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Income Taxes
9 Months Ended
Sep. 30, 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 $0.8 million and $1.6 million for the three months ended September 30, 2021 and 2020, respectively, and a provision for income taxes of $2.7 million and $2.1 million for the nine months ended September 30, 2021 and 2020, respectively.
The effective income tax rate was 9% and 21% for the nine months ended September 30, 2021 and 2020, respectively. The Company’s effective tax rate for the first nine months of 2021 was lower compared to the statutory tax rate primarily due to higher tax benefits from share-based compensation and tax benefits for federal and state research credits, partially offset by nondeductible stock-based compensation, Section 162(m) limitation on compensation expense to covered employees and a higher tax rate in certain foreign countries where the Company operates.
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.