Income Taxes

9 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The effective tax rate used for interim periods is the estimated annual effective tax rate, based on the current estimate of full year results, except taxes related to specific events, if any, are recorded in the interim period in which they occur.

Income tax expense was $0.2 million, or 38.2% of pretax income, for the three months ended December 31, 2023 as compared to income tax expense of less than $0.1 million, or (1.3)% of pretax loss, for the three months ended December 31, 2022. Income tax expense was $0.3 million, or 8.5% of pretax income, for the nine months ended December 31, 2023 as compared to income tax expense of $0.1 million, or (1.1)% of pretax loss, for the nine months ended December 31, 2022.

In assessing the realizability of our deferred tax assets, we review all available positive and negative evidence, including reversal of deferred tax liabilities, potential carrybacks, projected future taxable income, tax planning strategies and recent financial performance. We previously recorded a full valuation allowance against our deferred tax assets due to our cumulative pre-tax losses, and we continue to maintain a valuation allowance against our deferred tax assets. We intend to continue maintaining a full valuation allowance on our deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of these allowances. Release of the valuation allowance would result in the recognition of certain deferred tax assets and a decrease to income tax expense for the period the release is recorded. However, the exact timing and amount of the valuation allowance release are subject to change on the basis of the level of profitability that we are able to actually achieve.