v3.26.3
Income Taxes
 9 Months Ended
Sep. 30, 2026
Income Tax Disclosure [Abstract]  
Income Taxes INCOME TAXES:
The components of the income tax expense (benefit) are as follows:
For the Three Months Ended September 30,For the Nine Months Ended September 30,
2026202520262025
Federal income tax expense$3 $3 $8 $168 
State income tax expense18 (612)74 1,792 
Foreign income tax expense (benefit)687 656 249 (369)
$708 $47 $331 $1,591 

During the three months ended September 30, 2026 and 2025, the Company recorded income tax expense of $0.7 million and $47.0 thousand, respectively. During the nine months ended September 30, 2026 and 2025, the Company recorded income tax expense of $0.3 million and $1.6 million, respectively. The higher federal and state income tax expense in 2025 is largely due to recording an uncertain tax position for certain tax matters, including penalties and interest. During the three and nine months ended September 30, 2026, the Company had an effective tax rate of (6.0)% and (1.2)%, respectively. During the three and nine months ended September 30, 2025, the Company had an effective tax rate of (0.4)% and (3.4)%, respectively. The change in the tax in the quarterly periods is largely due to a reduction in the uncertain tax position made in Q3 2025 that did not reoccur in the third quarter of 2026. The increase in the Company's tax rate for the year-to-date period is primarily due to the recording of the uncertain tax positions in 2025 and an estimated increase in foreign pre-tax income in 2026.
Income tax expense reflects taxes due to the taxing authorities and the tax effects of temporary differences between the basis of assets and liabilities recognized for financial reporting and tax purposes, and net operating loss and tax credit carryforwards.
A valuation allowance is recorded to the extent it is more likely than not that some portion or all of the deferred tax assets will not be realized. A full valuation allowance was recorded on the Company’s U.S. and U.K. deferred tax assets as of September 30, 2026 and December 31, 2025.
Uncertain tax positions were approximately $2.0 million as of September 30, 2026 and December 31, 2025. The Company’s uncertain tax positions relate to U.S. federal and other jurisdictions. Due to various factors, including the inherent complexities and uncertainties of the judicial, administrative, and regulatory processes in certain jurisdictions, the timing of the resolution of income tax controversies is highly uncertain, and the amounts ultimately paid, if any, upon resolution of the issues raised by the taxing authorities may differ from the amounts accrued. Any assessments or settlements could result in changes to the Company's contingencies related to positions on prior years’ tax filings.