Playtika Holding Corp.PLTK
Playtika Holding Corp. Income Taxes Disclosure
INCOME TAXES
Deferred tax assets and liabilities
Deferred taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts recorded for tax purposes. Significant components of the Company's deferred tax assets and liabilities are as follows (in millions):
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Deferred tax assets | |||||||||||
| Net operating loss carry-forwards | $ | 63.5 | $ | 54.2 | |||||||
| Research and development expenses | 114.3 | 83.1 | |||||||||
| Operating lease liabilities | 21.3 | 18.3 | |||||||||
| Stock-based compensation | 28.1 | 19.1 | |||||||||
| Interest expense | 22.4 | 21.2 | |||||||||
| Foreign tax credit carryforward | 24.5 | 37.2 | |||||||||
| Other | 24.2 | 17.9 | |||||||||
| Deferred tax assets | 298.3 | 251.0 | |||||||||
| Valuation allowances | (51.8) | (60.3) | |||||||||
| Net deferred tax assets | 246.5 | 190.7 | |||||||||
| Deferred tax liabilities | |||||||||||
| Intangible assets | (48.1) | (59.9) | |||||||||
| Property and equipment | (7.1) | (8.0) | |||||||||
| Derivative instruments | (0.7) | (6.8) | |||||||||
| Operating lease right-of-use assets | (19.5) | (17.7) | |||||||||
| Other | (6.1) | (4.0) | |||||||||
| Deferred tax liabilities | (81.5) | (96.4) | |||||||||
| Net deferred tax assets (liabilities) | $ | 165.0 | $ | 94.3 | |||||||
Deferred taxes are reported in the accompanying consolidated balance sheets as follows (in millions):
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
Deferred tax assets, net | $ | 173.2 | $ | 119.0 | |||||||
Deferred tax liabilities, net | (8.2) | (24.7) | |||||||||
| Net deferred tax assets (liabilities) | $ | 165.0 | $ | 94.3 | |||||||
Based on available evidence, management believes it is not more-likely-than-not that $51.9 million U.S., Israel, and Finland deferred tax assets will be fully realizable. Accordingly, in those jurisdictions, the Company has recorded a valuation allowance against these assets. The Company regularly reviews the deferred tax assets for recoverability based on all of the available positive and negative evidence, with a focus on historical taxable income, projected future taxable income, the expected timing of the reversals of existing taxable temporary differences and tax planning strategies by jurisdiction.
The Company considers all undistributed earnings of its non-U.S. subsidiaries to be indefinitely reinvested, with the exception of certain subsidiaries that can repatriate tax-free. Determination of the amount of any deferred income or withholding tax liability on these earnings is not practicable.
Net operating loss carry-forwards
The Company has net operating loss carryforwards in certain jurisdictions, including Israel and Finland of $258.9 million and $43.8 million, respectively. The net operating losses in Israel are carried forward indefinitely. The net operating losses in Finland expire from 2031 through 2035.
The Company’s income tax return is subject to examination by federal, state and non-U.S. tax authorities. The 2022 through 2024 U.S. federal income tax filings are currently open tax years available for examination by the IRS. The IRS is currently examining tax year 2022. U.S. state tax jurisdictions have statutes of limitation generally ranging from to five years, with the earliest open tax year for the Company being 2020. Years still open to examination by tax authorities in Israel, which is the main jurisdiction other than the U.S., are 2017 through 2024, which years are currently under examination.
Income (loss) before income taxes is comprised as follows (in millions):
| Year ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Domestic (U.S.) | $ | 133.5 | $ | 92.9 | $ | 97.2 | |||||||||||
| Foreign | (306.4) | 187.6 | 294.9 | ||||||||||||||
| Income (loss) before taxes on income | $ | (172.9) | $ | 280.5 | $ | 392.1 | |||||||||||
Effective income tax rate reconciliations are as follows:
| Year ended December 31, | |||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||
| US Statutory Tax Rate | $ | (36.4) | 21.0 | % | $ | 58.9 | 21.0 | % | $ | 82.3 | 21.0 | % | |||||||||||||||||||||||
State taxes, net of federal benefit(1) | 3.8 | (2.2) | % | 7.8 | 2.8 | % | 8.0 | 2.0 | % | ||||||||||||||||||||||||||
| Foreign tax effects: | |||||||||||||||||||||||||||||||||||
| Israel | |||||||||||||||||||||||||||||||||||
| Foreign Rate Differential | (8.8) | 5.1 | % | 4.7 | 1.7 | % | 3.6 | 0.9 | % | ||||||||||||||||||||||||||
| Jurisdictional Tax Incentives | 6.3 | (3.6) | % | (8.2) | (2.9) | % | (18.1) | (4.6) | % | ||||||||||||||||||||||||||
| Nondeductible Stock-based Compensation | 3.2 | (1.8) | % | 8.2 | 2.9 | % | 5.4 | 1.4 | % | ||||||||||||||||||||||||||
| Valuation of Contingent Consideration | 44.6 | (25.8) | % | (5.7) | (2.0) | % | 0.3 | 0.1 | % | ||||||||||||||||||||||||||
| Change in Valuation Allowances | 3.6 | (2.1) | % | 7.3 | 2.6 | % | 4.5 | 1.1 | % | ||||||||||||||||||||||||||
| Repatriation of Undistributed Dividends | — | — | % | (11.0) | (3.9) | % | 11.0 | 2.8 | % | ||||||||||||||||||||||||||
| Other | (1.3) | 0.8 | % | 3.6 | 1.3 | % | (3.0) | (0.8) | % | ||||||||||||||||||||||||||
| United Kingdom | |||||||||||||||||||||||||||||||||||
| Impairment | — | — | % | 6.3 | 2.2 | % | — | — | % | ||||||||||||||||||||||||||
| Other | 1.9 | (1.1) | % | 1.4 | 0.5 | % | 2.1 | 0.5 | % | ||||||||||||||||||||||||||
| Germany | |||||||||||||||||||||||||||||||||||
| Foreign Rate Differential | 6.3 | (3.6) | % | 5.1 | 1.8 | % | 6.2 | 1.6 | % | ||||||||||||||||||||||||||
| Other | — | — | % | 0.9 | 0.3 | % | 1.0 | 0.3 | % | ||||||||||||||||||||||||||
| Finland | |||||||||||||||||||||||||||||||||||
| Change in Valuation Allowances | 0.5 | (0.3) | % | 8.1 | 2.9 | % | — | — | % | ||||||||||||||||||||||||||
| Other | 1.3 | (0.7) | % | (0.1) | — | % | 0.6 | 0.2 | % | ||||||||||||||||||||||||||
| Other Jurisdictions | |||||||||||||||||||||||||||||||||||
| Other | 0.4 | (0.2) | % | 2.3 | 0.8 | % | 0.9 | 0.2 | % | ||||||||||||||||||||||||||
| Cross-border tax laws | |||||||||||||||||||||||||||||||||||
| GILTI and other international adjustments | 17.7 | (10.2) | % | 11.0 | 3.9 | % | 13.1 | 3.3 | % | ||||||||||||||||||||||||||
| Nontaxable or nondeductible items | |||||||||||||||||||||||||||||||||||
| 162(m) Limitation | 4.5 | (2.6) | % | 3.4 | 1.2 | % | 3.8 | 1.0 | % | ||||||||||||||||||||||||||
| Other | 0.5 | (0.3) | % | 2.7 | 1.0 | % | 1.1 | 0.3 | % | ||||||||||||||||||||||||||
| Changes in UTBs | (15.3) | 8.9 | % | 14.0 | 5.0 | % | 34.9 | 8.9 | % | ||||||||||||||||||||||||||
| Other reconciling items | |||||||||||||||||||||||||||||||||||
| Other | 0.7 | (0.6) | % | (2.4) | (0.9) | % | (0.6) | (0.1) | % | ||||||||||||||||||||||||||
| Total tax expense/Effective tax rate | $ | 33.5 | (19.3) | % | $ | 118.3 | 42.2 | % | $ | 157.1 | 40.1 | % | |||||||||||||||||||||||
__________
(1) For 2025, state taxes in Pennsylvania, New York, Minnesota, California, Maryland, Georgia, Illinois, and Tennessee made up the majority (greater than 50 percent) of the tax effect in this category.
For 2024, state taxes in Pennsylvania, California, New York, Minnesota, Illinois, Georgia, and Maryland made up the majority (greater than 50 percent) of the tax effect in this category.
For 2023, state taxes in Pennsylvania, California, Minnesota, Georgia, Florida, New York, Maryland, and Illinois made up the majority (greater than 50 percent) of the tax effect in this category.
The Company believes that certain of its Israeli subsidiaries qualify as Preferred Technology Enterprises, entitled to a special tax track, under the Israeli Investment Law, 5719-1959 (the “Investment Law”) and accordingly are eligible for a reduced corporate tax rate of 12% on their preferred technology income, as defined in the Investment Law, beginning from tax year 2017 and onwards. A Preferred Technology Enterprise becomes a Special Preferred Technology Enterprise and is entitled to a reduced corporate tax rate of 6% on their preferred technology income when the worldwide revenues reach ILS 10 billion
annually. Income not eligible for Preferred Technology Enterprise benefits is taxed at the regular corporate tax rate at 23% beginning in 2018. Consistent with final assessment received for tax year 2017 in 2024, during 2025, the Company received final assessments from the Israel Tax Authority for tax years 2018 through 2021, similarly asserting that a smaller proportion of the Company’s earnings for these years qualified for reduced tax rates under the Preferred Technology Enterprise regime than what the Company had asserted on its tax return. As such, the Company has filed a tax appeal with the Israeli district court during 2025, resulting in tax years 2018 through 2021 being consolidated with ongoing court litigation for tax year 2017. Applying the Israeli Tax Authority’s assertion to all open tax years 2017 through 2025, the Company believes that its associated reserves are adequate based on available information. However, it is possible that any final amounts payable in connection with this tax assessment could exceed the Company’s current reserves.
The One Big Beautiful Bill Act (“OBBBA”), was signed into law on July 4, 2025. The OBBBA did not have a material impact on the Company’s consolidated financial statements for the year ended December 31, 2025.
The provision for income taxes is comprised as follows (in millions):
| Year ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Current | $ | 87.8 | $ | 153.0 | $ | 214.0 | |||||||||||
| Deferred | (54.3) | (34.7) | (56.9) | ||||||||||||||
| Total | $ | 33.5 | $ | 118.3 | $ | 157.1 | |||||||||||
| Domestic (U.S.) | $ | 60.9 | $ | 12.2 | $ | 42.4 | |||||||||||
| Foreign | (27.4) | 106.1 | 114.7 | ||||||||||||||
| Total | $ | 33.5 | $ | 118.3 | $ | 157.1 | |||||||||||
| Year ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| U.S. Federal | |||||||||||||||||
| Current | $ | 74.9 | $ | 32.4 | $ | 63.1 | |||||||||||
| Deferred | (18.7) | (30.1) | (30.8) | ||||||||||||||
| Total | $ | 56.2 | $ | 2.3 | $ | 32.3 | |||||||||||
| U.S. State | |||||||||||||||||
| Current | $ | 3.6 | $ | 10.7 | $ | 9.9 | |||||||||||
| Deferred | 1.1 | (0.8) | 0.2 | ||||||||||||||
| Total | $ | 4.7 | $ | 9.9 | $ | 10.1 | |||||||||||
| Foreign | |||||||||||||||||
| Current | $ | 9.3 | $ | 109.9 | $ | 141.0 | |||||||||||
| Deferred | (36.7) | (3.8) | (26.3) | ||||||||||||||
| Total | $ | (27.4) | $ | 106.1 | $ | 114.7 | |||||||||||
The cash paid for income taxes is comprised as follows (in millions):
| Year ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Federal | $ | 72.6 | $ | 25.5 | $ | 22.0 | |||||||||||
| State and local | 5.8 | 12.8 | 15.8 | ||||||||||||||
| Foreign | |||||||||||||||||
| Israel | (40.3) | 5.4 | 70.8 | ||||||||||||||
| Germany | 32.1 | 15.5 | 10.6 | ||||||||||||||
| Austria | 16.2 | 11.6 | 28.5 | ||||||||||||||
| United Kingdom | 11.1 | 16.2 | 19.8 | ||||||||||||||
| All other foreign | 5.8 | 5.6 | 2.3 | ||||||||||||||
| Income taxes paid, net of amounts refunded | $ | 103.3 | $ | 92.6 | $ | 169.8 | |||||||||||
Uncertain tax positions
A reconciliation of the opening and closing balances of total unrecognized tax benefits is as follows (in millions):
| Year ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Balance as of January 1 | $ | 294.0 | $ | 261.0 | |||||||
| Increases in respect of tax positions related to the current year | 44.1 | 38.9 | |||||||||
| Increases in respect of tax positions related to prior years | 20.1 | 0.8 | |||||||||
| Increases in respect to exchange rate fluctuations | 40.5 | — | |||||||||
| Reductions in respect of settlements with authorities | — | (5.2) | |||||||||
| Reductions in respect of expirations of statute of limitations | (81.8) | — | |||||||||
| Reductions in respect of exchange rate fluctuations | — | (1.5) | |||||||||
| Balance as of December 31 | $ | 316.9 | $ | 294.0 | |||||||
Included in the balance of total unrecognized tax benefits at December 31, 2025 is $129.8 million of tax benefits that if recognized, would affect the Company’s effective tax rate. The balance of the accrual relating to interest and penalties as of December 31, 2025 and 2024 is $27.6 million and $26.4 million, respectively. The amount of interest and penalties included in the Company’s consolidated statements of comprehensive income for the years ended December 31, 2025, 2024 and 2023 is $1.2 million, $6.7 million and $7.2 million, respectively.
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.