SharkNinja, Inc.SN
SharkNinja, Inc. Income Taxes Disclosure
13. Income Taxes
The components of income before income taxes were as follows:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (in thousands) | |||||||||||||||||
| United States | $ | 665,717 | $ | 418,744 | $ | 162,023 | |||||||||||
| Foreign | 234,561 | 153,723 | 131,205 | ||||||||||||||
| Total income before income taxes | $ | 900,278 | $ | 572,467 | $ | 293,228 | |||||||||||
The provision for income taxes was as follows:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (in thousands) | |||||||||||||||||
| Current: | |||||||||||||||||
| Federal | $ | 88,563 | $ | 128,276 | $ | 130,665 | |||||||||||
| State | 15,873 | 27,270 | 19,831 | ||||||||||||||
| Foreign | 55,760 | 25,590 | 17,389 | ||||||||||||||
| Total current income tax expense | 160,196 | 181,136 | 167,885 | ||||||||||||||
| Deferred: | |||||||||||||||||
| Federal | 38,420 | (43,875) | (45,596) | ||||||||||||||
| State | 2,955 | (7,508) | (6,286) | ||||||||||||||
| Foreign | (2,667) | 4,009 | 10,147 | ||||||||||||||
| Total deferred income tax benefit | 38,708 | (47,374) | (41,735) | ||||||||||||||
| Total provision for income taxes | $ | 198,904 | $ | 133,762 | $ | 126,150 | |||||||||||
The following table is a reconciliation of the U.S. federal statutory tax rate of 21.0% to the Company’s effective tax rate for the year ended December 31, 2025 in accordance with the guidance after the adoption of ASU 2023-09:
| Year Ended December 31, 2025 | |||||||||||
| Amount | Percentage | ||||||||||
| (in thousands, except percentages) | |||||||||||
| U.S. federal statutory tax rate | $ | 189,058 | 21.0 | % | |||||||
| State and local income tax, net of federal (national) income tax effect | 15,494 | 1.7 | |||||||||
| Foreign tax effects | |||||||||||
| United Kingdom | |||||||||||
| Statutory tax rate difference between United Kingdom and United States | 2,878 | 0.3 | |||||||||
| Other | 7,610 | 0.8 | |||||||||
| Hong Kong | |||||||||||
| Statutory tax rate difference between Hong Kong and United States | (6,192) | (0.7) | |||||||||
| Other | 127 | 0.0 | |||||||||
| Other jurisdiction | (588) | (0.1) | |||||||||
| Tax credits | |||||||||||
| R&D credits | (11,201) | (1.2) | |||||||||
| Nontaxable or nondeductible items | |||||||||||
| Permanent differences | 6,391 | 0.7 | |||||||||
| Changes in unrecognized tax benefits | (12) | 0.0 | |||||||||
| Other adjustments | |||||||||||
| Other | (4,661) | (0.5) | |||||||||
| Effective tax rate | $ | 198,904 | 22.1 | % | |||||||
The following table is a reconciliation of the U.S. federal statutory tax rate of 21.0% to the Company’s effective tax rate for the years ended December 31, 2024 and 2023 in accordance with the guidance prior to the adoption of ASU 2023-09:
| Year Ended December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| (in percentages) | |||||||||||
| Federal statutory income tax rate | 21.0 | % | 21.0 | % | |||||||
| State tax, net of federal benefit | 2.2 | 3.3 | |||||||||
| Permanent differences | (0.2) | 0.6 | |||||||||
| Foreign-derived intangible income | (0.3) | (0.5) | |||||||||
| Research and development credits, net | (1.7) | (2.0) | |||||||||
| Tax uncertainties | — | — | |||||||||
| Deferred tax adjustments | 0.1 | — | |||||||||
| Excess tax benefits from share-based compensation | (0.2) | (0.1) | |||||||||
| Change in valuation allowance | 0.5 | (0.2) | |||||||||
| Foreign rate differential | (0.9) | 1.0 | |||||||||
| Withholding taxes | — | 9.9 | |||||||||
| Limitation on executive compensation | 2.7 | 7.0 | |||||||||
| Non-deductible transaction costs | — | 2.9 | |||||||||
| Other tax rate items | 0.2 | 0.1 | |||||||||
| Effective tax rate | 23.4 | % | 43.0 | % | |||||||
The difference between the U.S. federal statutory tax rate of 21.0% and the Company’s effective tax rate (“ETR”) for the years ended December 31, 2025, 2024 and 2023, is primarily due to state taxes, benefits from U.S. research and development credits, U.S. tax benefits from share-based compensation deductions, non-deductible costs associated with the separation and distribution, withholding taxes, and limitations on deductible executive compensation. The decrease in the ETR from 2024 to 2025 is primarily related to one-time benefits recorded in the fourth quarter of 2025. The decrease in the ETR from 2023 to 2024 is primarily related to the impacts of the separation and distribution and refinancing, such as withholding taxes and transaction costs, and non-deductible executive compensation in 2023.
Although the Company is domiciled outside of the United States, as the most significant activity is driven and managed in the United States, the Company has utilized the statutory tax rate of 21.0% as the federal statutory rate in the rate reconciliation.
The following table presents the significant components of the Company’s deferred tax assets and liabilities as of December 31, 2025 and 2024:
| Year Ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| (in thousands) | |||||||||||
| Deferred tax assets: | |||||||||||
| Accrued expenses and reserves | $ | 56,853 | $ | 49,263 | |||||||
| Operating lease liabilities | 30,755 | 31,349 | |||||||||
| Share-based compensation | 5,965 | 4,030 | |||||||||
| State credit carryforwards | 16,141 | 10,014 | |||||||||
| Capitalized research and development expenditures | 42,255 | 96,814 | |||||||||
| Other | 817 | 2,465 | |||||||||
| Gross deferred tax assets | 152,786 | 193,935 | |||||||||
| Valuation allowance | (16,141) | (10,014) | |||||||||
| Total deferred tax assets, net of valuation allowance | $ | 136,645 | $ | 183,921 | |||||||
| Deferred tax liabilities: | |||||||||||
| Goodwill and intangible assets | $ | (111,805) | $ | (118,195) | |||||||
| Property and equipment, net | (3,659) | (3,327) | |||||||||
| Right-of-use assets | (26,727) | (29,237) | |||||||||
| Total deferred tax liabilities | $ | (142,191) | $ | (150,759) | |||||||
| Net deferred tax assets (liabilities) | $ | (5,546) | $ | 33,162 | |||||||
A valuation allowance is provided for deferred tax assets where the recoverability of the assets is uncertain. The determination to provide a valuation allowance is dependent upon the assessment of whether it is more likely than not that sufficient future taxable income will be generated to utilize the deferred tax assets. Based on the weight of the available evidence, which includes the Company’s historical operating profits and substantial taxable temporary differences, a valuation allowance has been established in certain jurisdictions as of December 31, 2025 and 2024, where attributes are not more-likely-than-not to be utilized, primarily in relation to Massachusetts tax credits.
As of December 31, 2025, the Company had state research and development credit carryforwards of $20.4 million, which will begin to expire in 2038.
Federal and state laws impose restrictions on the utilization of net operating loss carryforwards and research and development credit carryforwards in the event of a change in ownership of the Company, which constitutes an ‘ownership change’ as defined by Internal Revenue Code Section 382 and 383. The Company experienced an ownership change in the past that does not materially impact the availability of its net operating losses and tax credits. Should there be an ownership change in the future, the Company’s ability to utilize existing carryforwards could be substantially restricted.
As of December 31, 2025 and 2024, the cumulative undistributed earnings of the Company’s international subsidiaries remain indefinitely reinvested, and no liability has been recorded.
A reconciliation of the beginning and ending balance of total unrecognized tax position is as follows:
| Unrecognized Tax Positions | |||||
| (in thousands) | |||||
| Balance - January 1, 2023 | $ | 2,417 | |||
| Additions related to current year tax positions | 277 | ||||
| Statue of limitations release | (570) | ||||
| Settlements | (1,319) | ||||
| Balance - December 31, 2023 | $ | 805 | |||
| Statue of limitations release | (405) | ||||
| Balance - December 31, 2024 | $ | 400 | |||
| Statue of limitations release | (209) | ||||
| Balance - December 31, 2025 | $ | 191 | |||
The Company recognizes interest and penalties related to unrecognized tax benefits as income tax expense. There was $0.8 million and $0.8 million of accrued interest and penalties related to unrecognized tax benefits as of December 31, 2025 and 2024, respectively. During the years ended December 31, 2025, 2024 and 2023, the Company recorded an immaterial benefit for the accrual of interest and penalties.
The Company’s material income tax jurisdictions are the United States (federal), United Kingdom and Hong Kong. The Company is not currently under audit in the United States or Hong Kong, but is currently under audit in the United Kingdom for the 2020, 2021 and 2022 tax years. The statute of limitations for years prior to 2022 are closed for the United States and the United Kingdom other than years currently under audit. There are open tax years which remain subject to examination in various other jurisdictions that are not material to the Company’s financial statements with open tax years ranging from 2015 to 2025.
The Company paid cash taxes in significant jurisdictions as follows:
| Income Taxes Paid by Jurisdiction | |||||
| (in thousands) | |||||
| United States federal | $ | 90,400 | |||
| United States state and local | 12,594 | ||||
| Foreign | |||||
| Hong Kong | 28,785 | ||||
| United Kingdom | 14,778 | ||||
| All other | 2,793 | ||||
| Total income taxes paid, net | $ | 149,350 | |||
The amount of cash income taxes paid by the Company during the years ended December 31, 2024 and 2023 was $190.7 million and $141.2 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.