Annual report [Section 13 and 15(d), not S-K Item 405]

Income Taxes

v3.25.0.1
Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The components of the provision for (benefit from) income taxes were as follows (in thousands):
Year Ended December 31,
2024 2023 2022
Current
Federal $ —  $ —  $ — 
State 9  53  — 
Foreign 226  247  130 
Deferred
Federal —  —  — 
State —  —  — 
Foreign (46) (40) (26)
Total $ 189  $ 260  $ 104 
Loss before income taxes was as follows (in thousands):
Year Ended December 31,
2024 2023 2022
United States $ (28,776) $ (30,622) $ (49,551)
Foreign 619  (149) (83)
Total $ (28,157) $ (30,771) $ (49,634)
The following reconciles the differences between the federal statutory income tax rate in effect in each year to the Company’s effective tax rate:
Year Ended December 31,
2024 2023 2022
Statutory federal tax rate 21.00  % 21.00  % 21.00  %
State tax, net of federal tax effect 3.80  2.70  1.02 
Stock-based compensation
 0.09  (5.86) (4.07)
Change in valuation allowance (32.87) (19.97) (17.94)
Other 7.31  1.29  (0.03)
Effective tax rate (0.67) % (0.84) % (0.02) %
The components of deferred tax assets and liabilities were as follows (in thousands):
December 31, 2024 December 31, 2023
Deferred tax assets:
Net operating losses $ 51,550  $ 44,357 
Sales and use tax reserves 197  187 
Stock-based compensation
 2,914  2,112 
Compensation related accruals 1,307  1,749 
Interest expense limitations 309  396 
Leases - Right-of-use liability
 10,749  11,702 
Other 327  168 
Fixed assets 651  1,013 
Capitalized research expenses 11,082  8,470 
Valuation allowance (64,119) (54,867)
Total deferred tax assets - net 14,967  15,287 
Deferred tax liabilities:
State taxes —  — 
Intangible assets (367) (266)
Leases - Right-of-use asset
 (9,360) (10,309)
Deferred contract costs (5,129) (4,647)
Total deferred tax liabilities (14,856) (15,222)
Net deferred taxes assets $ 111  $ 65 
Activity of the deferred tax asset valuation allowance was as follows (in thousands):
Year Ended December 31,
2024 2023 2022
Balance at beginning of the year $ 54,867  $ 48,723  $ 40,101 
Charged to costs and expense 9,252  6,144  8,622 
Balance at end of the year $ 64,119  $ 54,867  $ 48,723 
The Company evaluates its ability to realize net deferred tax assets by considering all available positive and negative evidence including past results of operations, forecasted earnings, tax planning strategies, and all sources of future taxable income. A full valuation allowance was maintained on domestic deferred tax assets as of December 31, 2024, primarily due to cumulative losses in recent years. Net deferred tax assets are included in the other non-current assets on the consolidated balance sheets.
As of December 31, 2024, U.S. Federal and State net operating loss (“NOL”) carry forwards are both approximately $207.4 million and $154.9 million. These NOLs have expiration dates starting in 2034 for U.S. Federal and 2025 for State jurisdictions. The U.S. Federal NOL generated in 2018 and years forward, are not subject to a carryforward limitation and can be utilized at any time in the future. The total U.S. Federal NOLs not subject to carryover limitation are $175.7 million. Full realization of the NOLs is dependent on generating sufficient taxable income prior to their expiration. The ability to realize the NOLs could also be limited by previous or future changes in ownership in accordance with rules in Internal Revenue Code Sections 382 and 383.
ASC 740-10, Accounting for Uncertainty in Income Taxes, provides that a tax benefit from an uncertain tax position may be recognized in the financial statements only when it is more likely than not that the position will be sustained upon examination. Once the recognition threshold is met, the portion of the tax benefit that is recorded represents the largest amount of tax benefit that is greater than 50 percent likely to be realized upon settlement with a taxing authority. The Company determined it did not have any unrecognized tax benefits at December 31, 2024 or 2023. The Company accounts for interest expense
and penalties for unrecognized tax benefits as a part of its income tax provision. The Company does not anticipate any significant changes in unrecognized tax benefits during the next 12 months.
The Company files income tax returns in the U.S. Federal jurisdiction and in various states. Additionally, the Company files income tax returns in the foreign jurisdictions in which it operates. The statute of limitations for the federal U.S. income tax returns is still open for tax years 2021 forward. The statute of limitations for state income tax returns varies between three and four years in the state taxing jurisdictions where the Company files, and would still be open for tax years 2020 forward or 2019 depending on the jurisdiction. The statute of limitations in the foreign jurisdictions varies by foreign jurisdiction, however, the Company has open returns in the foreign jurisdictions beginning for tax year 2020.