INCOME TAXES

9 Months Ended

Sep. 30, 2025

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

The effective tax rate was 8.8% and (0.6)% for the three months ended September 30, 2025 and 2024, respectively. The effective tax rate was 2.0% and (0.4)% for the nine months ended September 30, 2025 and 2024. The effective tax rates for all periods presented differ from the statutory U.S. federal income tax rate of 21.0% primarily due to estimated permanent differences and changes in the valuation allowance. The Company does not anticipate a significant change to the Company’s gross unrecognized tax benefits within the next 12 months.

The Company assesses the deferred tax assets for recoverability on a quarterly basis. Based upon all available positive and negative evidence, the Company maintains a valuation allowance to reduce the net U.S. deferred tax asset to the amount that is more-likely-than-not realizable.

The Company computes an estimated annual effective tax rate (“AETR”) each quarter based on the current and forecasted continuing operating results. The income tax expense or benefit associated with the interim period is computed using the most recent estimated AETR applied to the year-to-date ordinary income or loss, plus the tax effect of any significant or infrequently occurring items recorded during the interim period. The computation of the estimated AETR at each interim period requires certain estimates and significant judgments including, but not limited to, the expected operating income (loss) for the year, projections of the proportion of income earned and taxed in various jurisdictions, permanent differences and the likelihood of recovering deferred tax assets generated in the current year. The accounting estimates used to compute the provision for income taxes may change as new events occur and additional information becomes known or as the tax environment changes.

One Big Beautiful Bill Act

On July 4, 2025, the One Big Beautiful Bill Act (“OBBB”) was signed into law. The change in the tax law will be partially effective in the current 2025 fiscal year, with additional provisions going into effect in future years. The primary impacts to the Company include the ability to expense U.S. research and development expenditures paid or incurred due to the permanent suspension of the current Section 174 requirement to capitalize and amortize, the ability to expense 100% of the cost of qualified property through Section 168 bonus depreciation, and expanded allowance for deducting business interest expense.

Following guidance provided by ASC 740, the company applied the relevant provisions of the OBBB in the third quarter of 2025, the period the tax legislation is enacted in. Due to the valuation allowance recorded by the Company, these changes have not had a material impact in the current reporting period. The Company is continuing to analyze the OBBB with its professional advisors and anticipates no material future impact on the value of deferred tax assets and liabilities, the Company's future taxable income and effective tax rate. Until such analysis is complete, the full impact of the new tax law on the Company in future periods is uncertain, and no assurances can be made by the Company on any potential impacts.