FORRESTER RESEARCH, INC. Income Taxes Disclosure
Note 10 – Income Taxes
Income (loss) before income taxes consists of the following (in thousands):
|
|
Years Ended December 31, |
|
|||||||||
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Domestic |
|
$ |
(123,750 |
) |
|
$ |
(1,775 |
) |
|
$ |
(4,058 |
) |
Foreign |
|
|
4,341 |
|
|
|
4,412 |
|
|
|
10,343 |
|
Total |
|
$ |
(119,409 |
) |
|
$ |
2,637 |
|
|
$ |
6,285 |
|
The components of the income tax expense (benefit) are as follows (in thousands):
|
|
Years Ended December 31, |
|
|||||||||
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Current: |
|
|
|
|
|
|
|
|
|
|||
Federal |
|
$ |
9 |
|
|
$ |
2,874 |
|
|
$ |
3,867 |
|
State |
|
|
242 |
|
|
|
613 |
|
|
|
1,922 |
|
Foreign |
|
|
3,629 |
|
|
|
4,955 |
|
|
|
2,907 |
|
Total current |
|
|
3,880 |
|
|
|
8,442 |
|
|
|
8,696 |
|
Deferred: |
|
|
|
|
|
|
|
|
|
|||
Federal |
|
|
(1,922 |
) |
|
|
(636 |
) |
|
|
(3,872 |
) |
State |
|
|
(946 |
) |
|
|
763 |
|
|
|
(1,597 |
) |
Foreign |
|
|
(1,061 |
) |
|
|
(185 |
) |
|
|
8 |
|
Total deferred |
|
|
(3,929 |
) |
|
|
(58 |
) |
|
|
(5,461 |
) |
Income tax expense (benefit) |
|
$ |
(49 |
) |
|
$ |
8,384 |
|
|
$ |
3,235 |
|
A reconciliation of the federal statutory rate to Forrester’s effective tax rate is as follows (dollars in thousands):
|
|
Year Ended December 31, |
|
|||||
|
|
2025 |
|
|||||
US federal statutory income tax rate |
|
$ |
(25,076 |
) |
|
|
21.0 |
% |
Domestic state and local income taxes, net of federal effect (1) |
|
|
(563 |
) |
|
|
0.5 |
|
Foreign tax effects |
|
|
1,658 |
|
|
|
(1.5 |
) |
Nontaxable or nondeductible items |
|
|
|
|
|
|
||
Stock compensation |
|
|
1,597 |
|
|
|
(1.3 |
) |
Goodwill impairment |
|
|
22,072 |
|
|
|
(18.5 |
) |
Other adjustments |
|
|
263 |
|
|
|
(0.2 |
) |
Effective tax rate |
|
$ |
(49 |
) |
|
|
(0.0 |
) |
|
|
Years Ended December 31, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Income tax provision at federal statutory rate |
|
|
21.0 |
% |
|
|
21.0 |
% |
Increase (decrease) in tax resulting from: |
|
|
|
|
|
|
||
State tax provision, net of federal benefit |
|
|
40.6 |
|
|
|
8.1 |
|
Foreign tax rate differential |
|
|
37.7 |
|
|
|
2.7 |
|
Stock compensation |
|
|
66.6 |
|
|
|
17.5 |
|
Withholding taxes |
|
|
31.7 |
|
|
|
6.2 |
|
Non-deductible expenses |
|
|
23.1 |
|
|
|
8.1 |
|
Goodwill related to sale of FeedbackNow |
|
|
93.9 |
|
|
|
— |
|
Permanent differences |
|
|
(0.1 |
) |
|
|
(1.7 |
) |
Change in valuation allowance |
|
|
0.4 |
|
|
|
0.5 |
|
Foreign subsidiary income subject to U.S. tax |
|
|
(1.6 |
) |
|
|
1.2 |
|
Foreign-derived intangible income benefit |
|
|
1.1 |
|
|
|
(3.8 |
) |
Change in tax legislation |
|
|
— |
|
|
|
(8.1 |
) |
Foreign exchange gain (loss) on previously taxed earnings and profits |
|
|
(0.5 |
) |
|
|
1.6 |
|
Currency translation gain |
|
|
3.6 |
|
|
|
0.7 |
|
Other, net |
|
|
0.4 |
|
|
|
(2.5 |
) |
Effective tax rate |
|
|
317.9 |
% |
|
|
51.5 |
% |
The significant items impacting the effective tax rate during 2025 as compared to 2024 are primarily the goodwill impairment charges in 2025, which are not deductible for tax purposes, in addition to transactions in 2024 that increased the Company’s tax expense and effective tax rate, including the divestiture of the FeedbackNow product line, foreign withholding taxes due to the dissolution of a foreign subsidiary, and a valuation allowance recorded against non-realizable state NOL carryforwards due to the dissolution of a domestic subsidiary.
The components of deferred income taxes are as follows (in thousands):
|
|
As of December 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Non-deductible reserves and accruals |
|
$ |
3,119 |
|
|
$ |
1,776 |
|
Net operating loss and other carryforwards |
|
|
4,476 |
|
|
|
5,525 |
|
Stock compensation |
|
|
2,123 |
|
|
|
2,085 |
|
Depreciation and amortization |
|
|
2,296 |
|
|
|
3,485 |
|
Lease liability |
|
|
8,586 |
|
|
|
8,562 |
|
Gross deferred tax asset |
|
|
20,600 |
|
|
|
21,433 |
|
Less - valuation allowance |
|
|
(174 |
) |
|
|
(1,055 |
) |
Sub-total |
|
|
20,426 |
|
|
|
20,378 |
|
Other liabilities |
|
|
(596 |
) |
|
|
(2,553 |
) |
Goodwill and intangible assets |
|
|
(11,145 |
) |
|
|
(13,837 |
) |
Operating lease right-of-use assets |
|
|
(6,892 |
) |
|
|
(5,822 |
) |
Deferred commissions |
|
|
(5,842 |
) |
|
|
(6,071 |
) |
Net deferred tax liability |
|
$ |
(4,049 |
) |
|
$ |
(7,905 |
) |
As of December 31, 2025 and 2024, long-term net deferred tax assets were $1.8 million and $0.8 million, respectively, and are included in other assets in the Consolidated Balance Sheets. Long-term net deferred tax liabilities were $5.9 million and $8.7 million at December 31, 2025 and 2024, respectively, and are included in non-current liabilities in the Consolidated Balance Sheets.
As of December 31, 2025 and 2024, the Company has fully utilized its U.S. federal net operating loss carryforwards. As of December 31, 2025 and 2024 the Company has state net operating loss carryforwards of approximately $5.1 million and $4.6 million, respectively. The state net operating loss carryforwards will begin to expire in 2038 if not utilized. In addition, the Company has no U.S. federal or state capital loss carryforwards.
As of December 31, 2025 and 2024, the Company has foreign net operating loss carryforwards of approximately $15.3 million and $17.4 million, respectively, which can be carried forward indefinitely.
The Company considers all available evidence, both positive and negative, to determine whether, based on the weight of that evidence, a valuation allowance is needed for some portion or all of a net deferred income tax asset. Judgment is required in considering the relative impact of negative and positive evidence. In arriving at these judgments, the weight given to the potential effect of negative and positive evidence is commensurate with the extent to which it can be objectively verified. Although realization is not assured, based upon the Company’s historical taxable income and projections of the Company’s future taxable income over the periods during which the deferred tax assets are deductible and the carryforwards expire, management believes it is more likely than not that the Company will realize the benefits of these deductible differences, net of the existing valuation allowances, as discussed below.
As of December 31, 2025, the Company maintained a valuation allowance of approximately $0.2 million, primarily related to foreign net operating loss carryforwards the Company believes to be unrealizable. As of December 31, 2024 and 2023, the Company maintained a valuation allowance of approximately $1.1 million, primarily relating to foreign net operating loss carryforwards from an acquisition.
The following table provides a summary of the changes in the deferred tax valuation allowance for the years ended December 31, 2025, 2024, and 2023 (in thousands):
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Deferred tax valuation allowance at January 1 |
|
$ |
1,055 |
|
|
$ |
1,065 |
|
|
$ |
989 |
|
Additions |
|
|
44 |
|
|
|
19 |
|
|
|
39 |
|
Deductions |
|
|
(992 |
) |
|
|
(8 |
) |
|
|
— |
|
Change in tax legislation |
|
|
— |
|
|
|
— |
|
|
|
(4 |
) |
Translation adjustments |
|
|
67 |
|
|
|
(21 |
) |
|
|
41 |
|
Deferred tax valuation allowance at December 31 |
|
$ |
174 |
|
|
$ |
1,055 |
|
|
$ |
1,065 |
|
The Company will generally be free of additional U.S. federal tax consequences on additional unremitted foreign earnings that have been subject to U.S. tax or would be eligible for a dividends received deduction for earnings distributed after January 1, 2018. Notwithstanding the U.S. taxation of these amounts, the Company intends to continue to invest all of its unremitted earnings of $46.8 million, as well as the capital in these subsidiaries, indefinitely outside of the U.S. unless there are opportunities in the future to repatriate in a tax efficient manner. The Company does not expect to incur any material, additional taxes related to such amounts.
The Company utilizes a two-step process for the measurement of uncertain tax positions that have been taken or are expected to be taken on a tax return. The first step is a determination of whether the tax position should be recognized in the financial statements. The second step determines the measurement of the tax position. The Company had no recorded uncertain tax positions as of December 31, 2025, 2024, and 2023.
The Company files income tax returns in the U.S. and in foreign jurisdictions. Generally, the Company is no longer subject to U.S., state, local, and foreign income tax examinations by tax authorities in its major jurisdictions for years before 2018, except to the extent of net operating loss and tax credit carryforwards from those years. Major taxing jurisdictions include the U.S., the Netherlands, the United Kingdom, Germany, and Switzerland. As of December 31, 2025, the Company has no jurisdictions under audit.
The components of cash income taxes paid, net of refunds, are as follows (in thousands):
|
|
2025 |
|
|
Federal |
|
$ |
3,500 |
|
Domestic, state and local |
|
|
694 |
|
Foreign |
|
|
|
|
India |
|
|
862 |
|
Switzerland |
|
|
583 |
|
Other foreign jurisdictions |
|
|
1,595 |
|
Total |
|
$ |
7,234 |
|
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 13, 2026 | Showing above |
| 2024 | Mar 7, 2025 | |
| 2023 | Mar 8, 2024 | |
| 2022 | Mar 10, 2023 | |
| 2021 | Mar 10, 2022 | |
| 2020 | Mar 11, 2021 | |
| 2019 | Mar 13, 2020 | |
| 2018 | Mar 8, 2019 | |
| 2017 | Mar 9, 2018 | |
| 2016 | Mar 10, 2017 | |
| 2015 | Mar 11, 2016 | |
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.