Income Taxes

6 Months Ended

Mar. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The calculation of the effective tax rate is as follows (in thousands):

	Three months ended March 31,						Six months ended March 31,
	2023			2022			2023			2022
Income (loss) before income taxes	$	10,973		$	595		$	12,587		$	(3,692)
Income tax provision	2,500			1,812			2,951			371
Net income (loss)	$	8,473		$	(1,217)		$	9,636		$	(4,063)
Effective tax rate	23		%	305		%	23		%	(10)		%

Our income tax provision reflects an effective tax rate on pre-tax income of 23% for both the three and six months ended March 31, 2023 compared to an income tax provision that reflects an effective tax rate on pre-tax income of 305% for the three months ended March 31, 2022 and negative 10% for the six months ended March 31, 2022. The effective tax rate for the three and six months ended March 31, 2023 approximated the U.S. federal statutory rate. The favorable impacts of the estimated Research and Development Tax Credit (R&D Tax Credit) and the projected utilization of net operating loss carryforwards in the UK that have been fully reserved with a valuation allowance were offset by state income tax expense, certain nondeductible expenses and an income inclusion related to U.S. global intangible income.

For the three and six months ended March 31, 2022, the effective tax rate was largely impacted by the change in the annual estimated relative amounts of income (loss) recognized in the various tax jurisdictions as well as the impacts of accounting for income taxes in interim reporting periods. During interim reporting periods, the provision for income taxes is calculated by applying an estimated annual effective tax rate to year-to-date ordinary pre-tax income (loss). As a result, a significant variation in the customary relationship between income tax expense and pre-tax income may occur. Due to the estimated R&D Tax Credit as well as the projected utilization of net operating loss carryforwards in Canada that were fully reserved with a valuation allowance, we projected an income tax benefit for the full fiscal year ended September 30, 2022, which resulted in a negative effective tax rate. When this annual effective tax rate was applied to the year-to-date loss, a tax provision resulted for the three and six months ended March 31, 2022.