16.

Income Taxes

Prior to the Corporate Reorganization, the Company was treated as a partnership for U.S. Federal and most applicable state and local income tax purposes. As a partnership, the Company was not subject to U.S. Federal and certain state and local income taxes. Any taxable income or loss generated by the Company was passed through to and included in the taxable income or loss of its members. Prior to the Corporate Reorganization, the Company's wholly owned subsidiary, Outreach, Inc., was subjected to U.S. Federal and state and local income taxes.

After the Corporate Reorganization, the Company is subject to U.S. Federal and state local income taxes.

The following summarizes the components of income tax (benefit) expense:


		Year Ended January 31,
		2026			2025			2024
	(in thousands)
Current income tax expense:
Federal		$	312		$	—		$	—
State			130			—			—
Foreign			60			—			—
Total current income tax expense			502			—			—
Deferred income tax expense (benefit):
Federal			(168	)		(508	)		(81	)
State			19			(288	)		(25	)
Foreign			9			—			—
Total deferred income tax benefit			(140	)		(796	)		(106	)
Total income tax expense (benefit)		$	362		$	(796	)	$	(106	)

The following summarizes the components of loss before provision for income taxes:


	Year Ended January 31,
	2026			2025			2024
	(in thousands)
Domestic	$	(161,381	)	$	(86,018	)	$	(48,258	)
Foreign		229			—			—
Total income before taxes	$	(161,152	)	$	(86,018	)	$	(48,258	)

The provision for income taxes differs from the amount computed by applying the statutory federal income tax rate to net loss before the provision for income taxes. The sources and effects of the differences are as follows:


	Year Ended January 31,
	2026					2025					2024
	(in thousands)
Pre-tax loss	$	(161,152	)			$	(86,018	)			$	(48,258	)
U.S federal statutory tax rate		(33,842	)	21.0	%		(18,064	)	21.0	%		(10,134	)	21.0	%
State and local income taxes, net of federal income tax effect (1)		121		(0.1	)%		(98	)	0.1	%		(20	)	0.1	%
Foreign tax effects		13		(0.0	)%		—		0.0	%		—		—	%
Effect of changes in tax laws or rates enacted in the current period		—		—	%		(129	)	0.2	%		—		—	%
Changes in valuation allowances		336		(0.2	)%		—		—	%		—		—	%
Nontaxable or nondeductible items:
Income not subject to corporate tax		24,647		(15.3	)%		11,662		(13.6	%)		10,048		(20.8	%)
Derivative fair market value adjustment		1,543		(1.0	)%		—		—	%		—		—	%
Warrant fair market value adjustment		1,202		(0.7	)%		—		—	%		—		—	%
Goodwill impairment Outreach		—		—	%		5,828		(6.8	%)		—		—	%
Other		352		(0.2	)%		5		(0.0	%)		—		—	%
Other adjustments:
Change in tax status		5,765		(3.6	)%		—		—	%		—		—	%
Other		225		(0.1	)%		—		—	%		—		—	%
Total income tax expense (benefit)	$	362		(0.2	)%	$	(796	)	0.9	%	$	(106	)	0.2	%

(1)

State taxes in California, Colorado, and Missouri represented the majority (greater than 50%) of the tax effect in this category.

Significant components of the Company’s net non-current deferred tax assets and liabilities are as follows:


	Year Ended January 31,
	2026			2025
	(in thousands)
Non-current deferred assets
Net operating loss carryforward	$	4,792		$	74
Equity-based compensation		3,612			—
Operating lease liability		1,787			825
Capitalized research and development costs		—			418
Inventory		—			68
Accrued liabilities		792			—
Accrued compensation		756			71
Other		505			14
Disallowed interest		301			—
Total deferred tax asset		12,545			1,470
Valuation allowance		(376	)		—
Net deferred tax asset		12,169			1,470
Non-current deferred tax liabilities
Capitalized software		(7,192	)		—
Investment in partnerships		(4,793	)		—
Intangibles		(2,320	)		(2,152	)
Operating right-of-use asset		(1,718	)		(840	)
Property and equipment		(499	)		(389	)
Total deferred tax liability		(16,522	)		(3,381	)
Net deferred tax liability	$	(4,353	)	$	(1,911	)

As of January 31, 2026, the Company had $22.3 million of federal net operating loss carryforwards, which can be carried forward indefinitely.

As of January 31, 2026, the Company had $10.6 million of state net operating loss carryforwards, which can be carried forward for periods that vary from ten years to indefinitely.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets depends on the generation of future taxable income during the periods in which those temporary differences are deductible. Management considers the scheduled reversal of deferred tax liabilities (including the effect in available carryback and carryforward periods), projected taxable income, and tax-planning strategies in this assessment. In order to fully realize the deferred tax asset, the Company has considered the reversal of its deferred tax liabilities. On the basis of this evaluation, the Company recorded a valuation allowance of $0.4 million as of January 31, 2026. For the year ended January 31, 2026, the net change in the valuation allowance was $0.4 million.

The total cash paid for income taxes, net of refunds is composed of the following:


	Year Ended January 31,
	2026		2025
	(in thousands)
U.S. Federal	$	22	$	—
State (1)		58		—
Foreign		87		—
Total cash paid for income taxes, net of refunds	$	167	$	—

(1) No individual jurisdictions met the 5% disaggregation threshold.

The Company had no uncertain tax positions for the year ended January 31, 2026. As of January 31, 2026, the Company had no accrued interest or penalties related to uncertain tax positions. The Company does not expect a material change in unrecognized tax benefits within the next 12 months.

The statute of limitations on Internal Revenue Service examinations has expired for all years prior to 2022. State income tax returns are generally subject to examination for a period of three to four years after filing of the return.

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.

Gloo Holdings, Inc. Income Taxes Disclosure

About Income Taxes Disclosures

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