Income Taxes |
9 Months Ended |
|---|---|
Sep. 30, 2026 | |
| Income Tax Disclosure [Abstract] | |
| Income Taxes | 12. Income taxes
The Company's provision for income taxes for the three and nine months ended September 30, 2026 is based on the estimated annual effective tax rate for fiscal 2026 applied to year-to-date ordinary income (loss), adjusted for discrete items, if any, which are recognized in the period in which they occur. Jurisdictions with an anticipated or year-to-date ordinary loss for which no tax benefit can be recognized are excluded from the estimated annual effective tax rate. The estimated annual effective tax rate is derived from an estimate of annual earnings before taxes, adjusted for nondeductible expenses, other permanent items, valuation allowances, and any applicable income tax credits. The Company continues to maintain a full valuation allowance against its U.S. federal and state net deferred tax assets, and against the deferred tax assets of certain foreign subsidiaries, as it is more likely than not that those deferred tax assets will not be realized. Although the Company generated pretax income for the nine months ended September 30, 2026, it remains in a cumulative pretax loss position in the U.S. over the most recent three-year period and incurred a pretax loss for the three months ended September 30, 2026. The Company will continue to monitor the positive and negative evidence, and will adjust the valuation allowance as sufficient positive evidence becomes available. The exact timing and amount of the valuation allowance release would be subject to change based on the level of profitability that the Company can achieve. For the three months ended September 30, 2026 and 2025, the Company’s provision for income taxes reflected an effective tax rate of (2.95) percent and (10.44) percent, respectively. For the nine months ended September 30, 2026 and 2025, the Company had an effective tax rate of 31.63 percent and (9.55) percent, respectively. For the three and nine months ended September 30, 2026 and 2025, the Company’s effective tax rate differed from the U.S. federal statutory rate of 21 percent primarily due to the Company's valuation allowances in the U.S. and certain foreign jurisdictions offsetting the benefits of losses in those jurisdictions. The Company’s total income tax expense consists primarily of current income tax expense from profitable foreign operations, including foreign withholding taxes, state current income tax expense unable to be offset by attributes, and deferred income tax expense relating to the tax amortization of acquired goodwill, which has an indefinite life for book purposes and cannot be fully offset by deferred tax assets. For the nine months ended September 30, 2026, these items resulted in income tax expense that was high relative to the Company's modest pretax income and, therefore, an effective tax rate above statutory rate. For the three months ended September 30, 2026, the Company recorded income tax expense on a pretax loss, resulting in a negative effective tax rate. Net operating losses and tax credits generated in years prior to 2022 remain open to adjustment until the statute of limitations closes for the tax year in which the net operating losses are utilized. generally remain open to examination by the major taxing jurisdictions to which the Company is subject; certain foreign jurisdictions have longer examination periods. |