Remitly Global, Inc.RELY
Remitly Global, Inc. Income Taxes Disclosure
Income Taxes
The components of income (loss) before provision for income taxes were as follows for the years ended December 31, 2025, 2024, and 2023:
| Years Ended December 31, | |||||||||||||||||
| (in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| United States | $ | 54,557 | $ | (42,708) | $ | (74,776) | |||||||||||
| Foreign | 17,071 | 12,457 | (37,162) | ||||||||||||||
Income (loss) before provision for income taxes | $ | 71,628 | $ | (30,251) | $ | (111,938) | |||||||||||
The components of the provision for income taxes were as follows for the years ended December 31, 2025, 2024, and 2023:
| Years Ended December 31, | |||||||||||||||||
| (in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
Current tax benefit (expense): | |||||||||||||||||
| Federal | $ | (172) | $ | (197) | $ | — | |||||||||||
| State | (1,344) | (418) | (376) | ||||||||||||||
| Foreign | (4,551) | (5,562) | (6,365) | ||||||||||||||
Total current tax benefit (expense) | (6,067) | (6,177) | (6,741) | ||||||||||||||
Deferred tax benefit (expense): | |||||||||||||||||
| Federal | — | — | — | ||||||||||||||
| State | — | — | — | ||||||||||||||
| Foreign | 2,372 | (550) | 839 | ||||||||||||||
Total deferred tax benefit (expense) | 2,372 | (550) | 839 | ||||||||||||||
| Provision for income taxes | $ | (3,695) | $ | (6,727) | $ | (5,902) | |||||||||||
A reconciliation at the applicable federal statutory rate to the Company’s effective income tax rate were as follows for the years ended December 31, 2025, 2024, and 2023:
| Years Ended December 31, | ||||||||||||||||||||||||||
(dollars in thousands) | 2025 | 2024 | 2023 | |||||||||||||||||||||||
| U.S. federal tax at statutory rate | $ | 15,042 | 21.00 | % | $ | (6,353) | 21.00 | % | $ | (23,507) | 21.00 | % | ||||||||||||||
State and local income tax, net of federal income tax effect(1) | 1,050 | 1.47 | % | 302 | (1.00) | % | 300 | (0.27) | % | |||||||||||||||||
Foreign tax effects: | ||||||||||||||||||||||||||
| Israel | ||||||||||||||||||||||||||
| Tax charges from integration of acquired companies | — | — | % | — | — | % | 16,631 | (14.86) | % | |||||||||||||||||
Stock-based compensation | (4,082) | (5.70) | % | 2,360 | (7.80) | % | 2,315 | (2.07) | % | |||||||||||||||||
| Withholding taxes | 2,973 | 4.15 | % | — | — | % | 168 | (0.15) | % | |||||||||||||||||
Change in valuation allowance | — | — | % | — | — | % | (6,387) | 5.71 | % | |||||||||||||||||
| Other | (689) | (0.96) | % | (315) | 1.04 | % | (715) | 0.64 | % | |||||||||||||||||
| Poland | ||||||||||||||||||||||||||
Stock-based compensation | 831 | 1.16 | % | 727 | (2.40) | % | 656 | (0.59) | % | |||||||||||||||||
| Change in valuation allowance | 2,107 | 2.94 | % | 1,142 | (3.78) | % | 901 | (0.80) | % | |||||||||||||||||
Research and development incentive | (2,541) | (3.55) | % | (1,353) | 4.47 | % | (901) | 0.80 | % | |||||||||||||||||
| Other | 19 | 0.03 | % | 110 | (0.36) | % | (400) | 0.36 | % | |||||||||||||||||
United Kingdom | ||||||||||||||||||||||||||
Stock-based compensation | 182 | 0.25 | % | (557) | 1.84 | % | (1,328) | 1.19 | % | |||||||||||||||||
| Other | 211 | 0.29 | % | 71 | (0.24) | % | 55 | (0.05) | % | |||||||||||||||||
| Canada | ||||||||||||||||||||||||||
Research and development incentive | (834) | (1.16) | % | — | — | % | — | — | % | |||||||||||||||||
| Withholding taxes | 318 | 0.44 | % | 705 | (2.33) | % | 194 | (0.17) | % | |||||||||||||||||
| Other | 728 | 1.02 | % | 25 | (0.08) | % | 180 | (0.16) | % | |||||||||||||||||
Other foreign jurisdictions | 1,209 | 1.69 | % | 437 | (1.44) | % | 1,222 | (1.09) | % | |||||||||||||||||
Effect of cross-border tax laws: | ||||||||||||||||||||||||||
| Base erosion and anti-abuse tax | 3,377 | 4.71 | % | 3,612 | (11.94) | % | — | — | % | |||||||||||||||||
Global Intangible Low-Taxed Income (“GILTI”) | 1,735 | 2.42 | % | — | — | % | — | — | % | |||||||||||||||||
IRC Section 367(a) gain | — | — | % | 988 | (3.27) | % | — | — | % | |||||||||||||||||
Tax credits: | ||||||||||||||||||||||||||
| Research tax credits | (9,542) | (13.32) | % | (11,483) | 37.96 | % | (18,277) | 16.33 | % | |||||||||||||||||
| Changes in valuation allowances | (3,519) | (4.91) | % | 20,170 | (66.68) | % | 62,272 | (55.63) | % | |||||||||||||||||
Nontaxable or nondeductible items: | ||||||||||||||||||||||||||
Stock-based compensation | (6,002) | (8.38) | % | (5,437) | 17.97 | % | (20,711) | 18.50 | % | |||||||||||||||||
| Tax charges from integration of acquired companies | — | — | % | — | — | % | (9,255) | 8.27 | % | |||||||||||||||||
| Other | 68 | 0.09 | % | (109) | 0.36 | % | 385 | (0.34) | % | |||||||||||||||||
| Changes in unrecognized tax benefits | 885 | 1.24 | % | 948 | (3.13) | % | 3,075 | (2.75) | % | |||||||||||||||||
| Other | 169 | 0.24 | % | 737 | (2.43) | % | (971) | 0.86 | % | |||||||||||||||||
Provision for income taxes and effective tax rate | $ | 3,695 | 5.16 | % | $ | 6,727 | (22.24) | % | $ | 5,902 | (5.27) | % | ||||||||||||||
__________
(1) Maryland, New York, New York City, Pennsylvania, and Texas make up the majority (greater than 50 percent) of the tax effect in this category
As of December 31, 2025, the Company has U.S. net operating loss (“NOL”) carryforwards of $191.9 million, which substantially do not expire, and state NOL carryforwards of $162.0 million, which begin to expire between 2028 and 2045. NOL carryforwards are subject to further possible limitation should a change in ownership of the Company occur, as defined by Internal Revenue Code (“IRC”) Section 382. As of December 31, 2025, the Company has foreign NOL carryforwards of $14.7 million, of which $3.2 million will begin to expire in 2030.
As of December 31, 2025, the Company had U.S. federal research and development credit carryforwards of $46.5 million, which begin to expire in 2041, U.S. state research and development credit carryforwards of $0.9 million, which do not expire, and foreign research and development credit carryforwards of $4.3 million, which will begin to expire in 2029, but which may also be used to satisfy payroll tax liabilities in the future.
The Organization for Economic Cooperation and Development released Pillar Two model rules defining a 15% global minimum tax for multinational corporations. Many countries in which the Company operates have enacted Pillar Two. Pillar Two rules apply to the Company beginning in the Company’s fiscal year 2025. Pillar Two is not expected to materially impact the Company’s effective tax rate or cash flows for fiscal year 2025. New legislation or guidance could change the Company’s current assessment.
The total income tax benefit related to stock-based compensation expense and stock option exercises was $8.6 million, $3.0 million, and $2.9 million for the years ended December 31, 2025, 2024, and 2023, respectively.
The components of income taxes paid (net of refunds) were as follows:
| Years Ended December 31, | |||||||||||||||||
| (in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Federal | $ | 200 | $ | 510 | $ | — | |||||||||||
| State | 41 | 1,752 | 503 | ||||||||||||||
| Foreign | 2,481 | 897 | 4,802 | ||||||||||||||
Total income taxes paid (net of refunds) | $ | 2,722 | $ | 3,159 | $ | 5,305 | |||||||||||
Income taxes paid (net of refunds) exceeded 5% of total income taxes paid (net of refunds) in the following jurisdictions:
| Years Ended December 31, | |||||||||||||||||
| (in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
State: | |||||||||||||||||
| New York City | $ | (325) | $ | 661 | * | ||||||||||||
| New York | * | 174 | * | ||||||||||||||
Foreign: | |||||||||||||||||
| Ireland | 798 | 1,259 | $ | 521 | |||||||||||||
United Kingdom | 635 | (1,219) | 1,273 | ||||||||||||||
| Canada | (630) | 705 | 2,170 | ||||||||||||||
| Brazil | 519 | * | * | ||||||||||||||
Philippines | 422 | * | * | ||||||||||||||
| Australia | 310 | 247 | 606 | ||||||||||||||
| India | 151 | * | * | ||||||||||||||
__________
*Jurisdiction below the threshold for the period presented.
The tax effects of the temporary differences and carryforwards that give rise to deferred tax assets were as follows:
| As of December 31, | |||||||||||
| (in thousands) | 2025 | 2024 | |||||||||
Deferred tax assets: | |||||||||||
| Net operating loss carryforwards | $ | 54,614 | $ | 59,255 | |||||||
| Accrued expenses | 4,463 | 775 | |||||||||
| Stock-based compensation | 23,785 | 18,475 | |||||||||
| Operating lease liabilities | 5,425 | 1,064 | |||||||||
| Capitalized research costs | 69,563 | 85,835 | |||||||||
| Intangible assets | 11,081 | 11,667 | |||||||||
| Research tax credits | 39,246 | 29,634 | |||||||||
| Other | 3,529 | 4 | |||||||||
| Gross deferred tax assets | 211,706 | 206,709 | |||||||||
Deferred tax liabilities: | |||||||||||
| Fixed assets | (8,647) | (3,660) | |||||||||
| Operating lease right-of-use assets | (531) | (727) | |||||||||
| Gross deferred tax liabilities | (9,178) | (4,387) | |||||||||
Valuation allowance(1) | (197,519) | (199,831) | |||||||||
Net deferred tax assets(2) | $ | 5,009 | $ | 2,491 | |||||||
__________________
(1) The Company maintains a full valuation allowance against the U.S. net deferred tax assets, as it believes that these deferred tax assets do not meet the more likely than not threshold.
(2) The net deferred tax asset as of December 31, 2025 and 2024 was recorded within ‘Other noncurrent assets, net’ on the Company’s Consolidated Balance Sheets.
The net change in the total valuation allowance was a decrease of $2.3 million, an increase of $25.0 million, and an increase of $73.4 million for the years ended December 31, 2025, 2024, and 2023, respectively. The change in valuation allowance as of December 31, 2025 was primarily related to the deduction of previously capitalized costs under IRC Section 174 and the utilization of U.S. federal and state net operating losses, offset by an increase in certain credit carryforwards. The change in valuation allowance as of December 31, 2024 and 2023 was primarily related to an increase in capitalized costs under IRC Section 174 and certain credit carryforwards, offset by the utilization of U.S. federal and state net operating losses. The following represents the changes in the Company’s valuation allowance for the years ended December 31, 2025, 2024, and 2023:
| Years Ended December 31, | |||||||||||||||||
| (in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
Beginning balance | $ | 199,831 | $ | 174,863 | $ | 101,446 | |||||||||||
| Charged to net income | (2,312) | 24,968 | 67,030 | ||||||||||||||
| Charged to other accounts | — | — | 6,387 | ||||||||||||||
Ending balance | $ | 197,519 | $ | 199,831 | $ | 174,863 | |||||||||||
The Company files income tax returns in the U.S. federal jurisdiction, various state jurisdictions, and internationally. As of December 31, 2025, tax years 2012 through 2021, and 2023 through 2025 remain open for examination by taxing authorities. The Company’s 2022 federal tax return was audited by the Internal Revenue Service, with no adjustments.
The calculation of the Company’s tax obligations involves dealing with uncertainties in the application of complex tax laws and regulations. ASC 740, Income Taxes, provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, on the basis of the technical merits. The Company has assessed its income tax positions and recorded tax benefits for all years subject to examination, based upon its evaluation of the facts, circumstances and information available at each period end. For those tax positions where the Company has determined there is a greater than 50% likelihood that a tax benefit will be sustained, the Company has recorded the largest amount of tax benefit that may potentially be realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. For those income tax positions where it is determined there is a less than 50% likelihood that a tax benefit will be sustained, no tax benefit has been recognized.
The following represents the changes in the Company’s unrecognized income tax benefits for the years ended December 31, 2025, 2024, and 2023:
| Years Ended December 31, | |||||||||||||||||
| (in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
Beginning balance | $ | 19,544 | $ | 15,578 | $ | — | |||||||||||
| Increases related to tax positions taken during the current year | 2,428 | 3,157 | 11,438 | ||||||||||||||
Increases (decreases) related to tax positions taken during prior years | (1,261) | 809 | 4,140 | ||||||||||||||
Ending balance | $ | 20,711 | $ | 19,544 | $ | 15,578 | |||||||||||
As of December 31, 2025, the Company had unrecognized tax benefits of $20.7 million, of which $8.3 million would impact the annual effective tax rate if recognized. The remainder of the unrecognized tax benefits would not affect the effective tax rate due to the valuation allowances recorded against deferred tax assets. As of December 31, 2025, $5.6 million of uncertain tax positions were recorded within ‘Other noncurrent liabilities’ on the Consolidated Balance Sheets, and $15.1 million were recorded as a reduction in deferred tax assets, of which $12.5 million are subject to valuation allowance.
The Company recognizes interest and, if applicable, penalties for any uncertain tax positions. Interest and penalties are recorded as a component of income tax expense. In the years ended December 31, 2025, 2024, and 2023, the Company did not have material accrued interest or penalties associated with any unrecognized tax benefits.Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 18, 2026 | Showing above |
| 2024 | Feb 19, 2025 | |
| 2023 | Feb 23, 2024 | |
| 2022 | Feb 28, 2023 | |
| 2021 | Mar 29, 2022 | |
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.