Income Taxes

6 Months Ended

Jun. 30, 2019

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

The Company’s income tax provision was approximately $0.9 million and $1.6 million with an effective income tax rate of (11.6)% and (15.4)% for the three and six months ended June 30, 2019. The Company’s income tax provision was approximately $0.5 million and $1.1 million with an effective income tax rate of (4.7)% and (3.9)% for the three and six months ended June 30, 2018. The Company’s effective tax rate differs from the statutory rate primarily due to the change in the valuation allowance on the Company’s deferred tax assets and foreign income taxes.

The income tax provision is related to domestic income, certain foreign income and withholding taxes. The Company does not have a material tax provision in the significant jurisdictions it operates in, such as the United States and United Kingdom, as it has historically generated losses. The Company has recorded a full valuation allowance against the net deferred tax assets and the Company does not currently anticipate recording an income tax benefit related to these deferred tax assets or current year losses.

The Company computed income taxes for the quarter ended June 30, 2019 using the discrete method, applying the actual year-to-date effective tax rate to our pre-tax loss. The Company believes this method yields a more reliable income tax calculation for the period. The estimated annual effective tax rate method is not reasonable due to its sensitivity to small changes in forecasted annual income or loss before income taxes, which would result in significant variations in the customary relationship between income tax expense and pre-tax income or loss for interim periods.

The Company is subject to United States federal income tax as well as to income tax in multiple state and foreign jurisdictions, including the United Kingdom. Federal income tax returns of the Company are subject to IRS examination for the 2015 through 2018 tax years. State income tax returns are subject to examination for the 2014 through 2018 tax years. Foreign income tax returns are subject to examination for the 2007 through 2018 tax years. The Company believes it is reasonably possible that within the next twelve months it may resolve certain matters related to the years under examination, which may result in reductions of its unrecognized tax benefits and income tax expense of up to $1.2 million.