Income Taxes |
9 Months Ended |
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Sep. 30, 2026 | |
| Income Tax Disclosure [Abstract] | |
| Income Taxes | Income Taxes The Company’s (benefit from) provision for income taxes during the interim periods is determined using an estimate of the Company’s annual effective tax rate, which is adjusted for certain discrete tax items during the interim period. The Company recorded an income tax benefit of $22.2 million and an income tax provision of $1.6 million for the three months ended September 30, 2026 and 2025, respectively. The Company recorded an income tax benefit of $17.2 million and an income tax provision of $7.7 million for the nine months ended September 30, 2026 and 2025, respectively. The income tax benefit for both the three and nine months ended September 30, 2026 was primarily driven by the release of the U.S. valuation allowance, partially offset by activity in the Company's foreign subsidiaries and U.S. state taxes. The income tax provision for both the three and nine months ended September 30, 2025, was primarily attributable to activity in the Company's foreign subsidiaries and U.S. state taxes. For the nine months ended September 30, 2026, the Company’s effective tax rate differed from the U.S. federal statutory rate primarily due to the release of the U.S. valuation allowance, research and development tax credits, and non-deductible executive compensation. For the nine months ended September 30, 2025, the Company’s effective tax rate differed from the U.S. federal statutory rate primarily due to the impact of non-deductible executive compensation and the change in the valuation allowance in the U.S. The Company files income tax returns as prescribed by the tax laws of the jurisdiction in which it operates. In the normal course of its business, the Company is subject to examination by federal, state and foreign jurisdictions, where applicable. The Company is open to future federal tax examinations by the Internal Revenue Service from 2022 to the present; however, carryforward attributes that were generated prior to 2022 may still be adjusted upon examination to the extent they will be used in a future period. The Company remains open to examination by other foreign tax authorities from 2021 to the present. The Company’s management evaluates the realizability of the Company’s deferred tax assets based on all available evidence, both positive and negative, and regularly assesses the need for a valuation allowance on its deferred tax assets. In making this 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 available evidence, whether it is more likely than not that some or all the deferred tax assets will not be realized. The assessment requires significant judgment and is performed for each of the applicable jurisdictions. During the nine months ended September 30, 2026, the Company demonstrated consistent and continued profitability over the preceding three-year period, both globally and within its U.S. operations. The Company’s ability to sustain and grow its profitability is supported by its success in building its client base around the world and the achievement of significant scale from expanding utilization by its clients’ customers. The Company anticipates it will achieve its sustained profitability through the normal course of business and does not expect that the realization of its deferred tax assets will be dependent on tax planning strategies, material improvements over present levels of consolidated pre-tax results, material changes in the present relationship between income reported for financial and tax purposes, or material asset sales or other non-routine transactions. Accordingly, the Company’s valuation allowance analysis is based on objective, verifiable evidence of recent profitability trends and reasonable projections of continued profitability. Further, given the Company's U.S. taxable income position for the annual periods ending on December 31, 2024 and 2025, the Company utilized more attributes than it generated which reduces its U.S. federal and state net deferred tax assets. As a result, in the third quarter of 2026, the Company concluded that its history of cumulative profitability in the U.S. over the preceding three-year period, along with increasingly favorable forecasts of continued future profitability in the U.S., provided sufficient positive evidence supporting the realizability of its U.S. deferred tax assets and, accordingly, the release of the related valuation allowance previously recorded against these deferred tax assets, resulting in a tax benefit of $25.2 million in the third quarter of 2026. Deferred tax assets are recorded within other assets on the condensed consolidated balance sheets. Following this release, the Company has no remaining valuation allowance against its U.S. federal and state deferred tax assets. On July 4, 2025, the U.S. government enacted the One Big Beautiful Bill Act of 2025 (OBBBA), which introduced comprehensive changes to the U.S. corporate income tax system. While the majority of the OBBBA’s provisions became effective for the Company beginning January 1, 2026, certain capital investment and innovation incentives were retroactively applicable to the 2025 fiscal year. The OBBBA reinstated 100% bonus depreciation for qualified property placed in service after January 19, 2025. It also restored the ability to immediately expense domestic research and development (R&D) expenditures, allowing for a 100% deduction (or 50% over two years for unamortized costs) for tax years beginning after December 31, 2024. The impact of these retroactive changes was recognized in the Company’s income tax provision for the year ended December 31, 2025, and did not have a material effect on the consolidated financial statements. The Company continues to evaluate the long-term effects of the legislation on the Company's estimated annual effective tax rate and cash tax position. Based on current analysis, the OBBBA did not have a material impact on the Company's condensed consolidated financial statements for the nine months ended September 30, 2026.
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