Intapp, Inc. Income Taxes Disclosure
Note 13. Income Taxes
The components of net loss before income taxes are as follows (in thousands):
|
|
Year Ended June 30, |
|
|||||||||
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
U.S. |
|
$ |
(30,981 |
) |
|
$ |
(34,220 |
) |
|
$ |
(72,871 |
) |
Foreign |
|
|
14,843 |
|
|
|
4,314 |
|
|
|
2,951 |
|
Total |
|
$ |
(16,138 |
) |
|
$ |
(29,906 |
) |
|
$ |
(69,920 |
) |
The income tax expense (benefit) consists of the following (in thousands):
|
|
Year Ended June 30, |
|
|||||||||
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Current: |
|
|
|
|
|
|
|
|
|
|||
Federal |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
(246 |
) |
State |
|
|
253 |
|
|
|
1,307 |
|
|
|
226 |
|
Foreign |
|
|
1,378 |
|
|
|
830 |
|
|
|
437 |
|
|
|
|
1,631 |
|
|
|
2,137 |
|
|
|
417 |
|
Deferred: |
|
|
|
|
|
|
|
|
|
|||
Federal |
|
|
— |
|
|
|
— |
|
|
|
(154 |
) |
State |
|
|
(84 |
) |
|
|
34 |
|
|
|
(327 |
) |
Foreign |
|
|
532 |
|
|
|
(56 |
) |
|
|
(431 |
) |
|
|
|
448 |
|
|
|
(22 |
) |
|
|
(912 |
) |
Income tax expense (benefit) |
|
$ |
2,079 |
|
|
$ |
2,115 |
|
|
$ |
(495 |
) |
The income tax expense (benefit) differs from the amount computed by applying the statutory federal income tax rate as follows (in thousands):
|
|
Year Ended June 30, |
|
|||||||||
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Federal tax expense (benefit): |
|
|
|
|
|
|
|
|
|
|||
At statutory rate |
|
$ |
(3,389 |
) |
|
$ |
(6,280 |
) |
|
$ |
(14,683 |
) |
State tax (net of federal benefit) |
|
|
205 |
|
|
|
935 |
|
|
|
192 |
|
Research and development credits |
|
|
(2,890 |
) |
|
|
(2,943 |
) |
|
|
(1,888 |
) |
Stock-based compensation |
|
|
(29,058 |
) |
|
|
(9,364 |
) |
|
|
(3,311 |
) |
Acquisition-related transaction costs |
|
|
(61 |
) |
|
|
162 |
|
|
|
254 |
|
Change in valuation allowance |
|
|
37,771 |
|
|
|
19,448 |
|
|
|
20,764 |
|
Other |
|
|
(499 |
) |
|
|
157 |
|
|
|
(1,823 |
) |
Income tax expense (benefit) |
|
$ |
2,079 |
|
|
$ |
2,115 |
|
|
$ |
(495 |
) |
Deferred tax assets and liabilities are as follows (in thousands):
|
|
June 30, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Deferred tax assets: |
|
|
|
|
|
|
||
Nondeductible accrued expenses |
|
$ |
2,614 |
|
|
$ |
3,243 |
|
Net operating loss carryforwards |
|
|
47,217 |
|
|
|
31,153 |
|
Research and development credits |
|
|
13,773 |
|
|
|
9,551 |
|
Section 174 capitalization |
|
|
74,073 |
|
|
|
47,930 |
|
Stock-based compensation |
|
|
6,594 |
|
|
|
7,437 |
|
Interest carryforwards |
|
|
10,828 |
|
|
|
13,765 |
|
Deferred revenue |
|
|
201 |
|
|
|
588 |
|
Other |
|
|
36 |
|
|
|
67 |
|
Valuation allowance |
|
|
(144,693 |
) |
|
|
(100,543 |
) |
Total deferred tax assets |
|
|
10,643 |
|
|
|
13,191 |
|
Deferred tax liabilities: |
|
|
|
|
|
|
||
Deferred commissions |
|
|
(7,133 |
) |
|
|
(6,614 |
) |
Fixed assets |
|
|
(4,115 |
) |
|
|
(3,089 |
) |
Intangible assets |
|
|
(551 |
) |
|
|
(4,196 |
) |
Total deferred tax liabilities |
|
|
(11,799 |
) |
|
|
(13,899 |
) |
Net deferred tax liabilities |
|
$ |
(1,156 |
) |
|
$ |
(708 |
) |
As of June 30, 2025, the Company has federal and state net operating loss carryforwards of approximately $171.3 million and $188.4 million, respectively, which expire beginning in the year 2034 for federal and 2025 for the state of California.
As of June 30, 2025, the Company has federal and state research credits carryforwards of approximately $15.8 million and $7.3 million, respectively, expiring beginning in 2027 for federal. The state credits can be carried forward indefinitely.
Federal and state tax laws impose substantial restrictions on the utilization, for tax purposes, of net operating loss and credit carryforwards in the event of an ownership change as defined in Section 382 of the Internal Revenue Code. Accordingly, the Company’s ability to utilize these carryforwards may be limited as a result of such ownership change. Such a limitation could result in the expiration of carryforwards before they are utilized.
In assessing the need for a valuation allowance, the Company considered all available evidence both positive and negative, including historical levels of income, legislative developments, expectations and risks associated with estimates of future taxable income, and prudent and feasible tax planning strategies.
As a result of this analysis as of June 30, 2025 and 2024, the Company has determined that it is more likely than not that it will not realize the benefits of its deferred tax assets due to continuing losses, and therefore has recorded a valuation allowance of $144.7 million and $100.5 million, respectively, to reduce the carrying value of its deferred tax assets.
At June 30, 2025, the Company asserts that it will not permanently reinvest its foreign earnings outside the U.S. The Company anticipates that the cash from its foreign earnings may be used to fund operations domestically, settle a portion of the outstanding debt obligations, or used for other business needs. The accumulated undistributed earnings generated by its foreign subsidiaries was approximately $39.0 million. Substantially all of these earnings will not be taxable upon repatriation to the U.S. since under the Tax Cuts and Jobs Act, they will be treated as previously taxed income or benefit from the dividends received deduction. The withholding taxes related to the distributable earnings of the Company’s foreign subsidiaries are not expected to be material.
It is the Company’s policy to recognize interest and penalties related to income tax matters in income tax expense. As of June 30, 2025 and 2024, the Company had no accrued interest and penalties related to uncertain tax positions.
The Company does not anticipate any significant increases or decreases to its unrecognized tax benefits in the next 12 months. There is no applicable lapse of the statute of limitations in the next 12 months.
The Company files income tax returns in the U.S. federal jurisdiction, various state jurisdictions and various foreign jurisdictions. In the normal course of business, the Company is subject to examination by taxing authorities. The Company is not currently under audit by the Internal Revenue Service or other similar tax authorities. The Company's tax returns remain open to examination as follows: U.S. federal and states, all tax years; and significant foreign jurisdictions, generally 2019 through 2024.
The following table summarizes the activity related to the Company’s unrecognized tax benefits (in thousands):
|
|
June 30, |
|
|||||||||
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Beginning of the year, unrecognized tax benefits |
|
$ |
6,876 |
|
|
$ |
5,311 |
|
|
$ |
3,811 |
|
Increases, prior year tax positions |
|
|
119 |
|
|
|
173 |
|
|
|
532 |
|
Increases, current year tax positions |
|
|
1,527 |
|
|
|
1,392 |
|
|
|
968 |
|
End of the year, unrecognized tax benefits |
|
$ |
8,522 |
|
|
$ |
6,876 |
|
|
$ |
5,311 |
|
As of June 30, 2025 and 2024, unrecognized tax benefits approximated $8.5 million and $6.9 million, respectively, of which none of the tax benefits would affect the effective tax rate if recognized. There are no interest and penalties accrued as of June 30, 2025.
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law, extending key provisions of the 2017 Tax Cuts and Jobs Act including, but not limited to, deductions for domestic research and development expenditures. The Company is currently evaluating OBBBA; however, the Company does not expect OBBBA to have a material impact on the Company’s consolidated financial statements.
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.