v3.26.3
Income Taxes
 9 Months Ended
Sep. 30, 2026
Income Tax Disclosure [Abstract]  
Income Taxes

Note 8. Income Taxes

The following table presents the Company’s income tax (benefit) expense and effective income tax rate (in thousands, except percentages):

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2026

 

 

2025

 

 

2026

 

 

2025

 

 

 

 

 

Income tax (benefit) expense

 

$

(1,421

)

 

$

254

 

 

$

(1,023

)

 

$

(101

)

Effective income tax rate

 

 

(47.9

%)

 

 

12.9

%

 

 

5.3

%

 

 

5.1

%

 

The Company recorded income tax benefits of $1.4 million and $1.0 million for the three and nine months ended September 30, 2026, respectively. The year-to-date benefit reflects the application of the estimated annual effective tax rate to the year-to-date pretax loss, partially offset by discrete tax expense related to uncertain tax positions and stock-based compensation. The third-quarter benefit includes the cumulative adjustment to the year-to-date provision based on the estimated annual effective tax rate. The Company’s income tax positions, including the assessment of valuation allowances and uncertain tax positions, remain largely consistent with those disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. The Company continues to maintain a valuation allowance on its net U.S. deferred tax assets while periodically reassessing the need for it.

 

The Company recognizes only those tax positions that meet the more-likely-than-not recognition threshold and establishes tax reserves for uncertain tax positions that do not meet this threshold. Interest and penalties associated with income tax matters are included in the provision for income taxes in the condensed consolidated statements of operations. As of September 30, 2026, the Company had uncertain tax positions of $2.2 million, inclusive of $0.4 million of interest and penalties.

 

As required by the authoritative guidance on accounting for income taxes, the Company evaluates the realizability of deferred tax assets on a jurisdictional basis at each reporting date. Accounting for income taxes requires that a valuation allowance be established when it is more likely than not that all or a portion of the deferred taxes will not be realized. The Company considers all positive and negative evidence in determining if, based on the weight of such evidence, a valuation allowance is required. In circumstances where there is sufficient negative evidence indicating that the deferred tax assets are not more likely than not realizable, the Company establishes a valuation allowance. Due to

the significant 2022 pre-tax loss, coupled with cumulative book losses, the Company recorded a valuation allowance on its net U.S. deferred tax assets as of December 31, 2022. The Company continues to maintain this valuation allowance for the three and nine months ended September 30, 2026. The Company will continue to evaluate all available positive and negative evidence in future periods to assess the realizability of its deferred tax assets and the need for a valuation allowance. Should facts and circumstances change, the Company may adjust its valuation allowance and record income tax expense or benefit in future periods.

The Company is subject to income taxes domestically and in various foreign jurisdictions. The Company files U.S., state and foreign income tax returns in jurisdictions with various statutes of limitations. The federal tax years open under the statute of limitations are 2022 through 2025, and the state tax years open under the statute of limitations are 2022 through 2024, and the foreign tax years open under the statute of limitations are 2022 through 2025.