Income Taxes

3 Months Ended

Jun. 30, 2020

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company computes its interim provision for income taxes by applying the estimated annual effective tax rate to income (loss) from operations and adjusts the provision for discrete tax items occurring in the period. The Company’s effective tax rate for the three months ended June 30, 2020 was 36% compared to 6% for the three months ended June 30, 2019. The effective tax rate was higher than the U.S. statutory tax rate for the three months ended June 30, 2020 because of the valuation allowance on certain deferred tax assets as well as non-deductible share-based compensation.

Based on the Company’s review of both positive and negative evidence regarding the realizability of deferred tax assets at June 30, 2020, a valuation allowance continues to be recorded against certain deferred tax assets based upon the conclusion that it was more likely than not that these assets would not be realized. The valuation allowance at June 30, 2020 relates primarily to share-based compensation, capitalized development costs, and foreign tax credits.