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Income Taxes
3 Months Ended
Mar. 31, 2021
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The Company computes its provision for income taxes by applying the estimated annual effective tax rate to pretax income and adjusts the provision for discrete tax items recorded in the period.
The Company recorded a provision for income taxes of $1.9 million and $0.4 million for the three months ended March 31, 2021 and 2020, respectively.
The effective income tax rate was 28% for the three months ended March 31, 2021. The income tax expense for the three months ended March 31, 2021 differs from the statutory federal rate of 21% due to nondeductible stock-based compensation, a higher tax rate in certain foreign countries where the Company operates, partially offset by a deduction for foreign-sourced revenue, and federal and state research credits. The effective income tax rate was 31% for the three months ended March 31, 2020 differs from the statutory federal rate of 21% primarily due to nondeductible stock-based compensation and foreign rate differential partially offset by federal and state research credits.
Realization of the Company’s deferred tax assets is dependent primarily on the generation of future taxable income. In considering the need for a valuation allowance, the Company considers its historical, as well as future projected, taxable income along with other objectively verifiable evidence. Objectively verifiable evidence includes the Company’s realization of tax attributes, assessment of tax credits, and utilization of net operating loss carryforwards during the year.