v3.26.1
INCOME TAXES
 12 Months Ended
Jun. 30, 2026
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
The components of income before provision for income taxes were as follows (in thousands):
Year ended June 30,
202620252024
Domestic$1,114,353 $326,371 $149,523 
Foreign68,722 479,281 274,305 
$1,183,075 $805,652 $423,828 
The provision for income taxes consisted of the following (in thousands):
Year ended June 30,
202620252024
Current
Federal$206,040 $131,505 $67,870 
State37,226 21,906 8,019 
Foreign15,384 12,511 9,946 
Current tax expense258,650 165,922 85,835 
Deferred
Federal(31,020)(62,239)(7,110)
State(3,950)(8,374)(627)
Foreign(908)(1,579)(4,230)
Deferred tax benefit (expense)(35,878)(72,192)(11,967)
Provision for income taxes$222,772 $93,730 $73,868 

The Company adopted ASU 2023-09 "Income Taxes (Topic 740): Improvements to Income Tax Disclosures" on a prospective basis beginning with the year ended June 30, 2026. The following table presents required disclosure pursuant to ASU 2023-09 and reconciles the U.S. federal statutory income tax amount and rate to our total provision for income taxes amount and rate for the year ended June 30, 2026 (in thousands except for percentages):
Year ended June 30, 2026
AmountPercent
US Federal Statutory Rate248,445 21.0 %
State and local income taxes, net of federal income tax effect *26,342 2.2 %
Foreign tax effects:— — %
Other foreign jurisdictions45 — %
Effect of cross-border tax laws:
Global intangible low tax income209 — %
Foreign-derived intangible income deduction(52,839)(4.5)%
Other1,512 0.1 %
Nontaxable or nondeductible items:
Stock-based compensation expense428 0.1 %
Other442 0.1 %
Changes in unrecognized tax benefits(1,812)(0.2)%
Total$222,772 18.8 %

(*) The tax effect in this category primarily reflects state and local taxes in California, Illinois, New Jersey, New York State, New York City, Pennsylvania, and Utah.

The following table presents the required disclosures prior to our adoption of ASU 2023-09 and reconciles the U.S. federal statutory income tax rate and our effective tax rate for the years ended June 30, 2025 and June 30, 2024 (in percentages):
Year ended June 30,
20252024
Statutory rate21.0 %21.0 %
Effect of foreign operations(5.0)(5.7)
State tax expense2.0 1.3 
Share-based compensation0.1 0.3 
Subpart F income0.2 0.4 
Intangibles realignment(6.6)— 
Other permanent items(0.1)0.1 
Effective tax rate11.6 %17.4 %

The Company made tax payments, net of refunds, during the year ended June 30, 2026 as follows (in thousands):
Year ended June 30, 2026
Amount
Cash paid for federal income taxes236,003 
Cash paid for state and local income taxes *41,776 
Cash paid for foreign income taxes *12,192 
$289,971 
*There were no net payments made to any jurisdiction that exceeded 5% of the total income taxes paid.
Significant components of the Company's deferred tax assets and liabilities as of June 30, 2026 are as follows (in thousands):

June 30,
20262025
Deferred tax assets
Reserves and allowances$12,620 $10,182 
Share-based compensation508 501 
Accrued expenses912 792 
Capitalized research expenditures124,504 97,584 
State tax7,160 1,805 
Investments1,325 1,325 
Lease liabilities17,436 11,404 
Other23,073 17,804 
Total deferred tax assets187,538 141,397 
Deferred tax liabilities
Property and equipment(9,689)(9,509)
Right of use assets(17,049)(11,052)
Other liabilities(15,962)(11,877)
Total deferred tax liabilities(42,700)(32,438)
Valuation allowance(1,325)(1,325)
Net deferred tax assets$143,513 $107,634 

A reconciliation of the beginning and ending balances of the unrecognized tax benefits during the years ended June 30, 2026 and 2025 consists of the following (in thousands):
 
Year ended June 30,
20262025
Unrecognized benefit—beginning of year$34,740 $33,049 
Gross increases—current year tax positions— 7,023 
Gross decreases—prior year tax positions due to statute lapse(3,256)(5,332)
Unrecognized benefit—end of year$31,484 $34,740 

As of June 30, 2026, the Company had approximately $31.5 million of unrecognized tax benefits, substantially all of which would, if recognized, affect its tax expense. The Company recognizes interest and penalties related to unrecognized tax benefits within the income tax expense line in the accompanying Consolidated Statements of Operations and Comprehensive Income. Accrued interest and penalties are included within the related tax liability line in the Consolidated Balance Sheets. As of June 30, 2026 and 2025, the Company had $6.7 million and $5.5 million accrued interest related to uncertain tax matters, respectively.

The Company and one or more of its subsidiaries, file income tax returns in the United States federal jurisdiction, and various state, local, and foreign jurisdictions and is currently undergoing income tax examinations by the U.S. Internal Revenue Service (“IRS”) and the IRD. All material consolidated federal, state and local income tax matters have been concluded for years through 2019, with the exception of federal income tax return for fiscal year 2015 and fiscal year 2016. The majority of the Company's foreign jurisdictions have been concluded through 2015, with the exception of Hong Kong which has been reviewed through 2009 and is currently under audit for the 2010-2020 statutory tax years.

In July 2018, the Company received a draft Notice of Proposed Adjustment (“Draft NOPA”) from the IRS proposing an adjustment to income for the fiscal 2015 and fiscal 2016 tax years based on its interpretation of certain obligations of the non-U.S. entities under the credit facility. This Draft NOPA was superseded by an Acknowledgement of Facts (“AOF”) issued to the Company by the IRS on January 17, 2020. The IRS in its AOF continued to propose an adjustment to the Company’s income for its fiscal 2015 and fiscal 2016 tax years based on the IRS’ interpretation of certain obligations of the Company’s foreign subsidiaries under the Company’s credit facilities. On May 12, 2020, the IRS issued a final NOPA to the Company with respect to the 2015/2016 tax years. The Company formally protested the adjustment and the case was moved from the Examination Division to the IRS Appeals
Division where a formal review of the facts and the applicable law took place on May 9, 2022. The Appeals Officer issued a Notice of Deficiency on August 3, 2022, which upheld the position of the Examination Division. The Company filed a petition with the United States Tax Court seeking to have the Notice of Deficiency reversed. On November 8, 2023, the Company filed a Motion for Summary Judgment. The IRS responded to the Company’s Motion on December 26, 2023 and filed a Cross-Motion for Summary Judgment. On January 22, 2024, the judge assigned to this case rejected both Motions for Summary Judgment. As such, the Company is awaiting a trial date to be set. The Company continues to believe that its tax position filed with the IRS with regard to this matter is more likely than not to be sustained based on technical merits. However, there can be no assurance that this matter will be resolved in the Company’s favor. Regardless of whether the matter is resolved in the Company’s favor, the final resolution of this matter could be expensive and time-consuming to defend and/or settle. The Company estimates the incremental tax liability associated with the income adjustment proposed in the AOF would be approximately $50.0 million, excluding potential interest and penalties, after adjusting for the impact of an adjustment on the amount of transition tax paid and payable in future years by the Company. As the Company believes that the tax originally paid in fiscal 2015 and fiscal 2016 is correct, it has not provided a reserve for this tax uncertainty. However, an adverse outcome may have a material and adverse effect on the Company’s results of operations and financial condition.

The IRD is examining the Company’s claims that its revenue is generated through activities performed wholly outside of the Hong Kong tax jurisdiction and are therefore exempt from Hong Kong tax. The Company is fully cooperating with the examination including submitting documentation in support of its position. The Company continues to believe that its tax positions filed with the IRD are more likely than not to be sustained based on their technical merits and therefore no reserve has been provided for this tax uncertainty. Between fiscal years 2018 and 2025, the Company made payments totaling a combined amount of $60.9 million as deposits with the IRD in connection with extending the statute of limitation for the 2010-2019 income tax audits. On March 27, 2026, the Company received notification that the IRD is seeking an additional $0.2 million deposit covering the 2020 statutory tax year. The Company filed a formal protest in response to this notice and the Assessor's office agreed to a reduced immaterial deposit amount covering the 2020 statutory tax year. The refundable deposits are included within other long-term assets on our Consolidated Balance Sheets. The Company expects the $60.3 million (net of foreign currency impact) of deposits made with the IRD to be refunded upon completion of the audit. However, there can be no assurance that this matter will be resolved in the Company’s favor and therefore it's possible that an adverse outcome of the matter could have a material effect on the Company’s results of operations and financial condition.

The Organization for Economic Co-operation and Development Inclusive Framework on Base Erosion and Profit Shifting released Pillar Two Model Rules (“Pillar Two”) for a global minimum tax. Many countries have enacted certain aspects of the Pillar Two framework with effective dates prior to the conclusion of the Company’s fiscal year 2025. Entities operating in countries where Pillar Two has been enacted are required to estimate Pillar Two top-up tax obligations beginning in the first quarter of fiscal year 2025. For the fiscal year ended June 30, 2026, the Company included approximately $3.2 million Pillar Two top-up tax obligations impacting the Company’s effective tax rate. The Company will continue to evaluate the impact of proposed and enacted legislation as new guidance becomes available.

On July 4, 2025, the United States enacted tax reform legislation through the One Big Beautiful Bill Act (“OBBBA”). Included in this legislation are provisions that allow for the immediate expensing of domestic United States research and development expenses, immediate expensing of certain capital expenditures, and changes to the U.S. taxation of profits derived from foreign operations. ASC 740, “Income Taxes”, requires the effects of changes in tax rates and laws on deferred tax balances to be recognized in the period in which the legislation is enacted. The legislation has multiple effective dates, with certain provisions effective in 2025 (our current fiscal year 2026) and others implemented through 2027 (our fiscal year 2028). The Company has evaluated the OBBBA enacted during the year end and believes it has reflected the impact of all relevant legislation in calculations to determine income taxes.