INCOME TAXES |
6 Months Ended |
|---|---|
Jun. 30, 2026 | |
| Income Tax Disclosure [Abstract] | |
| INCOME TAXES | NOTE 8—INCOME TAXES At the end of each interim period, the Company estimates the annual effective income tax rate and applies that rate to its ordinary year-to-date earnings or loss. The income tax provision or benefit related to significant, unusual or extraordinary items, if applicable, that will be separately reported or reported net of their related tax effects are individually computed and recognized in the interim period in which they occur. In addition, the effect of changes in enacted tax laws or rates, tax status, judgment on the realizability of a beginning-of-the-year deferred income tax asset in future years or unrecognized tax benefits is recognized in the interim period in which the change occurs. The computation of the estimated annual effective income tax rate at each interim period requires certain estimates and assumptions including, but not limited to, the expected pre-tax income (or loss) for the year, projections of the proportion of income (and/or loss) earned and taxed in foreign jurisdictions, permanent and temporary differences and the likelihood of the realization of deferred income tax assets generated in the current year. The accounting estimates used to compute the provision or benefit for income taxes may change as new events occur, more experience is acquired, additional information is obtained or the Company’s income tax environment changes. To the extent that the estimated annual effective income tax rate changes during a quarter, the effect of the change on prior quarters is included in income tax provision or benefit in the quarter in which the change occurs. For the three and six months ended June 30, 2026, the Company recorded an income tax provision of $177.3 million and $167.2 million, respectively, which represents effective income tax rates of 26% and 25%, which were higher than the statutory rate of 21% due primarily to state taxes. For the three months ended June 30, 2025, the Company recorded an income tax provision of $74.4 million, which represents an effective income tax rate of 28%, which was higher than the statutory rate of 21% due primarily to state taxes, a deferred tax adjustment and non-deductible compensation expense, partially offset by the realization of a capital loss. For the six months ended June 30, 2025, the Company recorded an income tax benefit of $0.4 million, which represents an effective income tax rate of 1%, which was lower than the statutory rate of 21% due primarily to a deferred tax adjustment, non-taxable stock-based compensation expense, which included a reversal due to the forfeiture of our former CEO’s restricted stock award pursuant to the Employment Transition Agreement, and state taxes, partially offset by research credits. As a result of the Distribution, the Company has allocated to Angi a portion of the tax attributes related to the consolidated federal and state tax filings pursuant to the Internal Revenue Code and applicable state law. This allocation requires that the Company’s net deferred income tax liability be adjusted in the year of the Distribution with a corresponding adjustment to additional paid-in capital. The allocation of attributes that was recorded as of December 31, 2025 was preliminary. A subsequent adjustment is expected to be made in the fourth quarter of 2026 following the filing of income tax returns for the year ended December 31, 2025. Further amendments could be required based upon amendments to the Company’s taxable income for periods prior to the Distribution and potential tax audits in the future. The Company is routinely under audit by federal, state, local and foreign authorities in the area of income tax. These audits include questioning the timing and the amount of income and deductions and the allocation of income and deductions among various tax jurisdictions. The IRS is currently auditing the Company’s federal income tax return for the year ended December 31, 2023. Returns filed in various other jurisdictions are open to examination for tax years beginning with 2015. Income taxes payable include unrecognized tax benefits considered sufficient to pay assessments that may result from the examination of prior year tax returns. The Company considers many factors when evaluating and estimating its tax positions and tax benefits, which may not accurately anticipate actual outcomes and, therefore, may require periodic adjustment. Although management currently believes changes in unrecognized tax benefits from period to period and differences between amounts paid, if any, upon resolution of issues raised in audits and amounts previously provided will not have a material impact on the liquidity, results of operations, or financial condition of the Company, these matters are subject to inherent uncertainties and management’s view of these matters may change in the future. The Company recognizes interest and, if applicable, penalties related to unrecognized tax benefits in the income tax provision. At June 30, 2026 and December 31, 2025, accruals for interest and penalties are not material. At June 30, 2026 and December 31, 2025, unrecognized tax benefits, including interest and penalties, were $13.4 million and $13.0 million, respectively. Unrecognized tax benefits, including interest and penalties, at June 30, 2026 increased by $0.4 million due primarily to research credits, partially offset by a settlement. If unrecognized tax benefits at June 30, 2026 are subsequently recognized, $12.5 million, net of related deferred income tax assets and interest, would reduce income tax expense. The comparable amount at December 31, 2025 was $12.1 million.
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