Income Tax |
9 Months Ended |
|---|---|
Sep. 30, 2025 | |
| Income Tax Disclosure [Abstract] | |
| Income Tax | Income Tax The effective income tax rate was (29.1)% and (220.4)%, respectively, for the three months ended September 30, 2025 and 2024 and (2.1)% and (102.4)%, respectively, for the nine months ended September 30, 2025 and 2024. The effective tax rate differs from the U.S. federal rate in 2025 primarily due to the windfall tax benefit on stock compensation activity, the executive compensation addback under Internal Revenue Code Section 162(m), generation of research and development tax credits, and state taxes. The effective tax rate differs from the U.S. federal rate in 2024 primarily due to the release of the domestic valuation allowance in the period, the windfall tax benefit on stock compensation activity, and the executive compensation addback under Internal Revenue Code Section 162(m). Prior to September 30, 2024, the Company concluded that a valuation allowance was required against its deferred tax assets. The Company considers all available positive and negative evidence in its assessment of the recoverability of its deferred tax assets each reporting period. As of September 30, 2024, the Company determined that a valuation allowance against its domestic deferred tax assets was no longer required, primarily due to sustained tax profitability (pre-tax earnings or loss adjusted by permanent book to tax differences) beginning in the fourth quarter of 2023 through the first nine months of 2024, which was objective and verifiable evidence, as well as anticipated future earnings. When a change in valuation allowance is recognized during an interim period, the change in valuation allowance resulting from that year’s ordinary income is included in the annual effective tax rate and the release of valuation allowance supported by projections of future taxable income is recorded as a discrete tax benefit in the interim period. The Company recognized an income tax benefit of $60.8 million during the three months ended September 30, 2024 related to a release of its domestic valuation allowance. The Company’s judgment regarding the need for a valuation allowance may reasonably change in future reporting periods due to many factors, including changes in the level of tax profitability that the Company achieves and changes in tax laws or regulations. For tax purposes, the 2030 Convertible Notes and Capped Calls are to be considered integrated pursuant to Treas. Reg. § 1.1275-6 and treated as a single, synthetic debt instrument for U.S. federal income tax purposes. As a consequence of the integration into synthetic notes, the premium paid for the Capped Calls results in an original issue discount that is to be amortized as interest expense over the life of the synthetic notes using the constant yield to maturity method. This results in a deferred tax asset on the basis difference between the book value and tax value of the note, which is recorded as an adjustment through additional paid-in capital on the unaudited condensed consolidated balance sheets. On July 4, 2025, the President signed into law the One Big Beautiful Bill Act (“OBBBA”), introducing significant amendments to the U.S. Internal Revenue Code. The amendments include the permanent extension of certain individual, business, and international tax measures initially established under the 2017 Tax Cuts and Jobs Act, which were set to expire at the end of 2025. The Company evaluated the impact of the OBBBA on its consolidated financial statements and related disclosures in the current period. The OBBBA permanently eliminates the requirement to capitalize and amortize U.S.-based research and experimental expenditures over five years, making these expenditures fully deductible in the period incurred. The OBBBA also permanently extends the full expensing of qualifying assets through accelerated bonus depreciation in the period purchased. The provision resulted in a reduction to estimated federal current income tax liabilities. The Company will continue to assess the implications of the OBBBA on actual results through the end of 2025 and will provide further disclosures in subsequent reporting periods, as applicable.
|