Income Taxes

9 Months Ended

Sep. 30, 2022

Income Tax Disclosure [Abstract]

INCOME TAXES

7. INCOME TAXES

Income tax expense or benefit for interim periods is determined using an estimate of the Company’s annual effective tax rate, adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter, the Company updates the estimate of the annual effective tax rate, and if the estimated tax rate changes, the Company records a cumulative adjustment.

The Company's effective tax rate for the three months ended September 30, 2022 and 2021 was (2.9)% and (2.5)%, respectively, and for the nine months ended September 30, 2022 and 2021 was (2.6)% and (2.0)%, respectively. The difference between the effective tax rate and the U.S. federal statutory rate is primarily due to a valuation allowance for the Company’s federal and state net deferred tax assets, income taxes on foreign operations, U.S. state income taxes, and stock-based compensation expense.

As of September 30, 2022, the Company continued to have a full valuation allowance against its U.S. federal and state deferred tax assets. Management regularly evaluates the realizability of the Company's deferred tax assets. Adjustments are recorded to income during the period in which management makes the determination a deferred tax asset is more likely than not to be realized.