v3.26.1
Income Taxes
 6 Months Ended
Jun. 30, 2026
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
 
Three Months Ended June 30,
Six Months Ended June 30,
 
2026
2025
2026
2025
(In thousands, except percentages)
Provision for (benefit from) income taxes
$(1,884)
$334
$(3,659)
$(1,269)
Discrete items
(185)
(22)
(317)
30
Provision for (benefit from) income taxes, excluding discrete items
$(2,069)
$312
$(3,976)
$(1,239)
Effective tax rate
37.1%
14.0%
19.1%
14.0%
Effective tax rate, excluding discrete items
40.7%
13.0%
20.8%
13.7%
The Company’s interim period tax benefit from income taxes is determined using an estimate of its annual effective tax rate, adjusted
for discrete items, if any, that arise during the period.  Each quarter, the Company updates its estimate of the annual effective tax rate, and if
the estimated annual effective tax rate changes, the Company makes a cumulative adjustment in such period.  The Company’s quarterly tax
provision and estimate of its annual effective tax rate are subject to variation due to several factors, including variability in accurately
predicting its pre-tax income or loss and the mix of jurisdictions to which they relate, the applicability of special tax regimes, and changes in
how the Company does business.
For the three and six months ended June 30, 2026, the recognized benefit from income taxes resulted from the tax projection based
on the full year forecast and included benefits related to the U.S. federal research and development (“R&D”) tax credit, reduced by certain
permanent differences, such as non-deductible stock-based compensation as well as an increase in the California valuation allowance for
California R&D tax credits.
For the three and six months ended June 30, 2025, the recognized provision for and (benefit from) income taxes, respectively,
resulted from the tax projection based on the full year forecasted profit and included benefits related to the U.S. federal foreign-derived
intangible income (“FDII”), federal R&D tax credit, certain permanent differences, such as stock-based compensation shortfalls, and partial
release of California valuation allowance.
The effective tax rate excluding discrete items for the three months ended June 30, 2026, as compared to the prior year, differed
primarily due to a change in the full year forecast for 2026, with the projection that the Company will not generate any tax incentives from the
U.S. federal foreign-derived intangible income (“FDDEI”), previously called “FDII”, in 2026, combined with non-deductible expenses, most of
which relates to non-deductible stock-based compensation and an increase in the state valuation allowance as a result of the change in
forecast.
The effective tax rate excluding discrete items for the six months ended June 30, 2026, as compared to the prior year, differed
primarily due to the projection that the Company will not generate the FDDEI deduction in 2026 due to the Company’s forecasted loss in
2026.
On July 4, 2025, the One Big Beautiful Bill (“OBBBA”) Act, which includes a broad range of tax reform provisions, was signed into law
in the United States. During the three and six months ended June 30, 2026, the Company recorded its best estimate of the impact of the
OBBBA on the income tax provision. The Company will continue to evaluate the elections available within the OBBBA, which may impact the
timing of permanent and temporary differences within the Company’s tax provision.