StubHub Holdings, Inc.STUB
StubHub Holdings, Inc. Income Taxes Disclosure
INCOME TAXES
The Company has provided for current and deferred U.S. federal, state and foreign income taxes for the current period for all tax jurisdictions in which it operates.
The U.S. and foreign components of the Company’s (loss) income before income taxes were as follows (in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
U.S. | $ | (1,573,325) | $ | (10,857) | $ | 137,145 | |||||||||||
Foreign | 27,985 | 48,116 | (51,549) | ||||||||||||||
| Total | $ | (1,545,340) | $ | 37,259 | $ | 85,596 | |||||||||||
The components of the Company’s (provision) benefit for income taxes were as follows (in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
Current income taxes: | |||||||||||||||||
U.S.—federal | $ | — | $ | 740 | $ | (1,513) | |||||||||||
U.S.—state | 1,231 | 22,773 | (4,035) | ||||||||||||||
Foreign | (5,009) | (5,863) | (853) | ||||||||||||||
Total current (provision) benefit for income taxes | (3,778) | 17,650 | (6,401) | ||||||||||||||
Deferred income taxes: | |||||||||||||||||
U.S.—federal | (253,726) | (22,079) | 222,034 | ||||||||||||||
U.S.—state | (99,399) | (2,061) | 63,236 | ||||||||||||||
Foreign | (3,691) | (33,569) | 40,736 | ||||||||||||||
Total deferred (provision) benefit for income taxes | (356,816) | (57,709) | 326,006 | ||||||||||||||
Total (provision) benefit for income taxes | $ | (360,594) | $ | (40,059) | $ | 319,605 | |||||||||||
The Company adopted ASU 2023-09 during the year ended December 31, 2025 on a prospective basis. The following table reconciles the U.S. federal statutory income tax rate of 21% to the Company's worldwide effective tax rate for the year ended December 31, 2025 in accordance with ASU 2023-09 (in thousands, except for percentages):
| Year Ended December 31, 2025 | |||||||||||
Amount | Rate | ||||||||||
U.S. federal statutory tax | $ | (324,521) | 21.0 | % | |||||||
State and local income tax, net of federal income tax effect(1) | 98,534 | (6.4) | |||||||||
Foreign tax effects | 2,075 | (0.1) | |||||||||
Effect of cross-border tax laws | 3,271 | (0.2) | |||||||||
Nontaxable or nondeductible items | |||||||||||
| Executive compensation | 205,980 | (13.3) | |||||||||
Other | 7,785 | (0.5) | |||||||||
Changes in unrecognized tax benefits | 8,494 | (0.6) | |||||||||
Changes in valuation allowance | 354,865 | (23.0) | |||||||||
Other adjustments | 4,111 | (0.2) | |||||||||
| Effective tax rate | $ | 360,594 | (23.3) | % | |||||||
(1)The state and local jurisdictions that contribute to the majority (greater than 50%) of the tax effect of this category include California, New York, and New York City. Additionally, $124.2 million of tax expense for the change in state valuation allowance is included in this category.
The following table reconciles the U.S. federal statutory tax rate of 21.0% to the Company's effective tax rate for the year ended December 31, 2024 and December 31, 2023 in accordance with the guidance prior to the adoption of ASU 2023-09:
| Year Ended December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Income taxes at U.S. federal statutory rate | 21.0 | % | 21.0 | % | |||||||
| State income taxes, net of federal benefit | 11.5 | 10.4 | |||||||||
| Foreign rate differential | (3.5) | 3.8 | |||||||||
| Impacts of restructuring | 99.8 | — | |||||||||
| Foreign branch adjustment | (3.6) | — | |||||||||
| BEAT minimum tax | — | 1.8 | |||||||||
| Valuation allowance | (20.1) | (415.0) | |||||||||
| Uncertain tax positions | (0.4) | 11.0 | |||||||||
| Permanent adjustments | 8.2 | 1.1 | |||||||||
| U.S. inclusion of foreign source income | 7.9 | — | |||||||||
| Tax rate changes | (5.2) | (1.6) | |||||||||
| Provision to return | (10.9) | (5.2) | |||||||||
| Other | 2.8 | (0.7) | |||||||||
| Effective tax rate | 107.5 | % | (373.4) | % | |||||||
The amounts of cash income taxes paid, net of refunds, by the Company pursuant to the disclosure requirements of ASU 2023-09 for the year ended December 31, 2025 were as follows (in thousands):
| Year Ended December 31, 2025 | |||||
U.S. - Federal | $ | (3,387) | |||
U.S. - State and local | 2,811 | ||||
| Brazil | 1,387 | ||||
| United Kingdom | 13,761 | ||||
| Canada | 3,954 | ||||
Other foreign | 800 | ||||
Total | $ | 19,326 | |||
The amounts of cash income taxes paid, net of refunds, by the Company (prior to ASU 2023-09) for the years ended December 31, 2024 and 2023 were $5.3 million and $9.0 million, respectively.
Deferred income taxes reflect the net tax effect of temporary differences between financial statement carrying amounts of assets and liabilities and their respective tax basis.
Significant components of the Company’s deferred tax assets and deferred tax liabilities were as follows (in thousands):
Year Ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
Deferred tax assets: | |||||||||||
| Net operating loss carryforwards | $ | 373,071 | $ | 334,542 | |||||||
| Stock-based compensation | 128,972 | 11,215 | |||||||||
| Amortization of intangible assets | 76,051 | 78,571 | |||||||||
| Transaction costs | 11,545 | 12,859 | |||||||||
| Accrued expenses and other liabilities | 38,772 | 26,676 | |||||||||
| Operating lease liabilities | 6,821 | 6,832 | |||||||||
| Interest expense limitation | 176,432 | 159,044 | |||||||||
| Other | 15,943 | 9,555 | |||||||||
Total gross deferred tax assets | 827,607 | 639,294 | |||||||||
Valuation allowance | (526,507) | (43,246) | |||||||||
Total net deferred tax assets | 301,100 | 596,048 | |||||||||
Deferred tax liabilities: | |||||||||||
| Goodwill and indefinite lived intangibles | (354,139) | (293,809) | |||||||||
| Interest rate swap | (18,630) | (32,058) | |||||||||
Capitalized software costs | (9,362) | — | |||||||||
| Right of use asset | (5,445) | (5,772) | |||||||||
| Foregone branch foreign tax credit | (2,083) | (3,817) | |||||||||
| Other | (2,584) | (12,110) | |||||||||
Total gross deferred tax liabilities | (392,243) | (347,566) | |||||||||
Net deferred tax assets (liabilities) | $ | (91,143) | $ | 248,482 | |||||||
As of December 31, 2025, the Company is no longer permanently reinvested with respect to certain non-U.S. subsidiaries and therefore, the Company has recorded taxes of $1.1 million with respect to undistributed earnings from its non-U.S. subsidiaries as such earnings are no longer reinvested indefinitely. The amount of undistributed earnings of non-U.S. subsidiaries as of December 31, 2025 was $28.7 million.
The Company assesses the realizability of its deferred tax assets in each jurisdiction by evaluating all relevant positive and negative evidence at each reporting date, including cumulative historical losses, available carryback or carryforward periods, and prudent and feasible tax planning strategies. As of December 31, 2025, the Company had incurred a cumulative loss in the U.S. over the preceding three-year period.
As of December 31, 2025, the Company concluded that objectively verifiable negative evidence outweighed the positive evidence and given that the Company has incurred a cumulative loss over the three-year period ended December 31, 2025, the Company determined that it was not more likely than not that its U.S. federal, state, and certain foreign deferred tax assets would be realized. Accordingly, in the fourth quarter of 2025, the Company recorded a valuation allowance of $479.1 million against its U.S. federal and state deferred tax assets.
The Company maintains a valuation allowance against its foreign net deferred tax assets of $47.4 million and $43.2 million as of December 31, 2025 and 2024, respectively.
A reconciliation of the beginning and ending amount of the Company’s valuation allowance was as follows (in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Beginning balance | $ | 43,246 | $ | 48,888 | $ | 404,098 | |||||||||||
| Increase to valuation allowance | 480,897 | — | 4,040 | ||||||||||||||
| Decrease to valuation allowance | (2,932) | (4,490) | (359,250) | ||||||||||||||
| Increase (decrease) in valuation allowance change in accumulated other comprehensive income (loss) | 5,296 | (1,152) | — | ||||||||||||||
| Ending balance | $ | 526,507 | $ | 43,246 | $ | 48,888 | |||||||||||
As of December 31, 2025, the Company had cumulative pre-tax U.S. federal net operating loss carryforwards of $1,219.9 million which have an unlimited carryforward period and non-U.S. net operating loss carryforwards of $214.5 million which expire at various times starting in 2030. As of December 31, 2025, the Company had cumulative net operating loss carryforwards of $827.4 million related to U.S. state jurisdictions which expire at various times starting in 2025. The Company’s U.S. federal and state net operating losses are potentially subject to limitations under Section 382 of the Internal Revenue Code of 1986, as amended, and other limitations under state law.
The following table summarizes the activity related to the Company’s unrecognized tax benefits (in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Balance as of the beginning of the period | $ | 50,397 | $ | 50,763 | $ | 41,527 | |||||||||||
| Increases for current year positions | 8,238 | 17,317 | 4,930 | ||||||||||||||
| Increases for prior year positions | 3,888 | 363 | 4,306 | ||||||||||||||
| Decreases for prior year positions | (2,503) | (15,514) | — | ||||||||||||||
| Payments/Settlements | (4,574) | (2,532) | — | ||||||||||||||
| Balance as of the end of the period | $ | 55,446 | $ | 50,397 | $ | 50,763 | |||||||||||
As of December 31, 2025 and 2024, the Company had unrecognized tax benefits of $55.4 million and $50.4 million, respectively, of which $6.4 million and $1.8 million, respectively, were included in other non-current assets and other non-current liabilities, $2.7 million and $13.4 million, respectively, were included in accrued expenses and other current liabilities, and $46.3 million and $35.2 million, respectively, were presented as a reduction of deferred tax assets on the consolidated balance sheets. The total amount of unrecognized tax benefits that, if recognized, would favorably affect the effective tax rate was $7.4 million and $37.9 million as of December 31, 2025 and 2024, respectively. The Company recognizes interest and penalties accrued related to unrecognized tax benefits in the (provision) benefit for income taxes. The accrued amounts for interest and penalties were $7.3 million and $8.8 million, as of December 31, 2025 and 2024, respectively. During the years ended December 31, 2025 and 2024, the Company accrued net tax expense related to interest and penalties of $1.3 million and $2.7 million, respectively.
The total amount of unrecognized tax benefits relating to the Company’s tax positions is subject to change based on future events including, but not limited to, the settlements of ongoing audits, participation in voluntary disclosure programs, and/or the expiration of applicable statutes of limitations. The Company believes that it is reasonably possible that a decrease of up to $2.7 million in unrecognized tax benefits related to the settlement of certain U.S. state and foreign uncertain tax positions may occur within the next 12 months.
The Company is subject to taxation and files income tax returns in the U.S. federal and state, and foreign jurisdictions. In the U.S., the years from 2020 forward generally remain open and could be subject to examination by the taxing authorities. The Company’s other non-U.S. subsidiaries could be subject to audit in certain jurisdictions as early as 2017.
On July 4, 2025, the U.S. government enacted The One Big Beautiful Bill Act (“OBBBA”). The OBBBA extends and modifies several provisions originally introduced under the Tax Cuts and Jobs Act of 2017, while also implementing additional changes to U.S. federal tax law. Key provisions of the OBBBA include (i) the permanent extension of 100% bonus depreciation for qualifying assets, (ii) the elimination of the requirement to capitalize and amortize U.S. – based research and experimental expenditures, allowing for immediate expensing, (iii) changes to limitation on the deductibility of interest expense and (iv) modifications to the taxation of foreign earnings and other international income tax provisions. The OBBBA contains multiple effective dates, with certain provisions taking effect beginning in calendar year 2025 and others phased in through calendar year 2027. In accordance with ASC 740, the Company has recognized the effects of the new tax law in the period of enactment. The legislation does not have a material impact on the consolidated financial statements for the year ended December 31, 2025About 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.