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Income Taxes
 12 Months Ended
Dec. 31, 2022
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The components of U.S. and International (loss) income before income taxes is as follows for the years presented:

(in thousands)202020212022
United States$(79,179)$(55,912)$(4,811)
International$15,324 $26,924 $32,927 
Total (loss) income before income taxes$(63,855)$(28,988)$28,116 

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

(in thousands)202020212022
Current income tax provision:
US Federal$— $— $— 
US State122 1,547 2,202 
International5,380 9,808 9,855 
Total current income tax provision5,502 11,355 12,057 
Deferred income tax provision (benefit):
US Federal(13,009)(15,597)(927)
US State(4,244)(2,451)(1,489)
International189 (3,768)(935)
Total deferred income tax benefit(17,064)(21,816)(3,351)
Total income tax (benefit) provision$(11,562)$(10,461)$8,706 

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

(dollars in thousands)202020212022
(Loss) income before income taxes
US Federal and State$(79,179)$(55,912)$(4,811)
International15,324 26,924 32,927 
Total (loss) income before income taxes$(63,855)$(28,988)$28,116 
US Federal statutory rate21 %21 %21 %
Income taxes computed at US Federal statutory rate
$(13,409)$(6,088)5,904 
Tax impact of foreign operations
3,192 (1,348)2,880 
Tax credits
(1,400)(840)(1,396)
Non-deductible transaction related costs
— 851 346 
Non-deductible compensation
— 3,136 2,661 
Stock-based compensation— — (570)
State taxes, net of Federal effect
(2,942)(949)(151)
U.S. Return to provision and deferred tax adjustments
2,128 (4,243)60 
Uncertain tax positions
521 (1,439)1,190 
Change in valuation allowance
— 234 48 
Amended tax returns— — (2,268)
Other permanent differences
348 225 2 
Total income tax (benefit) provision$(11,562)$(10,461)$8,706 
Effective income tax rate18.1 %36.1 %31.0 %

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 provides for deferred tax on the financial reporting basis over the tax basis of its investments in foreign subsidiaries, except for unremitted foreign earnings needed to support operations and continued growth plans outside the U.S. In making its decision to not permanently reinvest certain unremitted foreign earnings, the Company evaluates foreign operational cash requirements and the ability to repatriate funds. For the year ended December 31, 2022, the Company’s estimate of its remaining unremitted earnings of its foreign subsidiaries was approximately $50.9 million, of which $40.4 million is deemed to be indefinitely reinvested.
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)20212022
Deferred tax assets
Loss carryforwards
$25,235 $9,136 
Tax credits
5,802 7,113 
Accounts receivable, accrued expenses
     and reserves
8,408 8,466 
Interest expense
8,858 9,292 
Stock-based compensation
5,396 7,803 
Hedges, swaps and other unrealized
     losses
2,123 1,526 
ROU lease liability— 4,543 
Other121 163 
Total deferred tax assets, gross
$55,943 $48,042 
Valuation allowance(2,718)(2,766)
Total deferred tax assets, net
$53,225 $45,276 
Deferred tax liabilities
Intangibles
$(67,133)$(53,475)
Property and equipment
(4,695)(1,201)
ROU lease asset— (4,513)
Prepaid expenses
(2,857)(2,925)
Capitalized commissions
(1,177)(1,444)
Outside basis difference in subsidiaries
(1,159)(962)
Other(18)(11)
Total deferred liabilities
(77,039)(64,531)
Total deferred tax liabilities, net
$(23,814)$(19,255)

Activity in the Company’s valuation allowance accounts consists of the following for the years presented:

(in thousands)202020212022
Beginning balance$(2,477)$(2,484)$(2,718)
Additions of deferred income tax expense(7)(234)(48)
Reductions of deferred income tax expense— — — 
Ending balance$(2,484)$(2,718)$(2,766)


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 $2.8 million at December 31, 2022. 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, 2022 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.
At December 31, 2022, the Company has $16.3 million of US federal net operating loss carryforwards (“NOLs”), of which $11.2 million expire between 2026 and 2031 and $5.1 million that do not expire. The Company has a $4.1 million deferred tax asset for U.S. state net operating loss carryforwards that have various expiration periods from 2023 to 2040 in addition to net operating loss carryforwards that do not expire. The Company has $2.1 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 2042. The Company has recorded a valuation allowance on $13.1 million related to its NOLs as of December 31, 2022.
Unrecognized tax benefits are reconciled as follows for the years presented:

(in thousands)
20212022
Gross unrecognized tax benefits as of January 1$4,022 $2,677 
Increases—prior year tax positions— 735 
Decreases—prior year tax positions(1,830)(266)
Increases—current year tax positions485 575 
Gross unrecognized tax benefits as of December 31$2,677 $3,721 

The balances of unrecognized tax benefits as of December 31, 2021 and 2022 are $2.7 million and $3.7 million, respectively, of which $2.7 million and $3.7 million represent the amounts that, if recognized, impact the effective income tax rate in future periods.

The Company accrued $0.1 million and $0.2 million for interest and penalties as of December 31, 2021 and 2022, 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. The Company’s U.S. tax returns are subject to examinations for open tax years beginning in 2018. The Company’s foreign jurisdiction tax returns are subject to examinations for open tax years beginning in 2013. 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, 2022 will increase by approximately $0.6 million in the next twelve months. These unrecognized tax benefits relate to research and development credits as well as state income tax liabilities.
On August 16, 2022, President Biden signed the Inflation Reduction Act of 2022 (“IRA”) into law. The IRA establishes a 15% corporate minimum tax effective for taxable years beginning after December 31, 2022 for domestic corporations with average annual adjusted financial statement income that exceeds $1.0 billion over a three-year period, and imposes a 1% excise tax on the repurchase after December 31, 2022 of stock by publicly traded U.S. corporations. The Company currently does not expect the tax-related provisions of the IRA to have a material impact on the Company’s financial results.