v3.26.1
Income Taxes
 12 Months Ended
Mar. 31, 2026
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Substantially all of the Company’s income before income taxes was generated in the United States for the fiscal years ended March 31, 2026, 2025, and 2024.
The Company’s provision for income taxes consisted of the following (in thousands):
Fiscal Year Ended March 31,
202620252024
Current provision:
Federal$13,448 $42,259 $36,394 
State6,581 9,722 9,819 
Foreign
1,787 — — 
Total21,816 51,981 46,213 
Deferred provision (benefit):
Federal28,707 (9,606)(5,088)
State3,431 (1,986)(3,505)
Foreign
— — — 
Total32,138 (11,592)(8,593)
Total provision for income taxes$53,954 $40,389 $37,620 
The following is a reconciliation of the income tax expense at the federal statutory tax rate to the Company’s provision for income taxes, prepared in accordance with ASU 2023-09 for the fiscal year ended March 31, 2026 (in thousands, except percentages):
Fiscal Year Ended March 31, 2026
Income taxes at statutory rate$52,443 21.0 %
State and local income taxes, net of federal income tax effect (1)
8,528 3.4 %
Foreign tax effects
1,787 0.7 %
Tax credits
Research and development tax credits(3,663)(1.5)%
Investment tax credits(843)(0.3)%
Change in valuation allowance(39)— %
Nontaxable or nondeductible items
Section 162(m) limitation7,711 3.1 %
Stock-based compensation(12,405)(5.0)%
Other487 0.2 %
Changes in unrecognized tax benefits
(52)— %
Total
$53,954 21.6 %
(1) The tax effect in this category primarily reflects state taxes in New York, California, Pennsylvania, Illinois, New Jersey, and Tennessee, and local taxes in New York City.
The following is a reconciliation of the income tax expense at the federal statutory tax rate to the Company’s provision for income taxes in accordance with required disclosures prior to the Company’s adoption of ASU 2023-09 for the years ended March 31, 2025 and 2024 (in thousands):
Fiscal Year Ended March 31,
20252024
Income taxes at statutory rate$55,350 $38,893 
State income taxes, net of federal benefit12,831 12,130 
Research and development credits(6,439)(3,817)
Stock-based compensation(37,634)(6,734)
Change in valuation allowance25 (4,060)
Section 162(m) limitation19,872 3,410 
Transferable federal tax credits(1,305)(1,920)
Other(2,311)(282)
Total provision for income taxes$40,389 $37,620 
Cash paid for income taxes, net of refunds received, for the year ended March 31, 2026 is as follows (in thousands):
Fiscal Year Ended March 31, 2026
US Federal
$16,571 
US State
5,262 
Foreign
(19)
Cash paid for income taxes, net of refunds received
$21,814 
Components of deferred tax assets and liabilities were as follows (in thousands):
As of March 31,
20262025
Deferred tax assets:
Accruals and deferred revenue$3,295 $4,784 
Net operating loss carryforwards862 944 
Research & development credit carryforwards8,028 5,117 
Investment tax credits
8,272 4,600 
Operating lease liabilities2,574 3,122 
Acquisition and other related expense225 248 
Stock-based compensation expense9,420 5,236 
Capitalized research and development8,715 44,558 
Gross deferred tax assets41,391 68,609 
Less: valuation allowance(1,273)(1,200)
Deferred tax assets, net of valuation allowance40,118 67,409 
Deferred tax liabilities:
Property and equipment(4,501)(3,308)
Operating lease right-of-use assets(1,805)(2,238)
Intangible assets(1,819)(1,404)
Unrealized gain
(9)(445)
Deferred tax liabilities(8,134)(7,395)
Net deferred tax assets$31,984 $60,014 
The Company monitors the realizability of deferred tax assets, taking into account all relevant factors at each reporting period. As of March 31, 2026, the Company had a valuation allowance of $1.3 million, which related to Arizona research and development credits and capital loss carryforwards. As of March 31, 2025, the Company had a valuation allowance of $1.2 million, which related to Arizona research and development credits, California alternative minimum tax credits, and capital loss carryforwards.
Pursuant to provisions under the Inflation Reduction Act, the Company purchased $17.9 million of transferable federal tax credits during the fiscal year ended March 31, 2026, from various counterparties. In connection with the purchase, the Company paid $13.8 million for tax credits related to fiscal year ended March 31, 2026, and $2.8 million for tax credits related to fiscal year ended March 31, 2025, which were purchased at negotiated discounts, resulting in an income tax benefit of $1.1 million recorded during the fiscal year ended March 31, 2026.
As of March 31, 2026, the Company had net operating loss, or NOL, carryforwards for state tax purposes of $3.7 million. Portions of the NOL carryforwards will expire at various dates beginning in the tax year ending March 31, 2042. As of March 31, 2026, the Company had research and development tax credit carryforwards for federal tax purposes of $4.9 million for state tax purposes of $9.5 million. The Federal research and development tax credit carryforward expires in the year ending March 31, 2046. The California state research and development tax credit carryforwards do not expire. The other state research and development tax credit carryforwards will expire at various dates beginning in the year ending March 31, 2034. Based on an assessment of the Company’s historical ownership changes through March 31, 2026, the Company does not anticipate a current limitation on the tax attributes.
As of March 31, 2026 and 2025, the Company had unrecognized tax benefits, or UTBs, of $13.6 million and $12.0 million, respectively. If realized, $13.3 million would impact the effective tax rate while the remainder would reduce deferred tax assets subject to a full valuation allowance.
A reconciliation of the beginning and ending balances for gross UTBs is as follows (in thousands):
Fiscal Year Ended March 31,
202620252024
Beginning balance$11,989 $9,302 $7,913 
Additions for tax positions related to the current year1,844 2,502 1,404 
Additions for tax positions related to prior years11 194 112 
Reductions for tax positions related to prior years(257)(4)(119)
Reductions related to a lapse of statute— (5)(8)
Ending balance$13,587 $11,989 $9,302 
Interest and penalties were not material during the fiscal years ended March 31, 2026, 2025, and 2024.
In July 2025, Congress passed and the President signed into law H.R. 1, the One Big Beautiful Bill Act ("Tax Act") which addresses certain business tax provisions enacted as a part of the 2017 Tax Cuts and Jobs Act including restoration of Section 174 expensing for US-based research. Accounting Standards Codification Topic 740, Income Taxes, (“Topic 740”) requires the tax impacts to be included in the reporting period that includes the date the Tax Act was signed into law. The impacts of the Tax Act are reflected in our results for the fiscal quarter ended March 31, 2026, and there was no material impact to our income tax expense or effective tax rate. Management elected to accelerate the deduction of all remaining unamortized domestic R&D expenses originally capitalized in fiscal years 2023 through 2025 in one year—i.e., in fiscal year 2026. The net deductions benefit increased the Company’s March 31, 2026 prepaid taxes and decreased our deferred tax assets by approximately $35.3 million.
The Company files income tax returns in the U.S. federal and various state jurisdictions. With limited exceptions, all tax years after 2021 remain subject to examination.