Smartbird, Inc.BIRD
Smartbird, Inc. Income Taxes Disclosure
Income Taxes
The components of loss before provision for income taxes are as follows for the years ended December 31, 2025 and 2024:
| (in thousands) | December 31, 2025 | December 31, 2024 | |||||||||
| Loss before provision for income taxes | |||||||||||
| United States | $ | (74,402) | $ | (89,435) | |||||||
| Foreign | (2,488) | (2,012) | |||||||||
| $ | (76,890) | $ | (91,447) | ||||||||
Our total provision for income taxes consists of the following for the years ended December 31, 2025 and 2024:
| (in thousands) | December 31, 2025 | December 31, 2024 | |||||||||
| Current: | |||||||||||
| Federal | $ | — | $ | — | |||||||
| State | 64 | 9 | |||||||||
| Foreign | 276 | 950 | |||||||||
| 340 | 959 | ||||||||||
| Deferred | |||||||||||
| Federal | — | — | |||||||||
| State | — | — | |||||||||
| Foreign | 53 | 912 | |||||||||
| 53 | 912 | ||||||||||
| Total provision for income taxes | $ | 393 | $ | 1,871 | |||||||
We adopted ASU 2023-09 “Income Taxes (Topic 740): Improvements To Income Tax Disclosures” on a prospective basis beginning with the year ended December 31, 2025. The following table presents required disclosure pursuant to ASU
2023-09 and reconciles the U.S. federal statutory tax amount and rate to our actual global effective amount and rate for the year ended December 31, 2025:
| (in thousands) | Amount | Percent | |||||||||
| U.S. federal statutory tax rate | $ | (16,147) | 21.0 | % | |||||||
State and local income taxes, net of federal income tax effect (1) | $ | 50 | (0.1) | % | |||||||
| Foreign tax effects | $ | 492 | (0.6) | % | |||||||
| Effect of changes in tax laws or rates enacted in the current period | $ | — | — | % | |||||||
| Effects of cross-border tax laws | $ | — | — | % | |||||||
| Tax credits | $ | — | — | % | |||||||
| Changes in valuation allowance | $ | 15,066 | (19.6) | % | |||||||
| Nontaxable or nondeductible items | — | % | |||||||||
| Share-based payment awards | $ | 947 | (1.2) | % | |||||||
| Other | $ | (15) | — | % | |||||||
| Changes in unrecognized tax benefits | $ | — | — | % | |||||||
| Effective tax rate | $ | 393 | (0.5) | % | |||||||
(1) State taxes in Massachusetts and Texas made up the majority (greater than 50 percent) of the tax effect in this category.
The following table presents the required disclosures prior to our adoption of ASU 2023-09 and reconciles the U.S. federal statutory income tax rate to the actual global effective income tax rate for the years ended December 31, 2024:
| (in thousands) | December 31, 2024 | ||||
| Income tax benefit at statutory rate | 21.00 | % | |||
State income taxes-net of federal benefit | 2.71 | % | |||
| Foreign rate differential | (1.79) | % | |||
| Stock-based compensation | (1.73) | % | |||
| Charitable contribution | 0.04 | % | |||
| Return to provision and other | (2.56) | % | |||
| Uncertain tax positions | 0.10 | % | |||
| Tax credits | (0.38) | % | |||
| Other | 0.85 | % | |||
| Valuation allowance | (20.29) | % | |||
Effective tax rate | (2.05) | % | |||
Significant components of our net deferred tax assets as of December 31, 2025 and 2024, which are included in other assets in the consolidated balance sheets, are as follows:
| (in thousands) | December 31, 2025 | December 31, 2024 | |||||||||
| Deferred tax asset: | |||||||||||
| Inventory | $ | 1,551 | $ | 1,760 | |||||||
| Accruals | 491 | 1,182 | |||||||||
| Stock-based compensation | 1,253 | 904 | |||||||||
| Net operating loss carryforwards | 95,617 | 66,416 | |||||||||
| R&D credits | 4,696 | 4,696 | |||||||||
| Charitable contributions | 1,553 | 2,292 | |||||||||
| Intangibles | 657 | 711 | |||||||||
| Deferred revenue | 343 | 888 | |||||||||
| Advertising | 1,769 | 1,769 | |||||||||
| Intercompany payable | 552 | 552 | |||||||||
| Lease liability | 5,316 | 13,562 | |||||||||
| Section 174 capitalized costs | 2,952 | 7,787 | |||||||||
Depreciation | 1,903 | 6,502 | |||||||||
| Other | 1,291 | 799 | |||||||||
| Total gross deferred tax assets | 119,944 | 109,820 | |||||||||
| Less: valuation allowance | (116,187) | (99,344) | |||||||||
| Total deferred tax assets | 3,757 | 10,476 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Prepaid expenses | (169) | (560) | |||||||||
| Right-of-use assets | (3,079) | (9,353) | |||||||||
| Total deferred tax liabilities | (3,248) | (9,913) | |||||||||
| Net deferred tax assets | $ | 509 | $ | 563 | |||||||
We record deferred income taxes using enacted tax laws and rates for the years in which the taxes are expected to be paid. Deferred income tax assets and liabilities are recorded based on the differences between the financial reporting and income tax bases of assets and liabilities.
Because we have a recent history of pre-tax book losses and are expected to be in pre-tax book loss in the immediate future, both of which are considered significant negative evidence, the deferred tax assets in the United States and certain foreign jurisdictions have been reduced by a valuation allowance to an amount that is more likely than not to be realized.
The United States federal tax rules generally provide for a 100% deduction for dividends received from foreign subsidiaries. Nevertheless, companies must still apply the guidance of ASC 740 to account for the tax consequences of outside basis differences and other tax impacts of their investments in foreign subsidiaries, including potential state income tax and foreign withholding taxes on distributions. As of December 31, 2025, we no longer consider the unremitted earnings of our foreign subsidiaries to be permanently reinvested, with the exception of Allbirds UK. The unremitted earnings of these entities is not significant and would not result in material incremental taxes if such earnings were repatriated back to the US.
A tabular reconciliation of the total amounts of unrecognized tax benefits for the year presented is as follows:
| (in thousands) | December 31, 2025 | December 31, 2024 | |||||||||
| Unrecognized tax benefits - at beginning of year | $ | 1,781 | $ | 1,925 | |||||||
| Increases in balances related to tax positions taken in prior years | — | — | |||||||||
| Decreases in balances related to tax positions taken in prior years | — | (144) | |||||||||
| Increases in balances related to tax positions taken in current year | — | — | |||||||||
| Unrecognized tax benefits - at end of year | $ | 1,781 | $ | 1,781 | |||||||
We follow the guidance for accounting for uncertainty in income taxes in accordance with FASB ASC 740, which clarifies uncertainty in income taxes recognized in an enterprise’s financial statements. The standard also prescribes a recognition threshold and measurement standard for the financial statement recognition and measurement of an income tax position taken, or expected to be taken, in an income tax return. Only tax positions that meet the more likely than not recognition threshold may be recognized. In addition, the standard provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, and disclosure. As of December 31, 2025 and 2024, the balance of unrecognized tax benefits of $1.8 million and $1.8 million, respectively, relate to tax credits that, if recognized, would be in the form of a carryforward which is expected to require a full valuation allowance based on present circumstances. Therefore, these unrecognized tax benefits would not have an effect on the effective tax rate. The unrecognized tax benefits are not expected to materially change in the next twelve months. The total amounts of interest and penalties recognized for the years ended December 31, 2025 and 2024 were not material. Our tax years for 2019 through 2024 are still subject to examination by the tax authorities.
At December 31, 2025, we had income tax net operating loss carryforwards for our U.S. federal, state, and foreign operations of approximately $367.8 million, $278.4 million, and $12.0 million respectively. At December 31, 2024, we had income tax net operating loss carryforwards for our U.S. federal, state, and foreign operations of approximately $248.4 million, $215.4 million, and $7.7 million, respectively. The federal tax loss carryforwards do not expire. The state and foreign tax loss carryforwards will begin to expire in 2026 and 2029, respectively.
At December 31, 2025, we had federal and state research and development credit carryforwards of $4.0 million and $2.9 million, respectively. The federal tax credit carryforwards will begin to expire in 2036. The state tax credit carryforwards do not expire.
Utilization of some of the federal and state NOL and credit carryforwards are subject to annual limitations due to the “change in ownership” provisions of the IRC and similar state provisions. We do not anticipate these limitations, if any, will significantly impact our ability to utilize the NOLs and tax credit carryforwards.
We adopted ASU 2023-09 on a prospective basis for the year ended December 31, 2025 and have included the following table as a result of our adoption, which presents income taxes paid (net of refunds received) for the year ended December 31, 2025:
| (in thousands) | December 31, 2025 | ||||
| Federal Taxes: | $ | — | |||
| State Taxes: | |||||
| Texas | 30 | ||||
| New York | 13 | ||||
| Tennessee | 6 | ||||
| Massachusetts | 28 | ||||
| Other States | 17 | ||||
Foreign Taxes: | |||||
| United Kingdom | (51) | ||||
| Hong Kong | 12 | ||||
| China | 103 | ||||
| New Zealand | (36) | ||||
| Netherlands | 59 | ||||
| Korea | 26 | ||||
| Japan | (95) | ||||
Other | 4 | ||||
Net cash paid for taxes | 116 | ||||
Cash paid during the year for income taxes for the year ended December 31, 2024 was $1.7 million.
Free Sentinel
Track for freeWant the next Smartbird, Inc. income taxes disclosure the moment it drops?
Set a Sentinel and we'll alert you the moment Smartbird, Inc.'s next filing hits EDGAR. No credit card, your email never gets sold.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 31, 2026 | Showing above |
| 2024 | Mar 12, 2025 | |
| 2023 | Mar 13, 2024 | |
| 2022 | Mar 10, 2023 | |
| 2021 | Mar 16, 2022 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.