Income Taxes

9 Months Ended

Sep. 30, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Income Tax Expense

Our effective income tax rate was an expense of 4% and 27% for the three and nine months ended September 30, 2023, respectively, as compared to an expense of 9% and 17% for the three and nine months ended September 30, 2022, respectively. Our income tax rate for the three and nine months ended September 30, 2023 was primarily impacted by changes in pre-tax book loss, valuation allowance against our net deferred tax assets, non-deductible executive compensation, the foreign derived intangible income deduction, the research and development tax credit, return to provision adjustments in foreign jurisdictions, and changes in our uncertain tax position liabilities. Our income tax rate for the three and nine months ended September 30, 2022 was primarily impacted by changes in valuation allowance against our net deferred tax assets, non-deductible executive compensation, the foreign derived intangible income deduction, the research and development tax credit, changes in our uncertain tax position liabilities, and tax shortfalls on stock compensation.

Deferred Income Taxes

We generate deferred tax assets primarily as a result of finance and operating leases, net operating losses, excess interest carryforward, accrued compensation, and stock compensation. Our deferred tax liabilities are primarily comprised of intangible assets acquired in previous years, finance and operating leases, and unrealized gains and losses.

We maintained a net deferred tax liability of $15.8 million and $23.2 million as of September 30, 2023 and December 31, 2022, respectively. Our valuation allowance against our deferred tax assets was $25.2 million and $17.9 million as of September 30, 2023 and December 31, 2022, respectively, primarily related to net operating loss carryforwards, disallowed excess interest carryforwards, and capitalized research and development expenses.