Income taxes

9 Months Ended

Sep. 30, 2024

Income Tax Disclosure [Abstract]

Income taxes

Income taxes

The Company determines its tax provision for interim periods using an estimate of its annual effective tax rate adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter, the Company updates its estimate of the annual effective tax rate, and if its estimated tax rate changes, the Company makes a cumulative adjustment.

The Company’s effective tax rate (“ETR”) was 24.3% for the three months ended September 30, 2024, up from 24.1% for the three months ended September 30, 2023. The increase in the Company’s ETR in the three months ended September 30, 2024 was primarily driven by lower discrete benefits in the three months ended September 30, 2024 compared to the three months ended September 30, 2023.

The Company’s ETR was 24.8% for the nine months ended September 30, 2024, up from 23.4% for the nine months ended September 30, 2023. The increase in the Company’s ETR in the nine months ended September 30, 2024 was primarily driven by lower tax deductions related to stock-based compensation in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023.

The following table summarizes activities related to the Company’s unrecognized tax benefits for uncertain tax positions for the nine months ended September 30, 2024:

    

	Nine months ended September 30, 2024
Opening balance at January 1	$	19,236
Decrease related to prior year tax positions due to lapse of applicable statute of limitation	(37)
Decrease related to settlements with taxing authorities	(341)
Effect of exchange rate changes	(87)
Closing balance at September 30	$	18,771

As of December 31, 2023 and September 30, 2024, the Company had unrecognized tax benefits amounting to $19,236 and $18,771, respectively, which, if recognized, would impact the Company’s ETR.

As of December 31, 2023 and September 30, 2024, the Company had accrued $3,312 and $3,387, respectively, in interest and $499 and $512, respectively, for penalties relating to unrecognized tax benefits.

22. Income taxes (Continued)

During the year ended December 31, 2023 and the nine months ended September 30, 2024, the Company recognized approximately $220 and $(813), respectively, in interest related to income taxes.