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 loss before taxes are as follows (in thousands):
Year Ended December 31,
2024 2023 2022
United States $ (597,424) $ (506,243) $ (249,550)
International (10,481) (6,668) (8,401)
Loss before income taxes $ (607,905) $ (512,911) $ (257,951)
The provision for income taxes is as follows (in thousands):
Year Ended December 31,
2024 2023 2022
Current
Federal $ —  $ —  $ — 
State 14  6  7 
Foreign 115  133  85 
Total current provision $ 129  $ 139  $ 92 
Deferred
Federal —  —  — 
State —  —  — 
Total deferred benefit —  —  — 
Total provision (benefit) $ 129  $ 139  $ 92 
A reconciliation of the statutory U.S. federal rate to the Company’s effective tax rate is as follows:
Year Ended December 31,
2024 2023 2022
% % %
Tax at federal statutory rate (21.0) % (21.0) % (21.0) %
State taxes, net of federal benefit —  % (1.6) % (9.1) %
Permanent differences 3.5  % 16.8  % (6.3) %
Change in valuation allowance 22.4  % 9.0  % 41.8  %
Tax credits (4.9) % (3.2) % (5.4) %
Effective income tax rate 0.0  % 0.0  % 0.0  %
Significant components of the Company’s net deferred tax assets (in thousands):
December 31,
2024 2023 2022
Deferred tax assets:
Net operating loss carryforwards $ 190,451  $ 138,735  $ 161,239 
Research and development credits 115,651  55,492  36,886 
Accruals and reserves 567  2,479  148 
Property and equipment 2,892  3,110  4,260 
Stock-based compensation 6,094  16,396  14,416 
Goodwill 2,965  4,311  4,920 
Intangibles 2,769  2,234  900 
Lease Liability 515  664  600 
Capitalized R&D 173,217  88,985  42,676 
Total deferred tax assets 495,121  312,406  266,045 
Valuation allowance (481,760) (295,740) (249,382)
Net deferred tax assets 13,361  16,666  16,663 
Deferred tax liabilities
Contractual agreement (13,361) (16,666) (16,663)
Total deferred tax liabilities (13,361) (16,666) (16,663)
Net deferred tax assets $ —  $ —  $ — 
In connection with the acquisition of Uber Elevate on January 11, 2021, a deferred tax liability was established for the book versus tax basis difference associated with the contractual agreement asset (Note 5). This deferred tax liability created an additional source of income to realize the Company's deferred tax assets. As the Company continues to maintain a full valuation allowance against its net deferred tax assets, this additional source of income resulted in a corresponding release of the Company’s previously recorded valuation allowance against its net deferred tax assets. Consistent with the applicable guidance, this release of the valuation allowance was recorded in the consolidated statements of operations as an income tax benefit.
The following shows the changes in the gross amount of unrecognized tax benefits as follows (in thousands):
Year Ended December 31,
2024 2023 2022
Unrecognized tax benefits, beginning of the year $ 20,241  $ 14,571  $ 8,518 
Increases related to prior year tax positions 6,925  684  219 
Decreases related to prior year tax positions —  (1,037) — 
Increases related to current year tax positions 14,879  6,023  5,834 
Unrecognized tax benefits, end of year $ 42,045  $ 20,241  $ 14,571 
The Company has adopted the accounting policy that interest and penalties recognized are classified as part of its income taxes. The Company does not anticipate that its total unrecognized tax benefits will significantly change due to settlement of examination or the expiration of statute of limitations during the next 12 months. Due to the full valuation allowance at December 31, 2024, current adjustments to the unrecognized tax benefit will have no impact on our effective income tax rate. Any adjustments made after the valuation allowance is released will have an impact on the tax rate.
In assessing the realizability of deferred income tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Due to the uncertainty of the business in which the Company operates, projections of future profitability are difficult and past operating results are not necessarily indicative of future profitability. Management does not believe it is more likely than not that the deferred income tax assets will be realized; accordingly, a full valuation allowance has been established on net deferred income tax assets. The valuation allowance increased by $186.0 million during the year ended December 31, 2024, and by $46.4 million during the year ended December 31, 2023.
As of December 31, 2024, the Company had federal net operating loss carryforwards (“NOLs”) of $817.6 million, of which approximately $1.3 million will begin to expire in 2037 and the remainder do not expire. As of December 31, 2023, the Company had federal net operating loss carryforwards (“NOLs”) of $608.6 million of which approximately $15.8 million will begin to expire in 2036 and the remainder do not expire. As of December 31, 2024 and 2023, the Company had state NOLs of $156.2 million and $82.0 million, respectively, that will begin to expire in 2032. In addition, the Company had foreign NOLs of $28.0 million and $17.1 million as of December 31, 2024 and 2023, respectively.
At December 31, 2024, the Company had federal research and development credits of $101.6 million and California research and development credits of $66.6 million. The federal credits will expire beginning 2037, while California credits have no expiration. At December 31, 2023, the Company had federal research and development credits of $44.9 million and California research and development credits of $36.4 million. The federal credits will expire beginning 2036, while California credits have no expiration.
The realizability of the deferred tax assets is primarily dependent on our ability to generate sufficient taxable income in future periods. The need for a valuation allowance requires an assessment of both positive and negative evidence when determining whether it is more-likely-than-not that deferred tax assets are recoverable. Such assessment is required on a jurisdiction-by-jurisdiction basis. In making such assessment, significant weight is given to evidence that can be objectively verified. Based on cumulative taxable income, projections for future taxable income, and the timing of reversal of deferred tax liabilities, the Company has recorded a valuation allowance against certain deferred tax assets.