Income Taxes

6 Months Ended

Mar. 31, 2022

Income Tax Disclosure [Abstract]

INCOME TAXES

7. INCOME TAXES

The Company’s tax provision for interim periods is determined using an estimate of the annual effective tax rate, adjusted for discrete items arising in that quarter. In each quarter, management updates the estimate of the annual effective tax rate, and any changes in the annual effective tax rate are recorded in a cumulative adjustment in that quarter. The quarterly tax provision and quarterly estimate of the annual effective tax rate are subject to significant volatility due to several factors, including management’s ability to accurately predict the portion of income before income taxes in multiple jurisdictions, the tax effects of our stock-based compensation awards, and the effects of acquisitions and the integration of those acquisitions. The annual effective tax rate differs from the U.S. statutory rate primarily due to foreign and state taxes.

For the three and six months ended March 31, 2022, the Company recorded an income tax provision of $0.7 million and $0.5 million, respectively, which yielded an effective tax rate of 25% and 9%, respectively. For the three and six months ended March 31, 2021, the Company recorded an income tax provision of $0.4 million and a benefit of $0.1 million, respectively, which yielded an effective tax rate of 29% and negative 4%, respectively. The difference between the U.S. federal statutory tax rate and the Company’s effective tax rate for the six months ended March 31, 2022 was primarily due to excess tax benefits resulting from the vesting of restricted stock and the exercise of stock options as well as the impact of foreign and state taxes, and the impact of federal and state research and development credits on its tax provision.