CANTALOUPE, INC.CTLP
CANTALOUPE, INC. Income Taxes Disclosure
INCOME TAXES
The Company files income tax returns in the United States, various states, and international jurisdictions. The tax years ended June 30, 2022 through June 30, 2024 remain open to examination by taxing jurisdictions. While the statute of limitations has expired for years prior to the year ended June 30, 2022, changes in reported losses for those years are subject to examination by tax authorities to the extent that operating loss carryforwards from those prior fiscal years impact upon taxable income in current years. As of June 30, 2025, the Company did not have any income tax examinations in process.
The Company has significant deferred tax assets, a substantial amount of which result from operating loss carryforwards. The Company routinely evaluates its ability to realize the benefits of these assets to determine whether it is more likely than not that such benefit will be realized. The Company assesses the realizability of deferred tax assets by considering both positive and negative evidence including forecasts of future taxable income. For the year ended June 30, 2025, the Company concluded that it is more likely than not a portion of its deferred tax assets, primarily related to federal and state net operating loss carryforwards, will be realized. The Company released $46.0 million of the valuation allowance for the year ended June 30, 2025. These U. S. federal and state deferred tax assets were created primarily as a result of net operating loss carryforwards from historical business operations. Key factors supporting the conclusion to release a portion of the valuation allowance in the for the year ended June 30, 2025 included current year profitability, sustained cumulative profitability over the last three years and reasonable expectations of future period profitability both in the near and long term. The Company maintains its valuation allowance associated with the Pennsylvania net operating loss carryforwards.
The provision for income taxes for the years ended June 30, 2025, 2024 and 2023 is comprised of the following:
| Year ended June 30, | |||||||||||||||||
| ($ in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Current: | |||||||||||||||||
| Federal | $ | — | $ | (65) | $ | — | |||||||||||
| State | (1,368) | (729) | (92) | ||||||||||||||
| Foreign | — | — | — | ||||||||||||||
| Total current | (1,368) | (794) | (92) | ||||||||||||||
| Deferred: | |||||||||||||||||
| Federal | 40,092 | (248) | (62) | ||||||||||||||
| State | 3,628 | 57 | (27) | ||||||||||||||
| Foreign | — | — | — | ||||||||||||||
| Total deferred | 43,720 | (191) | (89) | ||||||||||||||
| Total income tax benefit (provision) | $ | 42,352 | $ | (985) | $ | (181) | |||||||||||
The components of pre-tax income are as follows:
| Year ended June 30, | |||||||||||||||||
| ($ in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| U.S. income | $ | 26,489 | $ | 16,217 | $ | 996 | |||||||||||
| Foreign losses | (4,308) | (3,239) | (182) | ||||||||||||||
| Total pre-tax income | $ | 22,181 | $ | 12,978 | $ | 814 | |||||||||||
The Company considers the excess of the amount for financial reporting over the tax basis (including undistributed and previously taxed earnings) of investments in our foreign subsidiaries, as of June 30, 2025 to be indefinitely reinvested in the foreign jurisdictions on the basis of our specific plan for reinvestment and estimates that future domestic cash generation will be sufficient to meet future domestic cash needs. Therefore, the Company has not provided for deferred taxes related to such excess or the relevant portions thereof. The determination of any deferred taxes related to this excess is not practicable.
A reconciliation of the provision for income taxes for the years ended June 30, 2025, 2024 and 2023 to the indicated provision based on income before the provision for income taxes at the federal statutory rate of 21.0% for the fiscal years ended June 30, 2025, June 30, 2024, and June 30, 2023 is as follows:
| Year ended June 30, | |||||||||||||||||
| ($ in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
Tax at U.S Federal statutory rate | $ | (4,658) | $ | (2,725) | $ | (171) | |||||||||||
| Effects of permanent differences | |||||||||||||||||
| Stock compensation | $ | 90 | $ | 24 | $ | (688) | |||||||||||
| Other permanent differences | $ | 56 | $ | (81) | $ | (497) | |||||||||||
| State income taxes, net of federal benefit | $ | (1,172) | $ | (613) | $ | (296) | |||||||||||
| Changes related to prior fiscal years | $ | (603) | $ | — | $ | 51 | |||||||||||
| Changes related to state tax rates | $ | 67 | $ | — | $ | (2,455) | |||||||||||
| Changes in valuation allowances | $ | 48,221 | $ | 2,281 | $ | 3,942 | |||||||||||
Statutory Rates Different from U.S. | $ | 262 | $ | 183 | $ | — | |||||||||||
| Other | $ | 89 | $ | (54) | $ | (67) | |||||||||||
Total | $ | 42,352 | $ | (985) | $ | (181) | |||||||||||
As of June 30, 2025 the Company had federal, state, and international operating loss carryforwards of approximately $107.5 million, $80.6 million, and $7.8 million, respectively, to offset future taxable income. As of June 30, 2024 the Company had federal and state operating loss carryforwards of approximately $158.7 million and $90.6 million, respectively, to offset future taxable income. The timing and extent to which the Company can utilize operating loss carryforwards in any year may be limited because of provisions of the Internal Revenue Code regarding changes in ownership of corporations (i.e. IRS Code Section 382). Federal, state, and international net operating loss carryforwards of $71.8 million, $9.2 million and $5.0 million, respectively, have indefinite lives and will not expire. The remaining $35.7 million of federal net operating loss carryforwards, $71.4 million of state operating loss carryforwards, and $2.8 million of international net operating loss carryforwards begin to expire in 2025. The net deferred tax assets arose primarily from net operating loss carryforwards, as well as the use of different accounting methods for financial statement and income tax reporting purposes as follows:
| As of June 30, | |||||||||||
| ($ in thousands) | 2025 | 2024 | |||||||||
| Deferred tax assets: | |||||||||||
| Net operating loss carryforwards | $ | 32,435 | $ | 37,621 | |||||||
| Receivable credit losses | 1,208 | 1,367 | |||||||||
| Inventory reserves | 614 | 541 | |||||||||
| Sales returns and allowances | 2,410 | 2,463 | |||||||||
| Sales tax reserves | 1,213 | 1,876 | |||||||||
| Deferred research and development | 7,997 | 5,750 | |||||||||
| Stock-based compensation | 4,564 | 4,327 | |||||||||
| Lease liabilities | 2,397 | 2,410 | |||||||||
| Other | — | 346 | |||||||||
| 52,838 | 56,701 | ||||||||||
| Deferred tax liabilities: | |||||||||||
| Intangibles | (3,154) | (3,502) | |||||||||
| Property and equipment | (17) | (1,179) | |||||||||
| Right-of-use assets | (1,847) | (1,954) | |||||||||
| Other | (52) | — | |||||||||
| (5,070) | (6,635) | ||||||||||
| Deferred tax assets, net | 47,768 | 50,066 | |||||||||
| Valuation allowance | (4,515) | (50,532) | |||||||||
| Deferred income taxes | $ | 43,253 | $ | (466) | |||||||
As of June 30, 2025, the Company had total unrecognized income tax benefits of $0.7 million related to its nexus in certain state tax jurisdictions. If recognized in future years, $0.7 million of these currently unrecognized income tax benefits would impact the income tax provision and effective tax rate. The following table summarizes the activity related to unrecognized income tax benefits:
| Year ended June 30, | |||||||||||||||||
| ($ in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Balance at the beginning of the year | $ | 799 | $ | 689 | $ | 572 | |||||||||||
| Gross increases and decreases related to current period tax positions | — | — | — | ||||||||||||||
| Gross increases and decreases related to prior period tax positions | (112) | 110 | 117 | ||||||||||||||
| Balance at the end of the year | $ | 687 | $ | 799 | $ | 689 | |||||||||||
The Company files income tax returns in the United States, various states, and international jurisdictions. The tax years ended June 30, 2022 through June 30, 2024 remain open to examination by taxing jurisdictions. While the statute of limitations has expired for years prior to the year ended June 30, 2022, changes in reported losses for those years are subject to examination by tax authorities to the extent that operating loss carryforwards from those prior fiscal years impact upon taxable income in current years. As of June 30, 2025, the Company did not have any income tax examinations in process.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Sep 8, 2025 | Showing above |
| 2024 | Sep 10, 2024 | |
| 2023 | Sep 25, 2023 | |
| 2021 | Sep 3, 2021 | |
| 2020 | Sep 11, 2020 | |
| 2019 | Oct 9, 2019 | |
| 2017 | Aug 23, 2017 | |
| 2016 | Sep 13, 2016 | |
| 2015 | Sep 30, 2015 | |
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.