LiveRamp Holdings, Inc.RAMP

LiveRamp Holdings, Inc. Income Taxes Disclosure

10-KFiled May 21, 20266 min read
14. INCOME TAX:

Income tax expense (benefit) (dollars in thousands):
For the twelve months ended March 31,
202620252024
Continuing operations$(46,712)$25,342 $24,270 
Discontinued operations(1,082)(2,131)(2,332)
$(47,794)$23,211 $21,938 
 
Income from continuing operations before income taxes (dollars in thousands):
For the twelve months ended March 31,
202620252024
U.S.$95,114 $18,431 $33,892 
Foreign2,950 4,409 469 
Total$98,064 $22,840 $34,361 

Components of income tax expense (benefit) attributable to continuing operations (dollars in thousands): 
For the twelve months ended March 31,
202620252024
Current
Federal$4,986 $20,300 $21,014 
Foreign1,292 480 662 
State3,352 4,869 3,384 
9,630 25,649 25,060 
Deferred
Federal(31,165)23 (101)
Foreign(279)(300)(387)
State(24,898)(30)(302)
(56,342)(307)(790)
$(46,712)$25,342 $24,270 
Reconciliation between expected income tax expense at the federal statutory rate and income tax expense (dollars in thousands): 
For the twelve months ended March 31,
202620252024
Income tax at federal statutory rate$20,593 21.0 %$4,797 21.0 %$7,216 21.0 %
State and local income taxes, net of federal tax effect(24,006)(24.5)%3,017 13.2 %2,032 5.9 %
Foreign tax effects
United Kingdom65 0.1 %(530)(2.3)%(360)(1.0)%
China(146)(0.2)%(203)(0.9)%(383)(1.1)%
Other491 0.5 %(178)(0.8)%(19)(0.1)%
Effect of cross-border tax laws89 0.1 %538 2.4 %(283)(0.8)%
Research & development tax credit(4,190)(4.3)%(6,030)(26.4)%(3,530)(10.3)%
Changes in valuation allowance(53,836)(54.9)%13,220 57.9 %13,346 38.8 %
Nontaxable and nondeductible items
Stock-based compensation6,691 6.8 %4,056 17.8 %2,013 5.9 %
Nondeductible meals & entertainment714 0.7 %588 2.6 %791 2.3 %
Nondeductible goodwill— — %— — %991 2.9 %
Other nondeductible items700 0.8 %584 2.5 %359 1.0 %
Changes in unrecognized tax benefits6,123 6.3 %5,483 24.0 %2,097 6.1 %
$(46,712)(47.6)%$25,342 111.0 %$24,270 70.6 %

State and local income taxes, net of federal benefit, in fiscal 2026 included a $28.9 million state tax benefit from a state valuation allowance release, the majority of which was attributable to California. The remaining state tax expense in fiscal 2026 was $4.8 million, the majority of which was attributable to Pennsylvania, New York, Georgia, Tennessee, and Wisconsin. In fiscal 2025 and 2024, the majority of state tax expense was attributable to New York, Illinois, Pennsylvania, and California.


Cash paid for income taxes, net of refunds (dollars in thousands):
For the twelve months ended March 31,
202620252024
Federal$1,047 $16,971 $(3,214)
State2,353 4,986 4,179 
Foreign563 591 1,500 
Total from continuing operations3,963 22,548 2,465 
State from discontinued operations(1,863)(2,486)(2,765)
$2,100 $20,062 $(300)

The One Big Beautiful Bill Act was signed into law on July 4, 2025 as Public Law 119-21 (the "2025 Tax Act"). The 2025 Tax Act includes provisions that allow for the immediate expensing of domestic research and development expenditures, as well as the accelerated deduction of remaining amortized amounts under a transition rule, which significantly reduced federal and state cash paid for income taxes in fiscal 2026.
State and foreign jurisdictions where income taxes paid, net of refunds, exceed 5% of the total (dollars in thousands):
For the twelve months ended March 31,
202620252024
State
Arkansas$480 $— $— 
Maryland280 — 518 
Pennsylvania260 — 311 
Michigan230 — — 
Minnesota210 — 39 
Indiana150 — — 
North Carolina150 — — 
Tennessee130 — — 
Kentucky120 — — 
New Jersey(209)— — 
Illinois— — 1,057 
New York— — 898 
Other— — 577 
Arizona— — 432 
Alabama— — 179 
Iowa from discontinued operations(1,863)— — 
New York from discontinued operations— (2,486)— 
Massachusetts from discontinued operations— — (595)
Tennessee from discontinued operations— — (912)
Maryland from discontinued operations— — (1,258)
Foreign
France516 — — 
India176 — — 
UK(298)— 1,214 
Other— — 279 

Income taxes paid, net of refunds, are not presented if less than 5% of the total. The "Other" amounts in fiscal 2024 include thirteen states and seven foreign jurisdictions where taxes paid, net of refunds, exceeded 5% of the total but did not exceed $0.1 million.

On March 27, 2020, the U.S. enacted The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). The CARES Act included several significant changes and clarifications to existing tax law, including changes to the treatment of net operating losses (“NOLs”). Under the CARES Act, NOLs arising in tax years beginning after December 31, 2017, and before January 1, 2021, may be carried back to each of the five tax years preceding the tax year of the loss. The Company carried back its fiscal 2021 NOL, resulting in a refund of approximately $29.0 million, which was received during fiscal 2024.
Components of deferred tax assets and liabilities (dollars in thousands):  
March 31,
20262025
Deferred tax assets
Accrued expenses$5,101 $5,072 
Lease liabilities6,800 8,453 
Net operating loss carryforwards30,683 35,268 
Stock-based compensation7,797 8,734 
Nonqualified deferred compensation3,275 2,788 
Tax credit carryforwards12,800 10,641 
Capitalized research and development26,516 58,556 
Other6,526 2,236 
Total deferred tax assets99,498 131,748 
Less valuation allowance(20,634)(105,040)
Net deferred tax assets78,864 26,708 
Deferred tax liabilities
Prepaid expenses(3,733)(3,546)
Property and equipment(1,342)(1,412)
Right-of-use assets(3,912)(4,657)
Intangible assets(1,837)(4,019)
Deferred commissions(10,119)(11,153)
Other— (181)
Total deferred tax liabilities(20,943)(24,968)
Net deferred tax assets$57,921 $1,740 
 
At March 31, 2026, the Company has federal net operating loss carryforwards of $19.0 million, state net operating loss carry forwards of $96.4 million, and foreign net operating loss carryforwards of $84.4 million. The federal net operating loss carryforwards do not expire. Of the state net operating loss carryforwards, $13.9 million do not expire and the remainder will expire by fiscal 2056. Of the foreign net operating loss carryforwards, $80.0 million do not expire and the remainder will expire by fiscal 2031. The Company has federal tax credit carryforwards of $4.2 million, which will expire by fiscal 2046. The Company has state tax credit carryforwards of $15.7 million, of which $13.4 million do not expire and the remainder will expire by fiscal 2041.
 
Deferred tax assets related to capitalized research and development decreased significantly in fiscal 2026 as a result of the 2025 Tax Act’s provisions allowing for the immediate expensing of domestic research and development expenditures.

Management considers whether a valuation allowance is required if it is more likely than not that the tax benefit of some or all of the deferred tax assets will not be realized due to the inability to generate sufficient taxable income.
 
In fiscal 2026, the tax benefit attributable to changes in federal and state valuation allowance was $53.8 million and $28.9 million, respectively. The valuation allowance release in fiscal 2026 was based on all available evidence, including sustained profitability in recent years, improved expectations of future taxable income, and the absence of significant negative evidence. The remaining valuation allowance of $20.6 million is related to foreign deferred tax assets, which are primarily net operating loss carryforwards not expected to be deducted in jurisdictions with a history of taxable losses. After the federal and state valuation allowance release, it is more likely than not that the tax benefit from all deferred tax assets, net of the foreign valuation allowance, will be realized.
 
Changes in unrecognized tax benefits (dollars in thousands):
For the twelve months ended March 31,
202620252024
Balance at beginning of fiscal year$26,418 $22,922 $21,624 
Increases related to prior fiscal years2,720 460 741 
Decreases related to prior fiscal years— — (246)
Increases related to current fiscal year2,048 3,036 1,179 
Lapses of statutes of limitation— — (376)
Balance at end of fiscal year$31,186 $26,418 $22,922 
 
The unrecognized tax benefits at March 31, 2026, if recognized, would reduce income tax expense by $31.2 million. Interest and penalties related to unrecognized tax benefits are recognized in income tax expense. Accrued interest and penalties related to unrecognized tax benefits was $10.9 million as of March 31, 2026 with an increase of $2.3 million during fiscal 2026.
 
The Company's federal tax returns prior to fiscal 2019 are no longer subject to examination by the Internal Revenue Service. The Internal Revenue Service is currently examining the federal tax return for fiscal 2019. Fiscal years subject to examination by state and foreign tax authorities vary by jurisdiction.

Historical Timeline

Fiscal YearFiled
2026May 21, 2026Showing above
2025May 21, 2025
2024May 22, 2024
2023May 24, 2023
2022May 24, 2022
2021May 27, 2021
2020May 26, 2020
2019May 29, 2019
2018May 25, 2018
2017May 26, 2017
2016May 27, 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.

Other Available Disclosures

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