Income Taxes

9 Months Ended

Sep. 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 15.6% and 17.8% for the nine months ended September 30, 2023 and 2022, respectively. The lower effective tax rate for the nine months ended September 30, 2023 was primarily due to a decrease in intercompany sales of intellectual property and global intangible low taxed income. These amounts were partially offset by an increase in non-deductible stock-based compensation and a decrease in the excess tax benefit related to stock-based compensation.

For the nine months ended September 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 non-deductible stock-based compensation and a shortfall related to stock-based compensation.

For the nine months ended September 30, 2022, the effective income tax rate was lower than the federal statutory tax rate due to foreign income taxed at lower rates, the benefit of U.S. federal, state and foreign research and development tax credits and the excess tax benefit related to stock-based compensation. 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.