Income taxes

9 Months Ended

Sep. 30, 2021

Income Tax Disclosure [Abstract]

Income taxes

Income taxes

At the end of each interim period, the Company estimates the annual expected effective income tax rate and applies that rate to its ordinary year-to-date earnings or loss. The income tax provision or benefit related to significant, unusual, or extraordinary items, if applicable, that will be separately reported or reported net of their related tax effects are individually computed and recognized in the interim period in which they occur. In addition, the effect of changes in enacted tax laws or rates, tax status, judgment on the realizability of a beginning-of-the-year deferred tax asset in future years or unrecognized tax benefits is recognized in the interim period in which the change occurs.

The computation of the annual expected effective income tax rate at each interim period requires certain estimates and assumptions including, but not limited to, the expected pre-tax income (or loss) for the year, projections of the proportion of income (and/or loss) earned and taxed in foreign jurisdictions, permanent and temporary differences, and the likelihood of the realization of deferred tax assets generated in the current year. The accounting estimates used to compute the provision or benefit for income taxes may change as new events occur, more experience is acquired, additional information is obtained or the Company’s tax environment changes. To the extent that the expected annual effective income tax rate changes during a quarter, the effect of the change on prior quarters is included in income tax provision in the quarter in which the change occurs.

For the three months ended September 30, 2021 and 2020, the Company recorded an income tax benefit of $898 and $1,486, respectively. The Company’s effective tax rate for the three months ended September 30, 2021 and 2020 was 8.4% and 25%, respectively. For the nine months ended September 30, 2021 and 2020, the Company recorded an income tax benefit of $4,855 and $10,616, respectively. The Company’s effective tax rate for the nine month periods ended September 30, 2021 and 2020 was 9.3% and 23.1%, respectively. The Company's effective tax rate for the three and nine months ended September 2021 is lower than for the respective three and nine month periods ended September 30, 2020 primarily due to non-deductible stock-based compensation in 2021 as the Company became subject to the provisions of Section 162(m) of the Internal Revenue Code as a result of becoming a public company.

The Company recognizes interest and, if applicable, penalties related to unrecognized tax benefits in the income tax provision. The Company is not currently under audit in any taxing jurisdiction. As of September 30, 2021, the Company does not have an accrual relating to uncertain tax positions.