Income Taxes

6 Months Ended

Jun. 30, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Income TaxesThe Company's effective income tax rate is based on estimated income for the year, the estimated composition of the

income in different jurisdictions and discrete adjustments, if any, in the applicable quarterly periods. Potential discrete adjustments include tax charges or benefits related to stock-based compensation, changes in tax legislation, settlements of tax audits or assessments, uncertain tax positions and acquisitions, among other items.

The Company’s effective income tax rate was 18.4% and 15.9% for the six months ended June 30, 2023 and 2022, respectively. The higher effective tax rate for the six months ended June 30, 2023 was primarily due to an increase in non-deductible stock-based compensation, an increase in revaluation of certain foreign income tax liabilities due to foreign exchange rate fluctuations and a decrease in the excess tax benefit related to stock-based compensation. These amounts were partially offset by a decrease in intercompany sales of intellectual property.

For the six months ended June 30, 2023, the effective income tax rate was lower than the federal statutory tax rate due to foreign income taxed at lower rates and the benefit of U.S. federal, state and foreign research and development credits. These amounts were partially offset by tax on global intangible low taxed income, non-deductible stock-based compensation and a shortfall related to stock-based compensation.

For the six months ended June 30, 2022, the effective income tax rate was lower than the federal statutory tax rate due to foreign income taxed at lower rates, the excess tax benefit related to stock-based compensation and the benefit of U.S. federal, state and foreign research and development tax credits. These amounts were partially offset by an intercompany sale of intellectual property, the tax on global intangible low taxed income and non-deductible stock-based compensation.