The tax effects of temporary differences that give rise to significant portions of deferred tax assets (liabilities) are as follows (in thousands):
Recognition of deferred tax assets is appropriate when realization of these assets is more likely than not. Based
upon the weight of available evidence, which includes our historical operating performance and the recorded
cumulative net losses in prior fiscal periods, we recorded a full valuation allowance of $85.7 million and $78.7 million against the U.S. net deferred tax assets as of December 31, 2019 and 2018, respectively. For the years ended December 31, 2019 and 2018, the valuation allowance increased by $7.1 million and $6.2 million, respectively.
As of December 31, 2019 and 2018, we had U.S. federal net operating loss carryforwards of $193.8 million and
$185.0 million, respectively, and state net operating loss carryforwards of $84.6 million and $75.3 million,
respectively. The federal net operating loss carryforwards will expire at various dates beginning in the year ending December 31, 2025, if not utilized. The state net operating losses expire in various years ending between 2023 and
2039, if not utilized.
Additionally, as of December 31, 2019 and 2018, we had U.S. federal research and development credit
carryforwards of $15.3 million and $13.3 million, and state research and development credit carryforwards of
$16.4 million and $14.2 million, respectively. The federal credit carryforwards will begin to expire at various dates
beginning in 2025 while the state credit carryforwards can be carried over indefinitely.
Utilization of the net operating losses and credit carryforwards may be subject to an annual limitation provided
for in the Internal Revenue Code Section 382 and similar state codes. Any annual limitation could result in the
expiration of net operating loss and credit carryforwards before utilization
With respect to our undistributed foreign subsidiaries’ earnings we consider those earnings to be indefinitely reinvested and, accordingly, no related provision for U.S. federal and state income taxes has been provided. Our intention has not changed subsequent to the one-time transition tax under the Tax Act. Upon distribution of those earnings in the form of dividends or otherwise, we may be subject to both U.S. income taxes subject to an adjustment for foreign tax credits and withholding taxes in the various countries. As of December 31, 2019 and 2018, the undistributed earnings approximated $13.6 million and $10.8 million, respectively. Our undistributed earnings through December 31, 2017 have been taxed under the one-time transition tax under the Tax Act.

December31,
December31,
2019
2018
Deferred tax assets:
Net operating loss carry forwards
$46,273
$43,869
Research and development credits, net of uncertain tax positions
25,386
22,051
Accruals, reserves, and other
12,021
11,264
Stock-based compensation
3,306
2,628
Depreciation and amortization
2,219
1,952
Operating lease liability
7,061
—
Gross deferred tax assets
96,266
81,764
Valuation allowance
(85,743)
(78,681)
Total deferred tax assets
10,523
3,083
Deferred tax liabilities:
Deferred contract acquisition costs
(2,245)
(2,256)
Operating lease right of use asset
(7,088)
—
Other
(19)
(13)
Total deferred tax liabilities
(9,352)
(2,269)
Net deferred tax assets
$1,171
$814


Question: Analyse this data from a financial earnings document. What is the increase in valuation allowance between 2018 and 2019?
Choices:
7062
-7062
7062000
-88033
164424
Correct choice index: 0