Income Taxes

9 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

Income Taxes

6. Income Taxes

The following table compares our income tax provision and effective tax rates for the three and nine months ended December 31, 2024 and 2023:

	Three Months Ended December 31,						Nine Months Ended December 31,
(In thousands)	2024			2023			2024			2023
Income tax provision (benefit)	$	3,913		$	(68,043	)	$	962		$	(67,396	)
Effective tax rate		50.5	%	nm				4.7	%	nm

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For the three months ended December 31, 2024, income tax provision and the effective tax rate were primarily driven by the tax effects of share-based compensation, global intangible low-taxed income (GILTI) and the mix of earnings in the U.S. and India.

For the nine months ended December 31, 2024, income tax provision and the effective tax rate were primarily driven by the impact of discrete excess tax benefits associated with Share-Based Compensation.

For the three and nine months ended December 31, 2023, income tax provision and the effective tax rate were primarily driven by the release of valuation allowances recorded against deferred tax assets in the U.S. and Canada.

Our India subsidiary operates in a “Special Economic Zone (SEZ)”. One of the benefits associated with the SEZ is that the India subsidiary is not subject to regular India income taxes during its first five years of operations, which included fiscal 2018 through fiscal 2022. The India subsidiary is subject to 50% of regular India income taxes during its second five years of operations, which includes fiscal 2023 through fiscal 2027.

The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) is a stimulus bill which was in response to economic consequences of the COVID-19 pandemic. The CARES Act provided an employee retention credit, which is a refundable tax credit against certain employment taxes. During the three and nine months ended December 31, 2024, we recorded $0.5 million of employee retention credits received in cash as other (gains) charges, net, in the condensed consolidated statements of operations.

We have recorded and maintain valuation allowances offsetting the Company’s deferred tax assets in certain U.S. States and foreign jurisdictions. The ultimate realization of deferred tax assets depends on various factors including the generation of future taxable income in the periods in which the underlying temporary differences are deductible. We maintain valuation allowances for deferred tax assets until we have sufficient evidence to support the reversal of all or some portion of the allowances.