Income Tax

9 Months Ended

Sep. 30, 2023

Income Tax Disclosure [Abstract]

Income Tax

Income Tax

The Company calculates its year-to-date provision for income taxes by applying the estimated annual effective tax rate to year-to-date pretax income or loss and adjusts the provision for discrete tax items recorded in the period. The Company recorded an income tax expense of $0.2 million and an immaterial amount for three months ended September 30, 2023 and 2022, respectively. The Company recorded an income tax benefit of $6.6 million and $0.6 million for the nine months ended September 30, 2023 and 2022, respectively. The income tax benefit for the nine months ended September 30, 2023 was primarily attributable to a $7.2 million partial valuation allowance release due to the acquisition of Power Finance Inc. (see Note 13 “Business Combination” for additional information), offset by $0.6 million of income tax expenses resulting from profitable foreign operations. The income tax benefit for the nine months ended September 30, 2022 was primarily attributable to stock-based compensation deductions for certain foreign jurisdictions.

On August 16, 2022, the Inflation Reduction Act of 2022 (Inflation Reduction Act) was enacted in the United States. The Inflation Reduction Act imposes a 1% excise tax on the fair market value of stock repurchases made by covered corporations after December 31, 2022. The total taxable value of shares repurchased is reduced by the fair market value of any newly issued shares during the taxable year. The amount of excise tax accrued for repurchases made by the Company during the three and nine months ended September 30, 2023, were $0.4 million and $0.8 million, respectively. The remaining corporate tax changes included in the Inflation Reduction Act are not expected to have a material impact on the Company’s Condensed Consolidated Financial Statements.