10. Income Taxes

The Company has a net deferred tax asset balance of $47.3 million and a net deferred tax liability balance of $4.8 million as of June 30, 2026 within the assets and liabilities, noncurrent on the Company’s consolidated balance sheet. As of 2025, the Company had a deferred tax liability of $3.7 million included within other liabilities, noncurrent on the Company’s consolidated balance sheet. In 2026, the Company had a net deferred tax asset primarily related to net operating loss carryforwards, tax credits and capitalized research expenditures and a net deferred tax liability related to the intangible basis difference with respect to the acquisition of HomeBuddy. In 2025, the net deferred tax liability is related to indefinite lived deferred tax liabilities unable to be offset with deferred tax assets. The Company evaluated the need for a valuation allowance by considering among other things, the nature, frequency and severity of current and cumulative losses, reversal of taxable temporary differences, tax planning strategies, forecasts of future profitability, and the duration of statutory carryforward periods. In the second quarter of fiscal year 2026, due to the preponderance of positive evidence, including the Company’s cumulative profit before taxes and future forecasts of continued profitability in the United States, the Company determined that sufficient positive evidence existed to conclude that substantially all of its valuation allowance was no longer needed. Accordingly, the Company released the valuation allowance for the majority of its federal and state deferred tax assets. The Company continues to maintain a valuation allowance related to its deferred tax assets for its capital loss carryforwards, California research and development tax credits and foreign net operating losses. If there are unfavorable changes to actual operating results or to projections of future income, the Company may determine that it is more likely than not that such deferred tax assets may not be realizable. The Company has a valuation allowance of approximately $8.7 million and $69.3 million as of June 30, 2026 and 2025.

As of June 30, 2026 and 2025, the Company had a federal operating loss carryforward of approximately $75.4 million and $105.4 million. As of June 30, 2026 and 2025, the Company’s state operating loss carryforward was approximately $68.0 million and $82.8 million. With the exception of $68.6 million of federal net operating losses that can be carried forward indefinitely, the federal and state net operating losses, if not used, will begin to expire on June 30, 2038 and June 30, 2026, respectively. However, the Company currently expects to fully utilize the federal net operating losses generated in fiscal year 2018 during the next fiscal year and therefore does not expect such losses to expire. Further, based on current forecasts of future taxable income, management expects to realize the benefits of the remaining net operating loss carryforwards before the applicable expiration dates. The operating loss carryforward in the India jurisdiction was approximately $0.5 million which will begin to expire on June 30, 2027. The Company has federal and California research and development tax credit carryforwards of approximately $15.2 million and $13.8 million to offset future taxable income. The federal research and development tax credits, if not used, will begin to expire on June 30, 2034, while the state tax credit carryforwards do not have an expiration date and may be carried forward indefinitely.

Utilization of the operating loss carryforwards and credits may be subject to a substantial annual limitation due to the ownership change limitations provided by the Internal Revenue Code of 1986, as amended, and similar state provisions. The annual limitation may result in the expiration of operating loss carryforwards and credits before utilization.

The Company’s policy is to include interest and penalties related to unrecognized tax benefits within the Company’s provision for (benefit from) income taxes. As of June 30, 2026, the Company has accrued $1.8 million for interest and penalties related to the unrecognized tax benefits. The balance of interest and penalties is recorded as other liabilities, noncurrent on the Company’s consolidated balance sheet.

As of June 30, 2026, unrecognized tax benefits of $1.1 million, if recognized, would affect the Company’s effective tax rate. The Company does not anticipate that the amount of existing unrecognized tax benefits will significantly increase or decrease within the next 12 months.

The Company files income tax returns in the United States, various U.S. states and certain foreign jurisdictions and is no longer subject to U.S. federal, state and local, or non-U.S., income tax examinations by tax authorities for years before fiscal 2014. As of June 30, 2026, the tax years 2014 through 2026 remain open in the U.S., and the tax years 2021 through 2026 remain open in various foreign jurisdictions. The Company believes that adequate amounts have been reserved for any adjustments that may ultimately result from our examinations.

On July 4, 2025, U.S. legislation formally titled "An Act to Provide for Reconciliation Pursuant to Title II of H. Con. Res. 14” (“The Act”) was signed into law. The Act, among other things, extended key provisions of the 2017 Tax Cuts and Jobs Act and introduced targeted changes to the U.S. federal income tax regime. Key provisions include permanently restoring bonus depreciation allowances, permanent changes in the limitations for deducting business interest expense and permanent reintroduction of expensing of US research and development costs. The impact on current and deferred taxes for tax law changes is reported in operating income in the first quarter of fiscal year 2026, the period including the enactment date. The Company has evaluated the impact of The Act on its results of operations and has recognized the related tax impacts in fiscal year 2026 which includes the period of enactment.