v3.26.1
Income Taxes
 12 Months Ended
Jun. 30, 2026
Income Tax Disclosure [Abstract]  
Income Taxes
18. Income Taxes
The components of income (loss) before provision for income taxes by U.S. and foreign jurisdictions consist of the following (in thousands):
Fiscal Year Ended June 30,
202620252024
Domestic$(71,814)$(137,403)$(139,687)
Foreign93,864 38,508 54,280 
Total$22,050 $(98,895)$(85,407)
The provision for income taxes consists of the following (in thousands):
Fiscal Year Ended June 30,
202620252024
Current:
Federal$1,270 $(1,249)$2,134 
State3,472 4,534 3,969 
Foreign94,225 149,908 209,002 
Total98,967 153,193 215,105 
Deferred:
Federal(22,681)927 (14,030)
State(1,333)1,814 3,680 
Foreign925 1,858 10,357 
Total(23,089)4,599 7 
Total provision for income taxes$75,878 $157,792 $215,112 
The Company adopted ASU 2023-09 on a prospective basis effective July 1, 2025. A reconciliation of the U.S. federal statutory rate to the Company’s effective tax rate for the fiscal year 2026 is as follows (in thousands):
Fiscal Year Ended June 30, 2026
AmountPercent
Tax at U.S. federal statutory rate$4,630 21 %
State, net of the federal benefit (1)
(3,774)(17)
Foreign tax effects:
Australia
Statutory tax rate difference between Australia and the U.S.(5,885)(27)
R&D incentive(8,651)(39)
Foreign tax credits(15,791)(72)
Stock-based compensation115,305 523 
Change in valuation allowance(79,820)(362)
Other5,248 24 
India
Statutory tax rate difference between India and the U.S.16,131 73 
Other1,193 5 
Brazil
Withholding taxes7,494 34 
Other foreign jurisdictions23,580 107 
Effects of cross border tax laws
Global intangible low-taxed income42,216 192 
Other(4,637)(21)
Tax credits
Research and development(38,700)(175)
Foreign tax credits(7,855)(36)
Non-taxable or non-deductible items
Stock-based compensation81,330 369 
Section 162(m) adjustment
5,871 27 
Basis difference in investments9,559 43 
Change in unrecognized tax benefits
34,860 158 
Change in valuation allowance(109,140)(495)
Other2,714 12 
Provision for income taxes
$75,878 344 %
(1) The state that contributed to the majority of the tax effect in this category was California.
A reconciliation between the effective income tax rate and the federal statutory income tax rate applied to the loss before income taxes for years prior to the adoption of ASU 2023-09 is as follows (in thousands):
Fiscal Year Ended June 30,
20252024
Tax at federal statutory rate$(20,768)$(17,935)
State, net of the federal benefit28,097 16,362 
Effects of non-U.S. operations7,332 (14,575)
Tax credits(233,946)(151,912)
Stock-based compensation94,305 123,719 
Non-deductible executive compensation10,462 6,721 
Australian R&D deductions forgone in lieu of R&D credit29,169 29,502 
Foreign taxes1,159 (131)
Basis difference in investments(34,562)14,615 
Change in reserves29,886 32,505 
Change in valuation allowance239,975 174,994 
Other6,683 1,247 
Provision for income taxes$157,792 $215,112 
Effective tax rate (%)(160)%(252)%
Income taxes paid, net of refunds received, for the fiscal year 2026 were as follows (in thousands):
Fiscal Year Ended June 30,
2026
Federal$(7,112)
State930 
Foreign
Australia90,592 
India36,077 
Netherlands11,261 
All other foreign28,958 
Income taxes, net of amounts refunded$160,706 
The following table sets forth significant components of the Company’s deferred tax assets and deferred tax liabilities (in thousands). Where necessary, a valuation allowance has been recognized to offset the Company’s deferred tax assets by the amount of any tax benefits that are not expected to be realized.
As of June 30,
20262025
Deferred tax assets:
Property and equipment$5,957 $11,028 
Loss carryforwards
645,268 615,687 
Credit carryforwards460,856 401,629 
Operating lease liabilities55,358 56,962 
Basis differences in investments1,900,521 2,040,203 
Provisions, accruals, and prepayments
69,336 66,735 
Deferred revenue242,151 317,761 
Capitalized research and development89,790 113,489 
Other1,197 571 
Total deferred tax assets3,470,434 3,624,065 
Less valuation allowance(3,383,071)(3,549,451)
Total deferred tax assets, net of valuation allowance87,363 74,614 
Deferred tax liabilities:
Unrealized investment gains3,233 4,163 
Operating right of use assets26,689 46,348 
Stock-based compensation1,355 7,205 
Intangible assets79,851 35,495 
Other— 1,522 
Total deferred tax liabilities111,128 94,733 
Net deferred tax liabilities$(23,765)$(20,119)
The Company recorded a valuation allowance of $3.4 billion, $3.5 billion and $3.3 billion as of June 30, 2026, 2025, and 2024, respectively, primarily relating to the basis difference of the U.S. investment in a wholly owned partnership, U.S. net operating loss and credit carryforwards, and the deferred revenue deferred tax assets.
The decrease in valuation allowance in fiscal year 2026 was primarily related to a decrease in the basis difference of the U.S. investment in a wholly owned partnership and the deferred revenue deferred tax assets. The decrease also reflected the release of valuation allowances on certain pre-existing U.S. deferred tax assets that became realizable as a result of deferred tax liabilities recognized in business combinations completed during the year.
The increase in valuation allowance in fiscal years 2025 and 2024 were primarily related to an increase in the basis difference of the U.S. investment in a wholly owned partnership and the deferred revenue deferred tax assets, offset by the utilization of U.S. federal and state net operating losses.
The Company regularly assesses the realizability of its deferred tax assets and establishes a valuation allowance if it is more likely than not that some or all of its deferred tax assets will not be realized. The Company evaluates and weighs all positive and negative evidence such as historic results, future reversals of deferred tax liabilities, projected future taxable income, as well as prudent and feasible tax planning strategies. The assessment requires significant judgment and is performed in each of the applicable jurisdictions. The Company intends to maintain a full valuation allowance on its federal deferred tax assets in the U.S. and Australia until there is sufficient positive evidence to support their reversal.
As of June 30, 2026, the Company had U.S. federal, state, and foreign net operating loss carryforwards of $663.4 million tax effected. Of the $566.0 million tax effected U.S. federal net operating loss carryforwards, $565.8 million may be carried forward indefinitely, and the remaining $0.2 million will begin to expire in 2032. The state net operating loss carryforwards of $97.1 million tax effected begin to expire in 2027. The foreign net operating loss carryforwards of $0.4 million may be carried forward indefinitely. As of June 30, 2026, the Company also had research and development U.S. federal and state tax credits of $277.9 million and $135.7 million, respectively, and U.S. federal foreign tax credits of $59.0 million. The U.S. federal research and development credits will begin
expiring in 2036 if not utilized, and the U.S. federal foreign tax credits will begin expiring in 2034. The state tax credit carryforwards do not expire except for the state research and development credits of Texas which will begin to expire in 2039.
Utilization of the Company’s US net operating loss and tax credit carryforwards may be subject to annual limitation due to the ownership change limitations provided by the Internal Revenue Code and similar state provisions. Such an annual limitation could result in the expiration of the net operating loss and tax credit carryforwards before utilization. As of June 30, 2026, the Company also had Polish R&D credits of $16.8 million, which will begin to expire in 2028.
On July 4, 2025, the U.S. government enacted The One Big Beautiful Bill Act which includes, among other provisions, changes to the U.S. corporate income tax system such as allowing of immediate expensing of qualifying domestic research and development expenses and permanent extensions of certain provisions within the Tax Cuts and Jobs Act. Certain provisions were effective for the Company beginning in fiscal year 2026. The changes did not have material impact on the Company’s provision for income taxes for the fiscal year 2026.
The Organization for Economic Co-operation and Development released Pillar Two model rules defining a 15% global minimum tax for multinational corporations. Many countries in which the Company operates, including the member states of the EU, have enacted Pillar Two. Based on enacted laws, Pillar Two has not materially impacted the Company’s effective tax rate or cash flows. New legislation or guidance could change the Company’s current assessment.
U.S. income tax has not been recognized on the excess of the amount for financial reporting over the tax basis of investment in foreign subsidiaries that is indefinitely reinvested outside the United States. Un-remitted earnings become taxable upon repatriation of assets from the subsidiary or a sale or liquidation of the subsidiary. The amount of such un-remitted earnings and the corresponding unrecognized deferred tax liability as of June 30, 2026 is not material.
The Company records a current income tax receivable when income tax payments made to a taxing authority exceed the income tax liability for that jurisdiction. Current income tax receivables were $68.0 million and $15.8 million as of June 30, 2026 and 2025, respectively, and are included in prepaid expenses and other current assets in the Company's Consolidated Balance Sheets.
The Company recognizes the tax benefit of an uncertain tax position only if it concludes it is more likely than not that the position is sustainable upon examination by the taxing authority, based on the technical merits. The tax benefit recognized is measured as the largest amount of benefit which is greater than 50 percent likely to be realized upon settlement with the taxing authority. A reconciliation of the beginning and ending balance of total unrecognized tax benefits is as follows (in thousands):
Fiscal Year Ended June 30,
202620252024
Beginning of the period$136,882 $104,453 $122,302 
Tax positions taken in prior period:
Gross increases— 105 10,887 
Gross decreases(5,302)(4,547)— 
Tax positions taken in current period:
Gross increases47,195 36,871 25,707 
Settlements— — (53,648)
Lapse of statute of limitations(29)— — 
Currency translation effect— — (795)
End of period$178,746 $136,882 $104,453 
As of June 30, 2026, 2025, and 2024, the Company had gross unrecognized tax benefits of approximately $14.8 million, $0.4 million, and $10.9 million, respectively, that would impact the effective tax rate if recognized.
The Company files income tax returns in the U.S. federal jurisdiction, various state jurisdictions, Australia, and in various other international jurisdictions. Tax years 2012 and forward generally remain open for examination for U.S. federal and state tax purposes. Tax years 2017 and forward generally remain open for examination for non-
U.S. tax purposes. To the extent utilized in future years’ tax returns, net operating loss carryforwards as of June 30, 2026, and 2025 will remain subject to examination until the respective tax year is closed.
There are differing interpretations of tax laws and regulations, and as a result, disputes may arise with tax authorities involving issues of the timing and amount of deductions and allocations of income among various tax jurisdictions. The Company believes that adequate amounts have been reserved for any adjustments that may ultimately result from these examinations.
The Company has not recognized any material interest and penalties related to unrecognized tax benefits in the income tax provision during fiscal years 2026, 2025, and 2024, respectively. As of June 30, 2026, 2025, and 2024, the accrual balances were also not material.