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Income Taxes
 3 Months Ended
Mar. 31, 2026
Income Tax Disclosure [Abstract]  
Income Taxes

9. Income Taxes

 

The (benefit) provision for income taxes is based on the estimated annual effective tax rate for the year which includes estimated federal, state and foreign income taxes on the Company's projected pre-tax income (loss).

The (benefit) provision for income taxes and the effective income tax rates were as follows (dollars in thousands):

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2026

 

 

2025

 

(Benefit) provision for income taxes

 

$

(273

)

 

$

424

 

Effective income tax rate

 

 

(1.3

)%

 

 

14.2

%

 

The effective tax rates differ from the statutory tax rates for the three months ended March 31, 2026 primarily due to excess deductions related to share-based compensation, and for the three months ended March 31, 2025 primarily due to the Company’s full valuation allowance position against net domestic deferred tax assets as of March 31, 2025. The (benefit) provision for income taxes for the three months ended March 31, 2026 and 2025 included estimated federal, state, and foreign income taxes in jurisdictions in which the Company does not have sufficient tax attributes.

The Company released its valuation allowance on the majority of its deferred tax assets as of December 31, 2025. The Company maintained a valuation allowance of $17,500,000 related primarily to state tax attributes as of March 31, 2026. On a periodic basis, the Company reassesses any valuation allowances that it maintains on its deferred tax assets, weighing positive and negative evidence to assess the recoverability of the deferred tax assets.