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Income Taxes
 9 Months Ended
Sep. 30, 2024
Income Tax Disclosure [Abstract]  
Income Taxes
13. Income Taxes
At the end of each interim reporting period, the Company determines the income tax provision by using an estimate of the annual effective tax rate, adjusted for discrete items occurring in the quarter. The effective income tax rate reflects the effect of federal, international, and state income taxes and the permanent impacts of differences in book and tax accounting.
The Company’s effective tax rate was 228.7% and 21.0% for the three and nine months ended September 30, 2024, respectively, and 4.1% and 37.1% for the three and nine months ended September 30, 2023, respectively. For the three months ended September 30, 2024, the effective tax rate increased from the three months ended September 30, 2023, primarily due to the near breakeven year-to-date pre-tax loss of $0.3 million in relation to the tax benefits resulting from operating losses outside of the U.S. which are not offset by a valuation allowance, and decreased tax payable in the U.S. For the nine months ended September 30, 2024, the unfavorable change in the effective tax rate associated with the decreased tax benefit, as compared to the nine months ended September 30, 2023, is primarily due to decreased operating losses outside of the U.S., where tax benefits are recognized and are not offset by a valuation allowance.
Judgment is required in determining whether deferred tax assets will be realized in full or in part. Management assesses the available positive and negative evidence on a jurisdictional basis to estimate if deferred tax assets will be recognized and when it is more likely than not that all or some deferred tax assets will not be realized, and a valuation allowance must be established. As of September 30, 2024, the Company continues to maintain a valuation allowance against its U.S. federal and state net deferred tax assets.
The Company’s effective tax rate for the three months and nine months ended September 30, 2024 differed from the federal statutory tax rate of 21% in the U.S. primarily due the valuation allowance recorded against its U.S. federal and state net deferred tax assets. Other permanent tax adjustments within the effective tax rates, which are offset by the valuation allowance, include state taxes, federal research credit under Internal Revenue Code Section 41, equity compensation in the U.S. and other U.S. non-deductible expenditures.