5. Income Taxes

The provision for income taxes is based on earnings reported in the consolidated financial statements. A deferred income tax asset or liability is determined by applying currently enacted tax laws and rates to the expected reversal of the cumulative temporary differences between the carrying value of assets and liabilities for financial statement and income tax purposes. Deferred income tax expense or benefit is measured by the change in the deferred income tax asset or liability during the year.

Deferred tax assets and liabilities result primarily from temporary differences in book versus tax basis accounting. Deferred tax assets and liabilities consist of the following:

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The Company maintained a valuation allowance on net noncurrent deferred tax assets of $7.4 million and $7.6 million as of June 30, 2026 and 2025, respectively, predominantly related to foreign and state income tax net operating losses ("NOL").

At June 30, 2026, the Company had approximately $24.5 million of available federal NOL carryforwards solely related to the acquisition of Galvanize in January 2020. The available federal NOL carryforwards were generated after 2017 and have an indefinite carryforward period due to the Tax Cuts and Jobs Act (the “Tax Act”). Section 382 of the Internal Revenue Code limits the utilization of NOL carryforwards following a change of control. The Company has performed an analysis of the Section 382 ownership changes and have determined that it will be able to fully utilize its available NOLs subject to the Section 382 limitation.

At June 30, 2026, the Company had tax effected state NOL carryforwards of $1.0 million, net of valuation allowances, and will expire on various dates.

The components of the income before income taxes for the years ended June 30, 2026, 2025 and 2024 were as follows:

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The components of the income tax expense (benefit) for the years ended June 30, 2026, 2025 and 2024 were as follows:

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Following the adoption of ASU 2023-09, the provision for income taxes can be reconciled to the income tax that would result from applying the statutory rate to the net income before income taxes as follows:

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^(a) State taxes in California, Texas, and Virginia made up the majority (greater than 50 percent) of the tax effect in this category.

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Prior to the adoption of ASU 2023-09, the provision for income taxes can be reconciled to the income tax that would result from applying the statutory rate to the net income before income taxes as follows:

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The decrease in the effective income tax rate for the year ended June 30, 2026, as compared to the effective tax rate for the year ended June 30, 2025, was primarily due to stock-based compensation. As of June 30, 2026 and 2025, the balance of income taxes payable was $27.5 million and $52.6 million, respectively. Income taxes payable is recorded within accrued liabilities on the consolidated balance sheets.

Tax Uncertainties

The Company follows the provisions of ASC 740, Income Taxes (“ASC 740”) which applies to all tax positions related to income taxes. ASC 740 provides a comprehensive model for how a company should recognize, measure, present and disclose in its financial statements uncertain tax positions that the Company has taken or expects to take on a tax return. ASC 740 clarifies accounting for income taxes by prescribing a minimum probability threshold that a tax position must meet before a financial statement benefit is recognized. If the probability for sustaining a tax position is greater than

50%, then the tax position is warranted and recognition should be at the highest amount which would be expected to be realized upon ultimate settlement related to unrecognized tax benefits.

The Company recognizes interest and penalties, if any, related to unrecognized tax benefits in income tax expense. As of June 30, 2026, 2025 and 2024, the Company had $0.7 million, $0.5 million and $0.4 million in accrued interest and penalties, respectively.

The unrecognized tax benefits for the years ended June 30, 2026, 2025 and 2024 were as follows:

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If recognized, all of the $6.0 million balance of unrecognized tax benefits as of June 30, 2026 would affect the effective tax rate. The Company does not anticipate a significant increase or decrease in unrecognized tax benefits in the next twelve months.

The Company remains subject to audit by the Internal Revenue Service for federal tax purposes for tax years after June 30, 2022. Certain state and foreign tax jurisdictions are also either currently under audit or remain open under the statute of limitations for the tax years after June 30, 2021.

Income Taxes Paid

Disclosed below is a summary of income taxes paid by jurisdiction pursuant to the disclosure requirements of ASU 2023-09 for the year ended June 30, 2026:

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Income taxes paid (net of refunds) exceed 5 percent of total income taxes paid (net of refunds) in the following jurisdictions:

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