Income Taxes |
6 Months Ended |
|---|---|
Jun. 30, 2026 | |
| Income Tax Disclosure [Abstract] | |
| Income Taxes | Income Taxes The Company computes its benefit from (provision for) income taxes for interim periods using an estimated annual effective tax rate based on anticipated annual pretax income or loss. The estimated annual effective tax rate is applied to the Company’s year-to-date income or loss, and is adjusted for discrete items recorded in the period. In 2026, the primary difference between the Company’s effective tax rate and federal statutory rate relates to the tax benefit recognized from the U.S. valuation allowance released during the second quarter of 2026. In prior periods, the primary difference between the Company’s effective tax rate and the federal statutory rate related to the valuation allowance the Company established on the federal, state and certain foreign net operating losses and credits. The benefit for income taxes recorded in the three and six months ended June 30, 2026 consists primarily of the release of the valuation allowance on U.S. deferred tax assets. The benefit for income taxes recorded in the three and six months ended June 30, 2026 was also impacted by federal, state and foreign income taxes and withholding taxes in foreign jurisdictions in which the Company conducts business, primarily driven by the excess benefit on share-based payment awards. The provision for income taxes recorded in the three and six months ended June 30, 2025 consists primarily of federal, state and foreign income taxes and withholding taxes in foreign jurisdictions in which the Company conducts business. The Company regularly assesses the need for a valuation allowance on its deferred tax assets. In making that assessment, the Company considers both positive and negative evidence related to the likelihood of realization of the deferred tax assets to determine, based on the weight of all available evidence, whether it is more-likely-than-not that some or all of the deferred tax assets will be realized. The determination of the realizability of deferred tax assets requires significant judgment and relies on management's estimates of future taxable income. As of June 30, 2026, the Company demonstrated sustained profitability in the U.S. over a cumulative period of three years based on the U.S. pre-tax book income adjusted for permanent book-tax differences, and expects to continue to sustain this profitability position in the U.S. for the annual period ended December 31, 2026. This evidence is objective and verifiable and represents strong positive evidence that carries significant weight. Based on the Company’s analysis of all available positive and negative evidence, including the objective and verifiable positive evidence as described above, and anticipated future earnings, the Company concluded that it is more likely than not that the majority of its U.S. deferred tax assets are realizable. As a result of this change in estimate, the Company released a significant portion of the valuation allowance on its U.S. deferred tax assets in the current quarter. The majority of this valuation allowance related to the U.S. federal and state net operating losses, tax credit carryforwards, and capitalized R&D expenditures. As the change in estimate occurred during an interim period, the Company included the change in valuation allowance resulting from the current year income in the estimated annual effective tax rate and recorded the release of the valuation allowance as a discrete tax benefit during the period, which resulted in the recognition of deferred tax assets and an income tax benefit during the three and six months ended June 30, 2026 of $944.1 million. An additional $8.7 million of the valuation allowance release was recorded in the statement of shareholders’ equity related to deferred tax assets that arose from a previously settled capped call. The Company’s judgment regarding the need for a valuation allowance may reasonably change in future reporting periods due to many factors, including changes in expectations of future profitability in the U.S. and changes in tax laws or regulations. The Company will continue to maintain a valuation allowance against deferred tax assets where the Company believes that it is more likely than not that they will not be realized. The remaining valuation allowance as of June 30, 2026 was $519.3 million, maintained against deferred tax assets related to investments, certain state research and development credits and certain foreign deferred tax assets. The Company is subject to taxation in the U.S. and various other state and foreign jurisdictions. Because the Company has net operating loss carryforwards for U.S. federal and state jurisdictions, the statute of limitations is open for all tax years. In February 2026, the Internal Revenue Service notified the Company of its intent to commence an audit of the Company's federal income tax return for the year ended December 31, 2023. The audit is in its preliminary stages. While the final outcome of this audit is uncertain, management believes that adequate amounts have been reserved for any adjustments that may result and does not expect the audit to have a material adverse effect on the Company's consolidated financial position, results of operations, or cash flows.
|