.5)%
Sec 162(m) officers compensation(14.2)%(12.7)%(6.3)%
Provision to return adjustments0.2 %0.4 %1.4 %
Effective income tax rate100.1 %(1.3)%5.6 %
    Set forth below are the tax effects of temporary differences that give rise to a significant portion of the deferred tax assets and deferred tax liabilities as of December 31, 2021 and 2020:
December 31, 2021December 31, 2020
(in thousands)
Deferred Tax Assets:
Accrued liabilities$1,208 $1,568 
Lease liabilities18,499 8,943 
Stock-based compensation5,573 3,559 
Net operating loss carryovers131,509 117,707 
Tax credit carryovers5,308 4,882 
Other1,555 1,263 
Total deferred tax assets163,652 137,922 
Less valuation allowance(56,049)(109,992)
Deferred tax assets, net of valuation allowance107,603 27,930 
Deferred Tax Liabilities:
Fixed assets(2,059)(824)
Intangible assets(101,477)(18,584)
Right of use lease asset(15,563)(8,283)
Total deferred tax liabilities(119,099)(27,691)
Net deferred tax assets (liability)$(11,496)$239 

    As of December 31, 2021, the net deferred tax liability of $11.5 million is presented in the Company's consolidated balance sheets as deferred tax liabilities, net of $13.3 million and other assets, non-current of $1.8 million. As of December 31, 2020, the net deferred tax asset of $0.2 million is presented in the Company's consolidated balance sheets as other assets, non-current of $0.4 million and deferred tax liability, net of $0.2 million. The valuation allowance was reduced by $53.9 million for the year ended December 31, 2021, and increased by $16.4 million, and $2.7 million for the years ended December 31, 2020 and 2019, respectively.
    At December 31, 2021, the Company had U.S. federal net operating loss carryforwards, or NOLs, of approximately $486.1 million, which will begin to expire in 2027. At December 31, 2021, the Company had state NOLs of approximately $285.2 million, which will begin to expire in 2023. At December 31, 2021, the Company had foreign NOLs of approximately $30.2 million, which will begin to expire in 2026. At December 31, 2021, the Company had acquired federal research and development tax credit carryforwards of approximately $0.4 million, and state research and development tax credits of approximately $8.0 million, both of which carry forward indefinitely. No amounts for any federal or state research and development tax credits for the years ended December 31, 2019, 2020, or 2021 related to business operations are included herein.
On March 11, 2021, the U.S. President signed into law the American Rescue Plan Act of 2021 ("ARP Act")—a $1.9 trillion coronavirus disease 2019 ("COVID-19") relief package. The ARP Act had limited income tax provisions. The Company has determined that the ARP Act did not have a material impact on the Company for the year ended December 31, 2021. On December 27, 2020, the U.S. President signed into law the Consolidated Appropriations Act, 2021 ("CAA"). The CAA was meant to provide additional relief and support to those impacted by the COVID-19 pandemic. The CAA included provisions relating to payroll tax deferrals, family leave, and a five-year extension of a myriad of tax provisions that were set to expire. The Company has determined that the tax implications of the CAA will not be material. On March 27, 2020, the U.S. President signed into law the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act"), in response to the COVID-19 pandemic. The CARES Act is meant to infuse negatively affected companies with various tax cash benefits to ease the impact of the COVID-19 pandemic. The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer-side social security payments, and net operating loss carryback periods. The Company has determined the tax implications of the CARES Act will not be material. In addition, various foreign jurisdictions where the Company has activity have enacted or are considering enacting a variety of measures that could impact our tax liabilities. The Company is monitoring new legislation and evaluating the potential tax implications of these measures globally.
Pursuant to Section 382 of the Internal Revenue Code, the Company and Telaria, Inc. both underwent ownership changes for tax purposes (i.e. a more than 50% change in stock ownership in aggregated 5% shareholders) on April 1, 2020 due to the Telaria Merger. As a result, the use of the Company’s total domestic NOL carryforwards and tax credits generated prior to the ownership change will be subject to annual use limitations under Section 382 and Section 383 of the Code and comparable state income tax laws. The Company believes that the ownership change will not impact its ability to utilize substantially all of its NOLs
and state research and development carryforward tax credits to the extent it will generate taxable income that can be offset by such losses. The Company reasonably expects its federal research and development carryforward tax credits will not be recovered prior to expiration.
    Additionally, for tax years beginning after December 31, 2017, the Tax Cuts and Jobs Act limits the NOL deduction to 80% of taxable income, repeals carryback of all NOLs arising in a tax year ending after 2017, and permits indefinite carryforward for all such NOLs. NOL’s arising in a tax year ending in or before 2017 can offset 100% of taxable income, are available for carryback, and expire 20 years after they arise.
    At December 31, 2021, unremitted earnings of the subsidiaries outside of the United States were approximately $29.3 million, on which the Company recorded a provisional transition tax of $5.0 million. The Company’s intention is to indefinitely reinvest these earnings outside the United States. Upon distribution of those earnings in the form of a dividend or otherwise, the Company would be subject to withholding taxes payable to various foreign countries and, potentially, various state taxes. The amounts of such tax liabilities that might be payable upon actual repatriation of foreign earnings, after consideration of corresponding foreign tax credits, are not material.
    The following table summarizes the activity related to the unrecognized tax benefits (in thousands):
Amount
Balance as of December 31, 2019
$4,720 
Increases related to current year tax positions— 
Decreases related to current year tax positions(2,294)
Increases related to prior year tax positions788 
Balance as of December 31, 2020
3,214 
Increases related to current year tax positions200 
Decreases related to prior year tax positions(41)
Increases related to prior year tax positions342 
Balance as of December 31, 2021
$3,715 
    Interest and penalties related to the Company’s unrecognized tax benefits accrued at December 31, 2021, 2020, and 2019 were not material.
    Due to the net operating loss carryforwards, the Company's United States federal and a majority of its state returns are open to examination by the Internal Revenue Service and state jurisdictions for all years since inception. The 2017 U.S. Income Tax Return for Telaria was under examination by the IRS, which was closed during the period ended June 30, 2021 with no change to tax as reported. The IRS is currently conducting a Form 1042 Withholding Tax Audit for Telaria for 2017. The Company has not received IRS findings related to this audit. For the Netherlands, New Zealand, Malaysia, and the United Kingdom, all tax years remain open for examination by the local country tax authorities, for France only 2019 forward are open for examination, for Singapore 2018 and forward are open for examination, for Australia, Brazil, and Germany 2017 and forward are open for examination, for Canada 2016 and forward are open for examination, and for Japan and Italy 2015 and forward remain open for examination.
    The Company does not expect its uncertain income tax positions to have a material impact on its consolidated financial statements within the next twelve months.