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INCOME TAXES
 9 Months Ended
Sep. 30, 2025
Income Tax Disclosure [Abstract]  
INCOME TAXES
NOTE 7—INCOME TAXES
At the end of each interim period, the Company estimates the annual effective income tax rate and applies that rate to its ordinary year-to-date earnings or loss. The income tax provision or benefit related to significant, unusual, or extraordinary items, if applicable, that will be separately reported or reported net of their related tax effects are individually computed and recognized in the interim period in which they occur. In addition, the effect of changes in enacted tax laws or rates, tax status, judgment on the realizability of a beginning-of-the-year deferred tax asset in future years or unrecognized tax benefits is recognized in the interim period in which the change occurs.
The computation of the estimated annual effective income tax rate at each interim period requires certain estimates and assumptions including, but not limited to, the expected pre-tax income (or loss) for the year, projections of the proportion of income (and/or loss) earned and taxed in foreign jurisdictions, permanent and temporary differences and the likelihood of the realization of deferred tax assets generated in the current year. The accounting estimates used to compute the provision or benefit for income taxes may change as new events occur, more experience is acquired, additional information is obtained or the Company’s tax environment changes. To the extent that the estimated annual effective income tax rate changes during a quarter, the effect of the change on prior quarters is included in income tax provision or benefit in the quarter in which the change occurs. Included in the income tax provision for the three and nine months ended September 30, 2025 was a benefit of $7.3 million due to a higher estimated annual effective income tax rate from that applied to the first half of the year’s ordinary loss. The higher estimated annual effective rate was due primarily to the increased impact that forecasted non-deductible expenses had on the decrease in forecasted ordinary pre-tax income.
For the three months ended September 30, 2025, the Company recorded an income tax benefit of $27.3 million, which represents an effective income tax rate of 56%, which was higher than the statutory rate of 21% due primarily to the change in the estimated annual effective income tax rate (as discussed above), excess tax benefits generated by the exercise of stock-based awards, non-deductible compensation expense and state taxes, partially offset by research credits. For the nine months ended September 30, 2025, the Company recorded an income tax benefit of $43.5 million, which represents an effective income tax rate of 51%, which was higher than the statutory rate of 21% due primarily to non-taxable stock-based compensation expense, state taxes and the realization of a capital loss, partially offset by research credits and a deferred tax adjustment. The non-taxable stock-based compensation expense relates to the forfeiture of our former CEO’s restricted stock award pursuant to the Employment Transition Agreement. For the three months ended September 30, 2024, the Company recorded an income tax benefit of $86.2 million, which represents an effective income tax rate of 24%, which was higher than the statutory rate of 21% due primarily to state taxes. For the nine months ended September 30, 2024, the Company recorded an income tax benefit of $80.1 million, which represents an effective income tax rate of 18%, which was lower than the statutory rate of 21% due primarily to the non-deductible portion of goodwill in the sale of the assets of Mosaic Group and non-deductible compensation expense, partially offset by the realization of a capital loss, research credits and state taxes.
As a result of the Distribution, the Company has allocated to Angi a portion of the tax attributes related to the consolidated federal and state tax filings pursuant to the Internal Revenue Code and applicable state law. This allocation requires that the Company’s net deferred tax liability be adjusted in the year of the Distribution with a corresponding adjustment to additional paid-in capital. The allocation of attributes that was recorded as of the Distribution on March 31, 2025 was preliminary and subject to adjustments. An allocation of additional tax attributes will be made at the close of the tax year on December 31, 2025 as an adjustment to additional paid-in capital, as well as upon the filing of the 2025 tax return in the fourth quarter of 2026 and potential tax audits in the future.
The Company is routinely under audit by federal, state, local and foreign authorities in the area of income tax. These audits include questioning the timing and the amount of income and deductions and the allocation of income and deductions among various tax jurisdictions. During the third quarter of 2025, the IRS notified the Company that its federal income tax return for the year ended December 31, 2023, has been selected for audit. Returns filed in various other jurisdictions are open to examination beginning with the 2015 tax year. Income taxes payable include unrecognized tax benefits considered sufficient to pay assessments that may result from the examination of prior year tax returns. The Company considers many factors when evaluating and estimating its tax positions and tax benefits, which may not accurately anticipate actual outcomes and, therefore, may require periodic adjustment. Although management currently believes changes in unrecognized tax benefits from period to period and differences between amounts paid, if any, upon resolution of issues raised in audits and amounts previously provided will not have a material impact on the liquidity, results of operations, and/or financial condition of the Company, these matters are subject to inherent uncertainties and management’s view of these matters may change in the future.
The Company recognizes interest and, if applicable, penalties related to unrecognized tax benefits in the income tax provision. At September 30, 2025 and December 31, 2024, accruals for interest and penalties are not material.
At September 30, 2025 and December 31, 2024, unrecognized tax benefits, including interest and penalties, were $16.2 million and $14.6 million, respectively. Unrecognized tax benefits, including interest and penalties, at September 30, 2025 increased by $1.6 million due primarily to research credits. If unrecognized tax benefits at September 30, 2025 are subsequently recognized, $15.2 million, net of related deferred tax assets and interest, would reduce income tax expense. The comparable amount at December 31, 2024 was $13.7 million. The Company believes that it is reasonably possible that its unrecognized tax benefits could decrease by $0.3 million by September 30, 2026 due to expected settlements and statute expirations, all of which would reduce the income tax provision from continuing operations.
On July 4, 2025, the “One Big Beautiful Bill Act” (the “Act”) was enacted into law. The Act contains multiple changes to the Internal Revenue Code with certain changes effective in 2025 and others with effective dates through 2027.  These changes include allowing accelerated tax deductions for domestic research expenditures and qualified property, and changes to the net interest expense deduction limitations. The Act has a limited effect on our estimated annual effective income tax rate.