Income taxes

6 Months Ended

Jun. 30, 2023

Income Tax Disclosure [Abstract]

Income taxes

Income taxesThe Company recorded income tax expense of $1.7 million and $1.7 million for the three months ended June 30, 2023 and 2022, respectively. The Company’s effective tax rate was 39.5% and (14.9)% for the second quarter of 2023 and 2022, respectively. On a year-to-date basis, the Company recorded income tax expense of $5.4 million and $3.9 million for 2023 and

2022, respectively. Effective tax rate was not meaningful and (32.4)% during the six months ended June 30, 2023 and 2022, respectively. Effective tax rate for six months ended June 30, 2023 was not meaningful due to immaterial income before tax compared to income tax expense recorded.

The change in the effective tax rate for the three and six months ended June 30, 2023, as compared to the same period in 2022 was attributable mainly to Section 162(m) compensation deduction limitations and foreign inclusion adjustments.

For the three and six months ended June 30, 2023, the Company used a discrete effective tax rate method to calculate income taxes due to sensitivity of the forecast. Through June 30, 2023, the Company determined that small changes in estimated “ordinary” income would result in significant changes in the estimated annual effective tax rate causing material distortion in the year-to-date tax provision. As of June 30, 2023, the Company is unable to produce a reliable estimate of ordinary income for the quarter and year ending 2023 due to the inability to reliably or accurately forecast 2023 operating expenses. Similarly, for the three and six months ended June 30, 2023, due to uncertainties created by geopolitical risks, the Company’s estimated annual effective tax rate method would not provide a reliable estimate and therefore was not used.