Income Taxes

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The provision for income taxes consisted of the following:

	Year Ended December 31,
	2023		2022		2021
	(in thousands)
Current:
Federal	$	—	$	—	$	—
State	41		355		425
Foreign	87		268		—
Total current	128		623		425
Deferred:
Federal	—		(1,831)		(34,462)
State	—		(1,033)		(4,849)
Foreign	(34)		—		—
Total deferred	(34)		(2,864)		(39,311)
Total provision for income taxes	$	94	$	(2,241)	$	(38,886)

The following summarizes the differences between the income tax provision recorded by the Company and the amount computed by applying the statutory federal income tax rate of 21% to loss before income tax for the years ended December 31, 2023, 2022 and 2021:

	Year Ended December 31,
	2023		2022		2021
	(in thousands)
Tax benefit at federal statutory rate	$	(37,524)	$	(151,504)	$	(43,747)
State taxes, net of federal benefit	481		(677)		(4,431)
Research and other credits	(3,774)		(3,798)		(2,305)
Valuation allowance release related to Title365 purchase price allocation	—		—		(34,462)
Change in valuation allowance	28,681		98,510		38,188
Section 162(m) adjustment	2,836		4,230		10,241
Non-deductible transaction costs	—		—		1,252
Stock-based compensation	9,380		(64)		(2,828)
Goodwill Impairment	—		60,318		—
Noncontrolling interest	(249)		(9,226)		125
Other	263		(30)		(919)
Total provision for income taxes	$	94	$	(2,241)	$	(38,886)

Deferred income taxes reflect the net tax effects of loss and credit carryforwards and temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities are as follows:

	December 31, 2023		December 31, 2022
	(in thousands)
Deferred tax assets:
Net operating loss carryforwards	$	145,096	$	130,808
Lease liabilities	2,684		3,600
Research and other credits	21,697		17,564
Accruals and reserves	1,046		334
Interest expense limitation	13,437		7,194
Stock-based compensation	9,421		16,777
Fixed assets	1,382		1,047
Capitalized research and development costs	44,586		31,542
Other deferred tax assets	2,910		1,177
Gross deferred tax assets	242,259		210,043
Less: valuation allowance	(237,205)		(204,371)
Total deferred tax assets	$	5,054	$	5,672
Deferred tax liabilities:
Right-of-use assets	$	(1,997)	$	(2,718)
Deferred contract costs	(858)		(1,340)
ASC 606 adjustments	(3)		(291)
Other deferred tax liabilities	(918)		(60)
Amortization	(749)		(759)
Acquired intangible assets	(495)		(504)
Gross deferred tax liabilities	(5,020)		(5,672)
Total net deferred tax assets	$	34	$	—

Included in the Company’s deferred tax assets and liabilities are the deferred tax effects associated with the fair value of the assets acquired and liabilities assumed from the acquisition of Title365 and acquired tax attributes that carry over to post-acquisition tax periods, including U.S. and state net operating losses and tax credits.

In conjunction with its acquisition of Title365, the Company released $39.3 million valuation allowance during the year ended December 31, 2021, attributed to ASC 805-740-30-3, which upon acquisition allowed the Company to recognize certain deferred tax assets of approximately $39.3 million which had previously been offset by a valuation allowance.

At December 31, 2023, the Company believes that, based on available evidence, both positive and negative, it is more likely than not that the net deferred tax assets will not be utilized.

At December 31, 2023, the Company had a valuation allowance of $237.2 million. The valuation allowance increase of $32.8 million during 2023 is primarily attributable to an increase in deferred tax assets resulting from net operating losses in 2023, disallowed interest expense and capitalized research and development costs.

At December 31, 2023, the Company had net operating loss (“NOL”) carryforwards for federal and state income tax purposes of approximately $537.3 million and $582.7 million, respectively, available to reduce future taxable income. The federal net operating losses generated before 2018 will begin to expire in 2028. The federal net operating losses generated in and after 2018 may be carried forward indefinitely. The state NOL carryforwards vary by state and begin to expire in 2025.

At December 31, 2023, the Company had $21.7 million of federal research credit carryforwards which will begin to expire in 2033 and state research credit carryforwards of $11.8 million which have no expiration date.

Utilization of the net operating loss and tax credit carryforwards may be subject to annual limitations due to the ownership change limitation provided by the Internal Revenue Code of 1986, as amended, and similar state provisions. Events which may cause limitations in the amount of the NOLs that the Company may use in any one year include, but are not limited to, a cumulative ownership change of more than 50% over a three-year period. Any annual limitations may result in the expiration of NOL and credits before they are able to be utilized.

As of December 31, 2023, the Company had $10.0 million of unrecognized tax benefits, none of which, if recognized, would impact the effective tax rate. The Company’s policy is to include interest and penalties related to unrecognized tax benefits within the provision for income taxes. Interest and penalties were not significant during the years ended December 31, 2023, 2022 and 2021. The Company does not expect any material changes to its unrecognized tax benefits within the next twelve months.

The following table reflects the changes in the Company’s unrecognized tax benefits:

	Year Ended December 31,
	2023		2022		2021
	(in thousands)
Beginning Balance	$	8,228	$	5,948	$	4,155
Gross increases—tax positions in prior periods	191		—		—
Gross increases—tax positions in current periods	1,621		2,300		1,793
Gross decreases—tax positions in prior periods	—		(20)		—
Ending balance	$	10,040	$	8,228	$	5,948