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

Income Taxes

v3.26.1
Income Taxes
 12 Months Ended
Mar. 31, 2026
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The components of our income (loss) prior to income taxes were as follows:
Year Ended March 31,
2026 2025 2024
U.S. $ (49,887) $ (109,128) $ (170,057)
Foreign 18,547  21,264  (235,074)
Loss before income taxes $ (31,340) $ (87,864) $ (405,131)
The components of the Company’s income tax provision (benefit) attributable to operations are as follows:
Year Ended March 31,
2026 2025 2024
Current:
U.S. federal $ —  $ —  $ — 
State and local —  —  — 
Foreign 6,739  8,241  8,262 
6,739  8,241  8,262 
Deferred:
U.S. federal (8) (9) 5,925 
State and local (3) —  5,491 
Foreign
 (336) (3,997) (4,361)
(347) (4,006) 7,055 
Income tax expense $ 6,392  $ 4,235  $ 15,317 
Beginning in the year ended March 31, 2026, we adopted ASU 2023-09 prospectively. A reconciliation of the U.S. federal statutory income tax rate to our effective tax rate pursuant to the disclosure requirements of ASU 2023-09 for the year ended March 31, 2026 was as follows:
Year Ended March 31, 2026
Amount Percent
U.S. federal statutory tax rate $ (6,581) 21.0  %
State and local income taxes, net of federal income tax effect (3) —  %
Foreign tax effects
Israel
Statutory tax rate difference between Israel and U.S. (3,630) 11.6  %
Other 96  (0.3) %
Germany
Statutory tax rate difference between Germany and U.S. (1,650) 5.3  %
Changes in valuation allowance 7,318  (23.4) %
Deferred tax rate remeasurement (2,016) 6.4  %
Other 62  (0.2) %
Brazil
Changes in valuation allowance 1,076  (3.4) %
Return to provision 336  (1.1) %
Other (241) 0.8  %
Luxembourg
Return to provision 375  (1.2) %
Other (369) 1.2  %
Netherlands
Changes in valuation allowance 513  (1.6) %
Other (103) 0.3  %
Norway
Changes in valuation allowance 390  (1.2) %
Other (218) 0.7  %
Singapore
Changes in valuation allowance 1,035  (3.3) %
Return to provision (441) 1.4  %
Other 22  (0.1) %
Other Foreign Jurisdictions (114) 0.4  %
Tax credits
Research and development tax credits (947) 3.0  %
Changes in valuation allowances 9,101  (29.0) %
Nontaxable or nondeductible items
Stock-based compensation 485  (1.6) %
Unrealized gain on derivatives (316) 1.0  %
Other 106  (0.3) %
Changes in unrecognized tax benefits 203  (0.7) %
Other
Prior period adjustments 1,566  (5.0) %
Other 337  (1.1) %
Effective tax rate $ 6,392  (20.4) %
The following table presents the required disclosures prior to our adoption of ASU 2023-09 and provides a reconciliation of the statutory federal income tax rate to our effective tax rate for the years ended March 31, 2025 and 2024:
Year Ended March 31,
2025 2024
Statutory federal income tax rate $ (18,518) $ (85,077)
State income taxes, net of federal benefit (2,591) — 
State rate remeasurement 523  1,680 
Nondeductible expenses —  176 
Disallowed executive compensation 2,018  1,145 
Excess deductions for stock-based compensation 1,572  2,783 
Foreign rate differential (5,049) (544)
Impairment of goodwill —  64,346 
Research and development tax credit (1,721) (721)
Change in uncertain tax liability 364  144 
Change in valuation allowance 29,551  29,010 
Return to provision adjustments (1,976) 2,375 
Other miscellaneous 62  — 
Income tax expense $ 4,235  $ 15,317 
ASC 740 requires the consideration of a valuation allowance, on a jurisdictional basis, to reflect the likelihood of realization of deferred tax assets. Significant management judgment is required in determining any valuation allowance recorded against deferred tax assets. The following table represents the roll forward of our valuation allowance:
Year Ended March 31,
2026 2025 2024
Balance at the beginning of the year $ 85,403  $ 55,852  $ 26,842 
Valuation allowance charged to income tax expense 21,589  29,551  29,010 
Balance at the end of the year $ 106,992  $ 85,403  $ 55,852 
Cash paid for income taxes, net of refunds received, by jurisdiction pursuant to the disclosure requirements of ASU 2023-09 for the year ended March 31, 2026 was as follows:
Year Ended March 31, 2026
U.S. federal $ — 
State and local — 
Foreign
Israel 25,208 
Other foreign jurisdictions 1,087 
Total foreign 26,295 
Total cash taxes paid, net of refunds $ 26,295 
The significant components of net deferred tax balances were as follows:
March 31,
2026 2025
Deferred tax assets
Net operating loss carry-forward $ 101,931  $ 90,177 
Stock-based compensation 5,774  5,698 
Accrued compensation 3,673  172 
Capitalized research and experimentation expenses —  3,114 
Disallowed interest expense
 27,326  15,963 
Other 634  471 
Total deferred tax assets 139,338  115,595 
Valuation allowance (106,992) (85,403)
Deferred tax assets, net of valuation allowance 32,346  30,192 
Deferred tax liabilities
Depreciation and amortization (1,280) (1,310)
Capitalized research and experimentation expenses (8,151) — 
Intangibles and goodwill (38,733) (45,190)
Total deferred tax liabilities (48,164) (46,500)
Deferred tax liabilities, net $ (15,818) $ (16,308)
The following details the scheduled expiration dates of the Company’s net operating loss (NOL) carryforwards as of March 31, 2026:
2027 Through 2036 2037 Through 2046 Indefinite Total
U.S. federal $ —  $ 37,357  $ 99,020  $ 136,377 
State and local 12,459  150,836  4,282  167,577 
Foreign 927  702  210,097  211,726 
Total net operating loss carryforwards $ 13,386  $ 188,895  $ 313,399  $ 515,680 
The Company’s income is subject to taxation in both the U.S. and foreign jurisdictions. Significant judgment is required in evaluating the Company’s tax positions and determining its provision for income taxes. The Company establishes liabilities for income tax-related uncertainties based on estimates of whether, and the extent to which, additional taxes will be due. These liabilities for tax contingencies are established when the Company believes that a tax position is not more likely than not sustainable. The Company adjusts these liabilities in light of changing facts and circumstances, such as the outcome of a tax audit or lapse of a statute of limitations. The provision for income taxes includes the impact of uncertain tax liabilities and changes in liabilities that are considered appropriate.
The Company has not provided for deferred taxes on undistributed earnings from foreign subsidiaries as of March 31, 2026. The Company has not provided for any additional deferred taxes with respect to items such as foreign withholding taxes, state income tax, or foreign exchange gain or loss that would be due when cash is repatriated to the U.S. because those foreign earnings are considered permanently reinvested in the business or may be remitted substantially free of any additional taxes. Because of the various avenues to repatriate the earnings, the determination of the amount of the unrecognized deferred tax liability related to the undistributed earnings, if eventually remitted, is not practicable.
A reconciliation of the beginning and ending amounts of unrecognized tax benefits for the years ended March 31, 2026, 2025, and 2024, is as follows:
Year Ended March 31,
  2026 2025 2024
Balance at the beginning of the year $ 2,532  $ 2,168  $ 2,024 
Additions for tax positions of prior years 189  364  144 
Balance at the end of the year $ 2,721  $ 2,532  $ 2,168 
Included in the net deferred income tax assets (liabilities) balances at March 31, 2026, 2025, and 2024, on our consolidated balance sheet are $2,721, $2,532, and $2,168, respectively, of unrecognized tax benefits, which would effect the annual effective tax rate if recognized. The Company recognized interest and penalties on uncertain income tax liabilities in income tax expense of $419, $227, and $232 during the years ended March 31, 2026, 2025, and 2024, respectively. The Company does not expect the amount of unrecognized tax benefits to change significantly in the next twelve months.
The Company’s U.S. federal, state, and foreign income tax returns generally remain subject to examination for the tax years ended 2021 through 2026.
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law which, among other things, provided a permanent extension of certain tax measures initially established under the 2017 Tax Cuts and Jobs Act, which were set to expire at the end of 2025, and modified tax legislation affecting bonus depreciation rules and the tax treatment of research and development expenses and interest deductions. Specifically, the OBBBA provides for 100% bonus depreciation and eliminates the requirement under Internal Revenue Code Section 174 to capitalize and amortize U.S.-based research and experimental expenditures over five years, making these expenditures fully deductible in the period incurred beginning after 2024. The Company currently does not expect the OBBBA to have a material impact on its effective tax rate but expects these provisions to result in a reduction of current income tax liabilities and an increase in deferred tax liabilities. The Company will continue to assess the implications of the OBBBA and will provide further disclosures in subsequent reporting periods, as necessary.