Income Taxes

9 Months Ended

Sep. 30, 2019

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company's provision for income taxes for interim periods is determined using an estimate of its annual effective tax rate, adjusted for discrete items, if any, that arise during the period. Each quarter, the Company updates its estimate of the annual effective tax rate, and if the estimated annual effective tax rate changes, the Company makes a cumulative adjustment in such period.

The Company's quarterly tax provision, and estimate of its annual effective tax rate, is subject to variation due to several factors, including variability in pre-tax income (or loss), the mix of jurisdictions to which such income relates, changes in how the Company does business, and tax law developments. The Company's estimated effective tax rate for the year differs from the U.S. statutory rate of 21% primarily due to non-deductible stock-based compensation expense, state taxes, foreign income subject to different tax rates than the U.S., and the benefit of U.S. federal income tax credits.

The Company recorded an income tax provision of $5.2 million and income tax benefit of $4.2 million for the three months ended September 30, 2019 and 2018, respectively, resulting in an effective tax rate of 21.2% and (22.1)%, respectively. The tax provision for the three months ended September 30, 2019 as compared to the tax benefit for the three months ended September 30, 2018 changed primarily due to an increase in pre-tax income and decrease in excess tax benefits from stock-based compensation in the current period.

The Company recorded an income tax provision of $10.0 million and income tax benefit of $2.2 million for the nine months ended September 30, 2019 and 2018, respectively, resulting in an effective tax rate of 17.1% and (5.5)%, respectively. The tax provision for the nine months ended September 30, 2019 as compared to the tax benefit for the nine months ended September 30, 2018 changed primarily due to an increase in pre-tax income and decrease in excess tax benefits from stock-based compensation in the current period.

As of September 30, 2019, the Company had unrecognized tax benefits of $8.0 million, of which $4.4 million, if recognized, would favorably impact the Company's effective tax rate. As of December 31, 2018, the Company had unrecognized tax benefits of $6.4 million, of which $3.5 million, if recognized, would favorably impact the Company's effective tax rate. The Company does not anticipate a material change in its unrecognized tax benefits in the next 12 months.