v3.26.3
Income Taxes
 12 Months Ended
Aug. 31, 2026
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Income before income taxes consisted of the following (in thousands):
Fiscal Year Ended August 31,
202620252024
United States$50,124 $54,936 $47,345 
Foreign (1)
56,375 46,690 44,163 
Income before income taxes$106,499 $101,626 $91,508 
(1)Included in these amounts are income before income taxes for the EIMEA segment of $42.5 million, $34.7 million and $31.4 million for the fiscal years ended August 31, 2026, 2025 and 2024, respectively.
The provision for income taxes consisted of the following (in thousands):
Fiscal Year Ended August 31,
202620252024
Current:
Federal$8,184 $(4,726)$9,559 
State1,178 1,543 820 
Foreign16,056 12,945 12,596 
Total current25,418 9,762 22,975 
Deferred:
United States(342)657 (1,413)
Foreign(923)213 302 
Total deferred(1,265)870 (1,111)
Provision for income taxes$24,153 $10,632 $21,864 
Income taxes paid, net of refunds, exceeds 5% of total income taxes paid, net of refunds, in the following jurisdictions for the year ended August 31, 2026:
August 31,
2026
Federal$8,909 
State1,284 
Foreign
United Kingdom
6,821 
China
2,305 
All other foreign
3,398 
Total income taxes paid, net of refunds
$22,717 
Deferred tax assets and deferred tax liabilities consisted of the following (in thousands):
August 31,
2026		August 31,
2025
Deferred tax assets:
Accrued payroll and related expenses$1,652 $1,451 
Reserves and accruals1,823 1,758 
Research and development expenses1,505 2,078 
Stock-based compensation expense2,521 2,547 
Uniform capitalization2,327 2,020 
Tax credit carryforwards3,934 4,399 
Lease Liability1,100 671 
Other2,714 2,134 
Total gross deferred tax assets17,576 17,058 
Valuation allowance(4,337)(4,552)
Total net deferred tax assets13,239 12,506 
Deferred tax liabilities:
Property and equipment, net(3,026)(3,449)
Withholding taxes(1,320)(736)
Right-of-use Asset(1,162)(637)
Amortization of tax goodwill and intangible assets(14,801)(15,793)
Other(48)(239)
Total deferred tax liabilities(20,357)(20,854)
Net deferred tax liabilities$(7,118)$(8,348)
The Company had state net operating loss (“NOL”) carryforwards of $9.6 million as of August 31, 2026, which generated a net deferred tax asset of $0.5 million. As of August 31, 2026, the Company had $2.6 million of state NOL carryforwards that do not expire. The remaining state NOL carryforwards, if unused, will expire between fiscal years 2027 and 2046. The Company also had tax credit carryforwards of $3.9 million as of August 31, 2026, of which $3.8 million is attributable to U.K. tax credit carryforwards, which do not expire.
Future utilization of the U.K. tax credit carryforwards and certain state carryforwards is uncertain and is dependent upon several factors that may not occur, including the generation of future taxable income in certain jurisdictions. At this time, management does not conclude that it is “more likely than not” that all of the related deferred tax assets will be realized. Accordingly, the Company recorded an insignificant change in its valuation allowance during the fiscal year ended August 31, 2026 and the cumulative valuation allowance recorded against the related deferred tax asset associated with the U.K. tax credit carryforwards was $3.7 million as of August 31, 2026, and state carryforwards were $0.6 million as of August 31, 2026.
The table below provides the updated requirements of ASU 2023-09 for the year ended August 31, 2026. Refer to Note 2 — Basis of Presentation and Summary of Significant Accounting Policies for recent accounting pronouncements for additional details on the adoption of ASU 2023-09. A reconciliation of the statutory federal income tax rate to the Company’s effective tax rate is as follows (in thousands):
August 31, 2026
Income tax expense% of pre-tax income
Amount computed at U.S. statutory federal tax rate$22,365 21.0 %
State and local taxes, net of federal income tax effect (1)
934 0.9 %
Foreign tax effects
United Kingdom
Statutory tax rate difference between the United Kingdom and the United States1,699 1.6 %
Foreign tax credits(1,554)(1.5)%
Other(439)(0.4)%
All other foreign jurisdictions4,517 4.2 %
Effect of cross-border tax laws
FDII(3,546)(3.3)%
Other341 0.3 %
Tax credits
(839)(0.8)%
Nontaxable or nondeductible items
771 0.7 %
Other, net
(96)(0.1)%
Provision for income taxes$24,153 22.7 %
(1)State taxes in California, Illinois and Pennsylvania contributed to the majority (greater than 50%) of the tax effect in this line item.
As previously disclosed prior to the adoption of ASU 2023-09, a reconciliation of the statutory federal income tax rate to the Company’s effective tax rate is as follows (in thousands):
Fiscal Year Ended August 31,
20252024
Amount computed at U.S. statutory federal tax rate$21,341 $19,217 
Effect of foreign operations3,323 3,339 
Net (benefit) from GILTI/FDII(3,339)(2,696)
Uncertain tax positions(8,049)947 
Interest and other true-ups related to uncertain tax positions(3,416)— 
Other772 1,057 
Provision for income taxes$10,632 $21,864 
On July 4, 2025, the One Big Beautiful Bill Act ("OBBB Act”) was enacted into law. The OBBB Act includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The OBBB Act did not have a material impact on our effective tax rate in the current fiscal year and the remaining significant provisions are not expected to have a material impact once implemented in fiscal year ending August 31, 2027.
The provision for income taxes was 22.7% and 10.5% of income before income taxes for the fiscal years ended August 31, 2026 and 2025, respectively. The increase in the effective income tax rate was primarily due to the expiration of the statute of limitations on the uncertain tax position associated with the Tax Cuts and Jobs Act’s mandatory one-time “toll tax” on unremitted foreign earnings in the fiscal year 2025.
Reconciliations of the beginning and ending amounts of the Company’s gross unrecognized tax benefits, excluding interest and penalties, are as follows (in thousands):
Fiscal Year Ended August 31,
20262025
Unrecognized tax benefits – beginning of fiscal year$901 $9,147 
Increases for prior period tax positions9 181 
Increases for current period tax positions182 218 
Expirations of statute of limitations for assessment(201)(8,558)
Settlements with taxing authorities(103)(87)
Unrecognized tax benefits – end of fiscal year$788 $901 
Gross unrecognized tax benefits totaled $0.8 million and $0.9 million for the fiscal years ended August 31, 2026 and 2025, respectively, of which $0.6 million and $0.7 million, respectively, would affect the Company’s effective income tax rate if recognized. Interest and penalties related to uncertain tax positions included in tax expense was not significant for the fiscal year ended August 31, 2026 and a benefit of $4.4 million for the fiscal year ended August 31, 2025. The total balance of accrued interest and penalties related to uncertain tax positions was not significant for the fiscal years ended August 31, 2026 and 2025.
The Company is subject to taxation in the U.S. and in various state and foreign jurisdictions. Due to expired statutes and closed audits, the Company’s federal income tax returns for years prior to fiscal year 2023 are not subject to examination by the U.S. Internal Revenue Service. The Company is currently under audit by the U.S. Internal Revenue Service for fiscal year 2025, and in various state jurisdictions for fiscal years 2022 through 2025. Generally, for the majority of state and foreign jurisdictions where the Company does business, periods prior to fiscal year 2022 are no longer subject to examination. Audit outcomes and the timing of settlements are subject to significant uncertainty.
Income taxes receivable of $3.8 million and $4.9 million are recorded in the Company’s consolidated balance sheets as of August 31, 2026 and 2025, respectively. Income taxes receivable are included in other current assets, which also consists of miscellaneous prepaid expenses and deposits.