Income Taxes

6 Months Ended

Jun. 30, 2025

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company calculates its provision for income taxes during interim reporting periods by applying an estimate of the annual effective tax rate to its year-to-date pre-tax book income or loss. The tax effects of discrete items are recognized in the period in which they occur. The effective tax rate (income taxes as a percentage of income from operations before income taxes) including discrete items was 54.4% and 28.0% for the three and six months ended June 30, 2025, respectively, compared to (91.0)% and 19.4% for the three and six months ended June 30, 2024, respectively. The change in the effective tax rate for the three and six months ended June 30, 2025, as compared to the prior-year periods, was primarily driven by: (i) excluding certain foreign losses for which no tax benefit can be recognized in our worldwide effective tax rate calculation, (ii) non-deductible permanent items offset against tax credit utilization, (iii) state taxes, and (iv) changes to the valuation allowance. The Company excluded certain foreign losses from its worldwide effective tax rate calculation due to a year-to-date ordinary loss for which no benefit may be recognized. The effective tax rate may vary from period to period depending on, among other factors, the geographic and business mix of our earnings, and changes to our valuation allowance assessment. These and other factors, including the Company’s history and projections of pre-tax earnings, are considered in evaluating the realizability of deferred tax assets.

As of each reporting date, the Company evaluates all available positive and negative evidence in assessing the realizability of deferred tax assets, in accordance with ASC Topic 740, “Income Taxes.” (“ASC 740”) As of June 30, 2025, the Company continues to maintain a valuation allowance on deferred tax assets not considered “more likely than not” to be realized. A

reduction in the valuation allowance could result in a significant decrease in income tax expense in the period the release is recorded. The timing and amount of any reversal will depend on actual earnings achieved in 2025 and projected future income levels.

As of June 30, 2025 and December 31, 2024, the Company had prepaid income taxes of $4.6 million and $31.9 million, respectively, which were included in “Prepaid expenses” within our unaudited Consolidated Balance Sheets.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBB”) was enacted. Key business income tax provisions of the OBBB applicable to the Company include (i) reinstatement of immediate deduction for domestic research or experimental expenditures, (ii) extension of 100% accelerated tax bonus depreciation for qualifying depreciable assets, and (iii) restoration of the favorable EBITDA-based business interest expense limitation.