v3.26.1
Income Taxes
 12 Months Ended
Jun. 30, 2026
Income Tax Disclosure [Abstract]  
Income Taxes INCOME TAXES
The components of income (loss) before provision for income taxes were as follows during the periods presented (in thousands):
Year ended
June 30,
202620252024
Domestic$(17,325)$(43,567)$5,312 
Foreign7,194 73,977 (31,631)
Total income (loss) before provision for income taxes$(10,131)$30,410 $(26,319)
The components of provision for income taxes were as follows during the periods presented (in thousands):
Year ended
June 30,
202620252024
Current:
Federal$(205)$3,850 $1,650 
State1,033 2,758 1,251 
Foreign2 80 19 
Total current830 6,688 2,920 
Deferred:
Federal205 (32)(262)
State75 (45)(99)
Total deferred280 (77)(361)
Provision for income taxes$1,110 $6,611 $2,559 
The items accounting for the difference between the income taxes computed at the U.S. federal statutory tax rate and the provision for income taxes after the adoption of ASU 2023-09 consisted of the following during the period presented (in thousands, except percentages):
Year e
ded June 30,
2026
U.S. federal statutory tax rate$(2,127)21 %
State and local income taxes, net of federal income tax effect947 (9)%
Foreign tax effects
Australia
Statutory tax rate difference647 (6)%
Internal restructuring (1)
24,227 (239)%
Changes in valuation allowances (1)
(26,439)261 %
Other57 (1)%
Effect of cross-border tax laws
Tax effects of foreign disregarded entity1,509 (15)%
Tax credits
Research and development tax credits(7,355)73 %
Changes in valuation allowances (1)
(17,218)170 %
Nontaxable or nondeductible items
Stock-based compensation (2)
20,772 (205)%
Limitation on executive compensation5,588 (55)%
Nondeductible meals658 (7)%
Other10 — %
Other adjustments(166)1 %
Provision for income taxes and effective tax rate$1,110 (11)%
The Company's effective tax rates for the years ended June 30, 2025, and 2024, were 22% and (10)%, respectively. The items accounting for the difference between the income taxes computed at the U.S. federal statutory tax rate and the provision for income taxes prior to adoption of ASU 2023-09 consisted of the following during the periods presented (in thousands):
Year ended
June 30,
20252024
Expected provision (benefit) at U.S. federal statutory rate$6,386 $(5,528)
State income taxes, net of federal benefit7,325 9,134 
Stock-based compensation (2)
19,204 24,300 
Research and development tax credits(23,383)(24,039)
Change in valuation allowance (3)
10,939 4,943 
Restructuring— (13,769)
Foreign rate differential(15,455)6,658 
Other1,595 860 
Provision for income taxes$6,611 $2,559 
(1) The rate impact during the year ended June 30, 2026 pertains to a decrease in valuation allowance due to the decrease in net deferred tax assets during the year.

(2) The rate impact during the year ended June 30, 2026, 2025 and 2024 relates to the impact of non-deductible stock compensation and shortfalls related to tax deductions being smaller than the associated stock compensation expense.
(3) The rate impact during the year ended June 30, 2025 and 2024 pertains to an increase in valuation allowance due to the increase in net deferred tax assets, capitalized R&D expense and tax credits generated during the year.
The components of deferred tax assets and liabilities were as follows as of the dates presented (in thousands):
June 30,
20262025
Deferred tax assets:
Accruals and reserves$15,808 $17,888 
Capitalized research and development123,090 160,755 
Stock-based compensation12,822 19,532 
Net operating and other loss carryforwards267,807 280,004 
Research and development credits108,218 99,626 
Operating lease liabilities15,460 17,874 
Other (1)
783 3,842 
Total deferred tax assets before valuation allowance
543,988 599,521 
Valuation allowance(455,485)(503,692)
Deferred tax assets$88,503 $95,829 
Deferred tax liabilities:
Deferred contract costs$(6,940)$(6,603)
Property and equipment(30,106)(22,253)
Intangible assets(38,436)(53,280)
Operating right of use assets(12,056)(14,066)
Other
(1,617)— 
Total deferred tax liabilities(89,155)(96,202)
Net deferred tax liabilities$(652)$(373)
(1) Fiscal 2025 amounts have been conformed to the fiscal 2026 presentation.
Accounting Standards Codification 740 requires that the tax benefit of net operating losses, temporary differences, and credit carryforwards be recorded as an asset to the extent that management assesses that realization is “more likely than not.” Realization of the future tax benefits is dependent on the Company’s ability to generate sufficient taxable income within the carryforward period. Because of the Company’s recent history of operating losses, management believes that recognition of the deferred tax assets arising from the above-mentioned future tax benefits is currently not likely to be realized and, accordingly, has provided a valuation allowance. The change in valuation allowance was a decrease of $48.2 million, an increase of $9.3 million, and an increase of $15.0 million during the years ended June 30, 2026, 2025, and 2024, respectively. The decrease in the June 30, 2026 valuation allowance is primarily from the enactment of the One Big Beautiful Bill Act (OBBBA), which permanently repealed the mandatory capitalization and amortization of research and experimental expenditures under Section 174 of the Internal Revenue Code (the Code), reducing the related deferred tax asset. The net deferred tax liability is included as other long-term liabilities in the accompanying consolidated balance sheets.
On July 4, 2025, President Trump signed the OBBBA into law, which extends and modifies various domestic and international business tax framework originally enacted under the Tax Cuts and Jobs Act ("TCJA”). The legislation includes multiple effective dates, with certain provisions taking effect in fiscal 2026 and others through fiscal 2028. The Company evaluated the OBBBA and included its impact within the consolidated financial statements. The Company will continue to evaluate the full impact of these legislative changes as additional supplemental guidance becomes available.
As of June 30, 2026, the Company had NOL carryforwards of $1.0 billion and $847.8 million for federal and state tax purposes, respectively, that are available to reduce future taxable income. If not utilized, $739.8 million of the state NOL carryforwards will begin to expire in fiscal 2027. As of June 30, 2026, the federal and the remaining state NOL carryforwards do not expire and will carry forward indefinitely until utilized. As of June 30, 2026, the Company also had research and development tax credit carryforwards of $99.0 million and $67.6 million for federal and state tax purposes, respectively. If not utilized, the federal tax credits will begin to
expire in fiscal 2041. The majority of the state tax credits do not expire and will carry forward indefinitely until utilized.
Utilization of the NOL and tax credit carryforwards may be subject to a substantial annual limitation due to the ownership change limitations provided by the Code and other similar state provisions. The annual limitation may result in the expiration of NOLs and tax credits before utilization.
Below is the reconciliation of the unrecognized tax benefits related to federal and state research and development credits during the periods presented (in thousands):
Year e
ded June 30,
202620252024
Balance at the beginning of the year$45,959 $35,128 $23,300 
Add:
Tax positions related to the current year
6,082 10,622 9,134 
Purchase of intangible assets— 209 — 
Tax positions related to the prior year
— — 2,714 
Less:
Tax positions related to the prior year
3,997 — — 
Statute of limitations lapse— — 20 
Balance at the end of the year$48,044 $45,959 $35,128 
The Company had unrecognized tax benefits as shown in the table above which are offset by a full valuation allowance. If the unrecognized tax benefits were recognized, they would not have an impact on the effective tax rate due to the Company’s valuation allowance.
The amount of interest and penalties during the years ended June 30, 2026, 2025, and 2024 was not material.
The Company files income tax returns in the U.S. for U.S. federal, California, and various states and foreign jurisdictions. The Company’s U.S. federal, state, and foreign tax returns for all years remain subject to examination by taxing authorities as a result of unused tax attributes being carried forward. The Company records liabilities related to uncertain tax positions, which provide adequate reserves for income tax uncertainties in all open tax years. Due to the Company’s history of tax losses, all years remain open to tax audit. The Company’s management evaluates the realizability of the Company’s deferred tax assets based on all available evidence, both positive and negative. The realization of net deferred tax assets is dependent on the Company’s ability to generate sufficient future taxable income during the foreseeable future.
The Company regularly evaluates the realizability of its deferred tax assets (DTAs) by assessing all available evidence, both positive and negative, to determine whether it is more likely than not that some or all of the DTAs will not be realized. The Company considers its historical earnings, volatility in actual earnings, impact of permanent book to tax difference, the timing of reversal of existing temporary differences, and future profitability to assess its valuation allowance. As of June 30, 2026, substantially all of the Company's U.S. DTAs, net of deferred tax liabilities, were subject to a valuation allowance. If sufficient positive evidence emerges, some or all of the valuation allowance could be released. Such a release would result in a non-cash income tax benefit in the period of release and the recognition of additional DTAs in the accompanying consolidated statements of operations and balance sheets, respectively. There is a reasonable possibility that, within the next twelve months, sufficient positive evidence may become available to conclude that all or a significant portion of the valuation allowance against U.S. net DTAs is no longer required.