Income Taxes

6 Months Ended

Sep. 30, 2024

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

In connection with the exchanges of Class B units and Class C units of the Partnership for Class A common stock by certain limited partners of the Partnership during the three months ended September 30, 2024, the Company recorded an increase to the deferred tax asset of $50.9 million and a decrease in the valuation allowance of $0.9 million. Additionally, a corresponding Tax Receivable Agreements liability of $46.5 million was recorded, representing 85% of the incremental net cash tax savings for the Company as a result of these exchanges. The Company made no payments during the three months ended September 30, 2024 and 2023, respectively, and payments of $9.8 million and $7.7 million during the six months ended September 30, 2024 and 2023, respectively, under the Tax Receivable Agreements. As of September 30, 2024, the Company’s total Tax Receivable Agreements liability was $261.9 million. See note 12 for more information on the Tax Receivable Agreements.

The Company’s effective tax rate was 8.2% and 11.5% for the three months ended September 30, 2024 and 2023, respectively, and 10.2% and 13.1% for the six months ended September 30, 2024 and 2023, respectively. The Company’s overall effective tax rate in each of the periods described above is less than the statutory rate as a portion of income was allocated to non-controlling interests and the tax liability on such income is borne by the holders of non-controlling interests. The primary rate difference was driven by an increase in tax benefits related to income allocated to non-controlling interests, as well as an increase in tax benefits associated with the vesting of RSUs for the three and six months ended September 30, 2024.

The Company continues to monitor and evaluate legislative developments related to the proposed Global Anti-Base Erosion (“GloBE”) Model Rules established under the Organization for Economic Co-operation and Development’s Pillar Two framework. Several countries where the Company operates have adopted GloBE into their legislation, and additional countries are anticipated to adopt these rules in the future. To date, these legislative changes have not had a material impact on the Company’s effective tax rate.

The Company evaluates the realizability of its deferred tax assets on a quarterly basis and adjusts the valuation allowance when it is more-likely-than-not that all or a portion of the deferred tax assets may not be realized.

As of September 30, 2024, the Company has not recorded any unrecognized tax benefits and does not expect there to be any material changes to uncertain tax positions within the next 12 months.