v3.26.1
Income Taxes
 9 Months Ended
Jun. 30, 2026
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The components of income (loss) before income taxes are as follows (dollars in thousands):
Three Months Ended June 30,Nine Months Ended June 30,
2026202520262025
Domestic$(5,203)$(7,488)$5,297 $(15,788)
Foreign6,751 6,699 23,334 12,435 
Income (loss) before income taxes$1,548 $(789)$28,631 $(3,353)
The components of the provision for income taxes are as follows (dollars in thousands):
Three Months Ended June 30,Nine Months Ended June 30,
2026202520262025
Domestic$1,291 $337 $17,628 $807 
Foreign(1,276)1,595 13,036 1,193 
Provision for income taxes$15 $1,932 $30,664 $2,000 
Effective income tax rate1.0 %(244.9)%107.1 %(59.6)%
The effective tax rates for the periods presented are based upon estimated income for the fiscal year and the statutory tax rates enacted in the jurisdictions in which we operate. For all periods presented, the effective tax rate differs from the 21.0% statutory U.S. tax rate due to the impact of the nondeductible stock-based compensation and our mix of jurisdictional earnings and related differences in foreign statutory tax rates.
Our effective tax rate for the three months ended June 30, 2026 was 1.0% compared to negative 244.9% for the three months ended June 30, 2025. Consequently, our provision for income taxes for the three months ended June 30, 2026 was $0.0 million, a net change of $1.9 million from a provision for income taxes of $1.9 million for the three months ended June 30, 2025. This difference was attributable to the tax impacts of valuation allowances, foreign income inclusions, stock-based compensation, and our composition of jurisdictional earnings.
For the three months ended June 30, 2025, the Company recorded a non-cash out-of-period adjustment of $3.8 million to increase deferred tax assets and decrease goodwill to correct an error related to a prior period. Management evaluated this error under SAB No. 99 and SAB No. 108 and determined it was not material to prior annual or interim periods. Therefore, the correction was recorded in the prior period’s financial statements rather than by restating prior periods.
Our effective tax rate for the nine months ended June 30, 2026 was 107.1% compared to negative 59.6% for the nine months ended June 30, 2025. Consequently, our provision for income taxes for the nine months ended June 30, 2026 was $30.7 million, a net change of $28.7 million from a provision for income taxes of $2.0 million for the nine months ended June 30, 2025. This difference was attributable to the tax impacts of valuation allowances, foreign income inclusions, stock-based compensation, and our composition of jurisdictional earnings.
Deferred tax assets and liabilities are measured using the statutory tax rates and laws expected to apply to taxable income in the years in which the temporary differences are expected to reverse. Valuation allowances are provided against net deferred tax assets if, based upon all available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income and the timing of the temporary differences becoming deductible. Management considers, among other available information, scheduled reversals of deferred tax liabilities, projected future taxable income, limitations of availability of net operating loss carryforwards, and other matters in making this assessment.