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Income Taxes
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The components of U.S. and International (loss) before income taxes is as follows:

(in thousands)201920202021
United States$(76,170)$(79,179)$(55,912)
International$17,685 $15,324 $26,924 
Total loss before income taxes$(58,485)$(63,855)$(28,988)

The income tax provision (benefit) for income taxes consists of the following:

(in thousands)201920202021
Current income tax provision:
US Federal$— $— $— 
US State559 122 1,547 
International6,746 5,380 9,808 
Total current income tax provision7,305 5,502 11,355 
Deferred income tax provision (benefit):
US Federal(12,908)(13,009)(15,597)
US State(5,597)(4,244)(2,451)
International(603)189 (3,768)
Total deferred income tax benefit(19,108)(17,064)(21,816)
Total income tax benefit$(11,803)$(11,562)$(10,461)

A reconciliation of the U.S. statutory income tax rate to the Company’s effective tax rate for continuing operations is as follows:

(dollars in thousands)201920202021
Loss before income taxes
US Federal and State$(76,170)$(79,179)$(55,912)
International17,685 15,324 26,924 
Total loss before income taxes$(58,485)$(63,855)$(28,988)
US Federal statutory rate21 %21 %21 %
Income taxes computed at US Federal statutory rate
$(12,282)$(13,409)(6,088)
Tax impact of foreign operations
5,708 3,192 (1,348)
Tax credits
(1,400)(1,400)(840)
Non-deductible transaction related costs
— — 851 
Non-deductible compensation
— — 3,136 
State taxes, net of Federal effect
(2,236)(2,942)(949)
U.S. Return to provision and deferred tax adjustments
(1,354)2,128 (4,243)
Uncertain tax positions
1,620 521 (1,439)
Change in valuation allowance
(2,455)— 234 
Other permanent differences
596 348 225 
Total Income tax benefit$(11,803)$(11,562)$(10,461)
Effective income tax rate20.2 %18.1 %36.1 %

The Tax Cuts and Jobs Act (“TCJA”) requires complex computations to be performed that were not previously required by U.S. tax law, significant judgments to be made in interpretation of the provisions of the TCJA, significant estimates in calculations, and the preparation and analysis of information not previously relevant or regularly produced. The U.S. Treasury Department, the Internal Revenue Service, and other standard-setting bodies will continue to interpret or issue guidance on how provisions of the TCJA will be applied or otherwise administered. The Company continues to make adjustments to amounts that it has previously recorded that materially impact its provision for income taxes in the period in which the adjustments are made as the final guidance is issued.
The Company reevaluated its permanent reinvestment assertion and determined that undistributed foreign earnings were no longer considered to be permanently reinvested, effective December 31, 2018. As of December 31, 2021, $30.1 million of earnings from certain subsidiaries are not considered to be permanently reinvested and therefore, related deferred U.S. and international income and withholding taxes were provided.
Deferred income taxes are provided for the effects of temporary differences between the amounts of assets and liabilities recognized for financial reporting purposes and the amounts recognized for income tax purposes. Significant components of deferred tax assets and deferred tax liabilities consisted of the following:
(in thousands)20202021
Deferred tax assets
Loss carryforwards
$29,547 $25,235 
Tax credits
5,742 5,802 
Accounts receivable, accrued expenses
     and reserves
4,833 8,408 
Interest expense
2,717 8,858 
Stock-based compensation
965 5,396 
Hedges, swaps and other unrealized
     losses
4,314 2,123 
Other— 121 
Total deferred tax assets, gross
$48,118 $55,943 
Valuation allowance(2,484)(2,718)
Total deferred tax assets, net
$45,634 $53,225 
Deferred tax liabilities
Intangibles
$(63,289)$(67,133)
Property and equipment
(7,779)(4,695)
Prepaid expenses
(1,658)(2,857)
Capitalized commissions
(1,001)(1,177)
Outside basis difference in subsidiaries
(746)(1,159)
Other(561)(18)
Total deferred liabilities
(75,034)(77,039)
Total deferred tax liabilities, net
$(29,400)$(23,814)

Activity in the Company’s valuation allowance accounts consists of the following for the years ended December 31, 2019, 2020 and 2021:

(in thousands)201920202021
Beginning balance$(4,932)$(2,477)$(2,484)
Additions of deferred income tax expense— (7)(234)
Reductions of deferred income tax expense2,455 — — 
Ending balance$(2,477)$(2,484)$(2,718)


The Company regularly evaluates the ability to realize the benefit of its net deferred tax assets. The Company weighs positive and negative evidence concerning the realizability of the Company’s deferred tax assets in each jurisdiction. In assessing the need for a valuation allowance, the Company considers the weight attributable to both positive and negative evidence that can be objectively verified. On the basis of this limitation the Company maintains a valuation allowance of $2.7 million at December 31, 2021. The valuation allowance is primarily attributable to Internal Revenue Code Section 382 limitations related to certain acquired net operating losses. The Company considered the existence of a cumulative loss as of December 31, 2021 as a significant piece of negative evidence that requires equal or greater pieces of positive evidence. The Company considered the reversal of existing temporary differences, primarily related to the reversal of book amortization of existing definite lived intangible assets to fully offset the net operating losses, interest expense carryovers, and R&D credit carry forward without limitation.

The Company has $80.7 million of US federal net operating loss carryforwards (“NOLs”), $73.1 million that expire between 2026 and 2036 and $7.6 million that do not expire. The Company has a $5.4 million
deferred tax asset for U.S. state net operating loss carryforwards that have various expiration periods from 2022 to 2040 in addition to net operating loss carryforwards that do not expire. The Company has $2.8 million of deferred tax asset for foreign net operating loss carryforwards that do not expire.

A portion of the U.S. (federal and state) operating loss carryforwards and credits are subject to Internal Revenue Code Section 382 or similar provisions. The gross NOLs for tax return purposes are different from financial statement NOLs as the Company’s intention is to settle additional income taxes from tax contingencies with the net operating loss carryforwards. The other tax credit carryforwards expire between 2028 and 2040.




Unrecognized tax benefits are reconciled as follows:

(in thousands)
20202021
Gross unrecognized tax benefits as of January 1$3,672 $4,022 
Decreases—prior year tax positions— (1,830)
Increases—current year tax positions350 485 
Gross unrecognized tax benefits as of December 31$4,022 $2,677 

The balances of unrecognized tax benefits as of December 31, 2020 and 2021 are $4.0 million and $2.7 million, respectively, of which $4.0 million and $2.7 million represent the amounts that, if recognized, impact the effective income tax rate in future periods.

The Company accrued $0.3 million and $0.1 million for interest and penalties as of December 31, 2020 and 2021, respectively.

The Company is subject to income taxes in the U.S. and numerous foreign jurisdictions including Australia, Canada, India, Philippines and the United Kingdom, and is not currently under examination by the taxing authorities. Significant judgment is required in evaluating the Company’s tax positions and determining its provision for income taxes. During the ordinary course of business, there are many transactions and calculations for which the ultimate tax determination is uncertain. The Company establishes reserves for tax-related uncertainties based on estimates of whether, and the extent to which, additional taxes will be due. These reserves are established when the Company believes that certain positions might be challenged despite the belief that the Company’s tax return positions are fully supportable. The Company adjusts these reserves in light of changing facts and circumstances, such as the outcome of tax audits. The provision for income taxes includes the impact of reserve provisions and changes to reserves that are considered appropriate.

The Company estimates that it is reasonably possible that the balance of unrecognized tax benefits as of December 31, 2021 will increase by approximately $0.3 million in the next twelve months. These unrecognized tax benefits relate to research and development credits.