Revolve Group, Inc. Income Taxes Disclosure
Note 8. Income Taxes
The components of income before income tax expense are as follows (in thousands):
|
|
Year Ended December 31, |
|
|||||||||
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Domestic |
|
$ |
70,523 |
|
|
$ |
55,503 |
|
|
$ |
31,942 |
|
Foreign |
|
|
11,780 |
|
|
|
8,944 |
|
|
|
5,819 |
|
|
|
$ |
82,303 |
|
|
$ |
64,447 |
|
|
$ |
37,761 |
|
The components of the provision for income tax expense (benefit) are as follows (in thousands):
|
|
December 31, 2025 |
|
|||||||||
|
|
Current |
|
|
Deferred |
|
|
Total |
|
|||
U.S. federal |
|
$ |
14,555 |
|
|
$ |
(1,835 |
) |
|
$ |
12,720 |
|
State and local |
|
|
5,965 |
|
|
|
(1,064 |
) |
|
|
4,901 |
|
Foreign |
|
|
3,536 |
|
|
|
— |
|
|
|
3,536 |
|
|
|
$ |
24,056 |
|
|
$ |
(2,899 |
) |
|
$ |
21,157 |
|
|
|
December 31, 2024 |
|
|||||||||
|
|
Current |
|
|
Deferred |
|
|
Total |
|
|||
U.S. federal |
|
$ |
14,865 |
|
|
$ |
(5,373 |
) |
|
$ |
9,492 |
|
State and local |
|
|
5,429 |
|
|
|
(1,482 |
) |
|
|
3,947 |
|
Foreign |
|
|
2,237 |
|
|
|
— |
|
|
|
2,237 |
|
|
|
$ |
22,531 |
|
|
$ |
(6,855 |
) |
|
$ |
15,676 |
|
|
|
December 31, 2023 |
|
|||||||||
|
|
Current |
|
|
Deferred |
|
|
Total |
|
|||
U.S. federal |
|
$ |
8,758 |
|
|
$ |
(2,853 |
) |
|
$ |
5,905 |
|
State and local |
|
|
4,740 |
|
|
|
(2,398 |
) |
|
|
2,342 |
|
Foreign |
|
|
1,367 |
|
|
|
— |
|
|
|
1,367 |
|
|
|
$ |
14,865 |
|
|
$ |
(5,251 |
) |
|
$ |
9,614 |
|
A reconciliation of the provision for income taxes to the amount computed by applying the 21% statutory U.S. federal income tax rate to income before income taxes after the adoption of ASU 2023-09 is as follows:
|
|
Year Ended December 31, |
|
|||||||||||||||||||||
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||||||||||||||
|
|
(in thousands) |
|
|
Percent |
|
|
(in thousands) |
|
|
Percent |
|
|
(in thousands) |
|
|
Percent |
|
||||||
U.S. federal statutory tax rate |
|
$ |
17,284 |
|
|
|
21.0 |
% |
|
$ |
13,534 |
|
|
|
21.0 |
% |
|
$ |
7,930 |
|
|
|
21.0 |
% |
State and local income taxes (1) |
|
|
3,872 |
|
|
|
4.7 |
|
|
|
3,118 |
|
|
|
4.8 |
|
|
|
1,874 |
|
|
|
5.0 |
|
Foreign tax effects |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Netherlands |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Rate differential |
|
|
(302 |
) |
|
|
(0.4 |
) |
|
|
5 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Permanent tax differences related to disallowed intercompany and investment write-offs |
|
|
1,598 |
|
|
|
2.0 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
France |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Rate differential |
|
|
181 |
|
|
|
0.2 |
|
|
|
(157 |
) |
|
|
(0.2 |
) |
|
|
— |
|
|
|
— |
|
Permanent tax differences related to disallowed intercompany and investment write-offs |
|
|
(1,134 |
) |
|
|
(1.4 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Others |
|
|
718 |
|
|
|
0.9 |
|
|
|
511 |
|
|
|
0.8 |
|
|
|
145 |
|
|
|
0.4 |
|
Effect of cross-border tax laws |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Foreign-derived intangible income |
|
|
(1,090 |
) |
|
|
(1.3 |
) |
|
|
(450 |
) |
|
|
(0.7 |
) |
|
|
(561 |
) |
|
|
(1.4 |
) |
Tax credits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Work opportunity tax credit |
|
|
2 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
- |
|
|
|
— |
|
Changes in valuation allowances |
|
|
621 |
|
|
|
0.8 |
|
|
|
(23 |
) |
|
|
— |
|
|
|
(3 |
) |
|
|
— |
|
Nontaxable and nondeductible items |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Equity-based compensation |
|
|
(284 |
) |
|
|
(0.3 |
) |
|
|
(1,821 |
) |
|
|
(2.8 |
) |
|
|
(122 |
) |
|
|
(0.3 |
) |
Return to provision adjustments |
|
|
(1,141 |
) |
|
|
(1.4 |
) |
|
|
183 |
|
|
|
0.3 |
|
|
|
(110 |
) |
|
|
(0.3 |
) |
Others |
|
|
832 |
|
|
|
0.9 |
|
|
|
776 |
|
|
|
1.1 |
|
|
|
461 |
|
|
|
1.1 |
|
Effective tax rate |
|
$ |
21,157 |
|
|
|
25.7 |
% |
|
$ |
15,676 |
|
|
|
24.3 |
% |
|
$ |
9,614 |
|
|
|
25.5 |
% |
The components of net deferred tax assets (liabilities) are as follows (in thousands):
|
|
December 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Deferred tax assets: |
|
|
|
|
|
|
||
Accrued liabilities, reserves and other |
|
$ |
23,106 |
|
|
$ |
19,369 |
|
UNICAP |
|
|
8,555 |
|
|
|
8,108 |
|
Tax basis goodwill |
|
|
465 |
|
|
|
753 |
|
Investment in FWRD |
|
|
4,016 |
|
|
|
4,381 |
|
Equity-based compensation |
|
|
6,354 |
|
|
|
4,836 |
|
Deferred revenue |
|
|
5,929 |
|
|
|
4,564 |
|
Research and development expenses |
|
|
— |
|
|
|
1,953 |
|
Lease liabilities |
|
|
9,274 |
|
|
|
10,052 |
|
Capital loss |
|
|
779 |
|
|
|
— |
|
Net operating loss |
|
|
— |
|
|
|
— |
|
Gross deferred tax assets |
|
|
58,478 |
|
|
|
54,016 |
|
Valuation allowance |
|
|
(779 |
) |
|
|
— |
|
Deferred tax assets, net of valuation allowance |
|
|
57,699 |
|
|
|
54,016 |
|
Deferred tax liabilities: |
|
|
|
|
|
|
||
Accrued expenses and reserves |
|
|
(6,947 |
) |
|
|
(6,766 |
) |
State taxes |
|
|
(1,697 |
) |
|
|
(1,504 |
) |
Depreciation |
|
|
(1,157 |
) |
|
|
(69 |
) |
Right-of-use lease assets |
|
|
(8,139 |
) |
|
|
(8,817 |
) |
Total gross deferred liabilities |
|
|
(17,940 |
) |
|
|
(17,156 |
) |
Net deferred tax assets |
|
$ |
39,759 |
|
|
$ |
36,860 |
|
As of December 31, 2025 and 2024, there were no gross federal and state operating loss carryforwards.
In accordance with ASC 740-30-25-17, we intend that the undistributed net earnings from continuing operations as well as the future net earnings of the foreign subsidiaries to be permanently reinvested in our operations outside of the U.S.
The amounts of cash paid for income taxes were as follows:
|
|
Year Ended December 31, |
|
|||||||||
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
|
|
|
|
|
(in thousands) |
|
|
|
|
|||
Federal |
|
$ |
14,500 |
|
|
$ |
14,500 |
|
|
$ |
9,005 |
|
State and local |
|
|
|
|
|
|
|
|
|
|||
California |
|
|
2,210 |
|
|
|
2,988 |
|
|
|
1,487 |
|
Others |
|
|
2,382 |
|
|
|
2,364 |
|
|
|
915 |
|
Foreign |
|
|
|
|
|
|
|
|
|
|||
United Kingdom |
|
|
3,678 |
|
|
|
2,351 |
|
|
|
1,588 |
|
Total |
|
$ |
22,770 |
|
|
$ |
22,203 |
|
|
$ |
12,995 |
|
For the years ended December 31, 2025, 2024 and 2023, we filed a consolidated federal and state income tax return for Revolve Group, Inc. We believe that there are no uncertain tax positions that would impact the accompanying consolidated financial statements.
The tax years ended December 31, 2022 through 2025 remain subject to possible examination by the Internal Revenue Service and the tax years ended December 31, 2021 through 2025 remain subject to possible examination by state tax jurisdictions. No interest or penalties related to income taxes are recognized in the accompanying consolidated financial statements.
In October 2021, the OECD issued a statement updating and finalizing the key components of the two-pillar plan on global tax reform, intended to be effective on January 1, 2024. Pillar One focuses on nexus and profit
allocation. Pillar Two provides for a global minimum effective corporate tax rate of 15%, applied on a jurisdiction-by-jurisdiction basis. While the U.S. has not adopted the Pillar Two rules, various other governments around the world are enacting legislation. Although these rules are not currently applicable to us, we operate in participating countries that have implemented or are expected to implement these rules. On January 5, 2026, the OECD announced a “side-by-side” elective safe harbor that would exempt electing U.S.-parented multinational entities from the fifteen percent global minimum tax for taxable years beginning on or after January 1, 2026. We continue to evaluate the impact of these tax developments and those under other OECD and non-U.S. rules as new guidance and regulations are published and become applicable. Further, legislation commonly known as the One Big Beautiful Bill Act enacted in July 2025 modified certain tax provisions that had an impact our tax liability and financial condition.
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.