Income Taxes

9 Months Ended

Sep. 30, 2023

Income Tax Disclosure [Abstract]

Income Taxes

12. Income Taxes

The Company’s quarterly provision for income taxes is based on an estimated annual effective income tax rate. The quarterly provision for income taxes also includes discrete items, such as changes in valuation allowances or adjustments upon finalization of tax returns as well as infrequently occurring items, if any, such as the effects of changes in tax laws or rates, in the interim period in which they occur.

The Company recorded an income tax expense of $0.1 million and an income tax benefit of $0.7 million in the three months ended September 30, 2023 and 2022, respectively. The Company recorded an income tax expense of $0.6 million and an income tax benefit of $2.9 million in the nine months ended September 30, 2023 and 2022, respectively. The increase in the Company's tax provision reflects the effect of the Company's foreign operations, which reported pre-tax income in the first half of 2023 and pre-tax loss in the first half of 2022.

The Company’s effective tax rates for both periods differ from the 21% U.S. Federal statutory tax rate primarily due to valuation allowances recorded against deferred tax assets on domestic losses and the tax rate differences between the U.S. and foreign countries. The Company maintains a valuation allowance against its U.S. deferred tax assets as the Company believes it is more likely than not the deferred tax assets will not be realized.