Teads Holding Co.TEAD
Teads Holding Co. Income Taxes Disclosure
10. Income Taxes
In 2025, the Company adopted ASU 2023-09 with prospective application. ASU 2023-09 updates disclosure requirements for the reconciliation of tax expense from continuing operations, income taxes paid and modifies other income tax related disclosures.
On July 4, 2025, the One Big Beautiful Bill Act (the “OBBBA”) was enacted into law in the U.S., with certain provisions of OBBBA effective in 2025 and others becoming effective in 2026 and beyond. The OBBBA amends U.S. tax law including provisions related to bonus depreciation, interest deduction limitations, research and development, and foreign derived intangible income. The OBBBA provisions did not have a material impact on the Company’s total tax benefits for the period ended December 31, 2025 but will result in lower cash taxes due to a favorable change to the US interest expense limitation regime, which allowed for more interest to be deducted in 2025 rather than carried forward into future years. The Company will continue to evaluate discretionary elections available and other provisions which become effective in 2026.
The components of income (loss) before income taxes and the provision (benefit) for income taxes are as follows:
Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (In thousands) | |||||||||||||||||
| United States | $ | (330,776) | $ | (36,653) | $ | 16,837 | |||||||||||
| Foreign | (146,908) | 38,357 | (482) | ||||||||||||||
Income (loss) before provision for income taxes | $ | (477,684) | $ | 1,704 | $ | 16,355 | |||||||||||
Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (In thousands) | |||||||||||||||||
Current tax provision (benefit): | |||||||||||||||||
| Federal | $ | 2,199 | $ | 1,566 | $ | 5,177 | |||||||||||
| State | (14,567) | (302) | 57 | ||||||||||||||
| Foreign | 24,189 | 6,246 | 5,191 | ||||||||||||||
Total current tax provision | 11,821 | 7,510 | 10,425 | ||||||||||||||
| Deferred tax provision (benefit): | |||||||||||||||||
| Federal | 23,932 | (2,570) | (2,427) | ||||||||||||||
| State | 11,333 | (186) | 446 | ||||||||||||||
| Foreign | (7,700) | (2,339) | (2,331) | ||||||||||||||
| Total deferred tax provision (benefit) | 27,565 | (5,095) | (4,312) | ||||||||||||||
| Provision for income taxes | $ | 39,386 | $ | 2,415 | $ | 6,113 | |||||||||||
The items comprising the differences between the U.S. federal statutory income tax rate and the Company’s effective tax rate on income (loss) before income taxes for the years ended December 31 are summarized in the tables below:
| December 31, 2025 | |||||||||||
Amount | |||||||||||
| (in thousands) | Percentage | ||||||||||
Statutory Federal Income Tax at 21% | $ | (100,314) | 21.0 | % | |||||||
State & local income taxes, net of federal income tax effect (1) | (249) | 0.1 | % | ||||||||
Foreign Tax Effects: | |||||||||||
France | |||||||||||
Statutory tax rate difference | (7,245) | 1.5 | % | ||||||||
Other | 983 | (0.2) | % | ||||||||
Japan | |||||||||||
Goodwill impairment | 5,047 | (1.1) | % | ||||||||
Other | 1,422 | (0.3) | % | ||||||||
Switzerland | |||||||||||
Goodwill impairment | 5,357 | (1.1) | % | ||||||||
Other | 2,201 | (0.5) | % | ||||||||
United Kingdom | |||||||||||
Goodwill impairment | 10,672 | (2.2) | % | ||||||||
Other | 360 | (0.1) | % | ||||||||
Other foreign jurisdictions | 23,858 | (5.0) | % | ||||||||
Effects on cross-border tax laws | 5,996 | (1.3) | % | ||||||||
Tax Credits | |||||||||||
Anticipated foreign branch tax credits | (16,081) | 3.4 | % | ||||||||
Other | (2,566) | 0.5 | % | ||||||||
Changes in U.S. federal valuation allowances | 63,926 | (13.4) | % | ||||||||
Nontaxable or nondeductible items | |||||||||||
Impairment of Goodwill | 35,911 | (7.5) | % | ||||||||
Other | 6,374 | (1.2) | % | ||||||||
Changes in unrecognized tax benefits | 3,731 | (0.8) | % | ||||||||
| Total | $ | 39,386 | (8.2) | % | |||||||
___________________________________________
(1) In 2025, state and local income taxes in New York and New York City comprise more than 50% of state and local taxes.
| 2024 | 2023 | ||||||||||
| Tax at statutory federal rate | 21.0 | % | 21.0 | % | |||||||
| State tax—net of federal benefit | (10.1) | % | 2.4 | % | |||||||
| Foreign withholding taxes | 0.5 | % | 1.8 | % | |||||||
Foreign rate differential (1) | 81.5 | % | 12.5 | % | |||||||
| Stock compensation and other permanent items | 83.4 | % | 7.0 | % | |||||||
Tax impacts of intercompany sale of assets | (21.6) | % | — | % | |||||||
| Transaction costs | 146.4 | % | — | % | |||||||
| Tax rate change | 7.6 | % | 1.6 | % | |||||||
| Uncertain tax positions | (142.1) | % | 6.5 | % | |||||||
| Change in valuation allowance | (141.1) | % | 4.2 | % | |||||||
Global intangible low-taxed income and Subpart F inclusion | 1.9 | % | 4.4 | % | |||||||
| Foreign-derived intangible income deduction | (39.0) | % | (12.6) | % | |||||||
Foreign tax credits | (60.9) | % | (6.1) | % | |||||||
| Capital loss carryforwards | 65.9 | % | — | % | |||||||
| Return to provision adjustments | 153.7 | % | (5.1) | % | |||||||
| Other | (5.4) | % | (0.2) | % | |||||||
| Effective tax rate | 141.7 | % | 37.4 | % | |||||||
_______________________________
(1) Primarily relates to higher tax rates relating to certain of the Company’s European operations.
Deferred taxes are the result of temporary differences between the bases of assets and liabilities for financial reporting and income tax purposes. Deferred tax assets and liabilities as of December 31, 2025 and 2024 were comprised of the following:
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| (In thousands) | |||||||||||
| Deferred tax assets: | |||||||||||
| Net operating loss carryforwards | $ | 26,102 | $ | 10,197 | |||||||
| Foreign tax credit carryforwards | 3,403 | 2,530 | |||||||||
| Capital loss carryforwards | 788 | 2,286 | |||||||||
| Stock-based compensation | 4,144 | 2,106 | |||||||||
| Accruals, reserves, and other | 24,716 | 4,365 | |||||||||
Interest & related financing costs | 12,249 | 2,929 | |||||||||
| Capitalization of research and development costs | 40,046 | 29,561 | |||||||||
Anticipated foreign branch tax credits | 22,349 | — | |||||||||
| Allowance for credit losses | 4,358 | 1,477 | |||||||||
| Gross deferred tax assets | 138,155 | 55,451 | |||||||||
| Valuation allowance | (104,070) | (13,904) | |||||||||
| Total deferred tax assets | 34,085 | 41,547 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Intangible assets and capitalized software | (88,272) | (2,275) | |||||||||
Tax on unremitted foreign earnings | (8,429) | — | |||||||||
| Total deferred tax liabilities | (96,701) | (2,275) | |||||||||
Net deferred tax (liabilities) assets | $ | (62,616) | $ | 39,272 | |||||||
The Company regularly assesses the need for a valuation allowance on its deferred tax assets, and to the extent that it determines that an adjustment is needed, such adjustment will be recorded in the period that the determination is made.
As of December 31, 2025, the Company has recorded a valuation allowance against its net deferred tax assets in several jurisdictions, most notably in the U.S. In accordance with ASC 740, the Company considered all available evidence, both positive and negative, to determine whether it is more likely than not that the deferred tax assets will be realized.
Negative evidence considered by the Company primarily included: (i) macroeconomic challenges which led to a sustained deterioration of operating results throughout the year. (ii) continued integration challenges which contributed to U.S. pretax losses, (iii) expectation of future U.S. losses.
Positive evidence considered included: (i) the combined business reflects three-years of cumulative pretax U.S. income, (ii) future taxable income generated by U.S. capitalization of foreign Section 174 expenditures and (iii) inclusion of foreign sourced income in the U.S. based on global intangible low-taxed income (“GILTI”) and Subpart F regimes.
As of each reporting date, the Company will continue to consider existing evidence, both positive and negative, that could impact its view with regard to future realization of deferred tax assets. It is possible that the valuation allowance could change in the next 12 months.
Recognition of deferred tax assets is appropriate when realization of these assets is more likely than not. Based upon the weight of available evidence, which includes the Company’s historical operating performance and the recorded cumulative net losses in prior fiscal periods, the Company recorded a valuation allowance of $104.1 million and $13.9 million against certain deferred tax assets, of which $87.8 million and $11.8 million related to U.S. federal & state valuation allowances, as of December 31, 2025 and December 31, 2024, respectively. The net valuation allowance increased by $90.2 million and decreased by $2.4 million for the years ended December 31, 2025 and 2024, respectively, compared to their respective prior year periods.
As of December 31, 2025 and 2024, the Company had U.S. federal net operating loss carryforwards of $2.8 million and $2.5 million, respectively. The federal net operating loss carryforwards will expire at various amounts beginning in the year ending December 31, 2032, if not utilized. Utilization of the net operating losses remaining as of December 31, 2025 is subject to an annual limitation provided for in Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”) and any annual limitation could result in the expiration of net operating loss carryforwards before utilization.
As of December 31, 2025 and 2024, the Company had state net operating loss carryforwards of $128.5 million and $122.1 million, respectively. State net operating losses will expire at various amounts beginning in the year ending December 31, 2026, if not utilized.
As of December 31, 2025 and 2024, the Company had U.K. foreign tax credits of $2.5 million and $2.1 million, respectively, which can be carried forward indefinitely. As of December 31, 2025, the Company had Swiss foreign tax credits of $0.5 million. The Company had no Swiss foreign tax credit as of December 31, 2024. As of December 31, 2025 and 2024, the Company also had U.S. foreign tax credits of $0.4 million, which can be carried forward for 10 years.
The Company’s previously undistributed earnings of foreign subsidiaries are no longer indefinitely reinvested due to current U.S. funding needs. Therefore, in 2025, an incremental deferred tax liability of $8.4 million was recorded for withholding tax and other income taxes due upon future distribution of earnings.
Unrecognized Tax Benefits
The activity related to the gross amount of unrecognized tax benefits is as follows:
Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (In thousands) | |||||||||||||||||
| Beginning balance | $ | 6,002 | $ | 8,423 | $ | 7,352 | |||||||||||
| Decreases due to tax settlements | — | (5,395) | — | ||||||||||||||
| Decreases due to expirations of statutes of limitations | (309) | (120) | (699) | ||||||||||||||
| Additions based on tax positions related to prior year | 21,409 | 3,094 | 1,612 | ||||||||||||||
| Additions based on tax positions related to current year | — | — | 158 | ||||||||||||||
| Ending balance | $ | 27,102 | $ | 6,002 | $ | 8,423 | |||||||||||
As of December 31, 2025, the Company had approximately $27.1 million of gross unrecognized tax benefits of which $7.8 million, if fully recognized, would impact our effective tax rate. The current year balance increased $19.1 million related to the Acquisition, which has an offsetting indemnification asset. While it is often difficult to predict the outcome of any particular uncertain tax position, the Company believes it is reasonably possible that its unrecognized tax benefits will decrease by approximately $8.2 million during the next 12 months, primarily due to the expiration of statute of limitations and audit settlements. The Company further expects that the amount of unrecognized tax benefits will continue to change in the future as a result of ongoing operations, the outcomes of audits, and the expiration of the statute of limitations. This change is not expected to have a significant impact on the Company’s results of operations or financial condition.
The Company recognizes accrued interest and penalties related to unrecognized tax benefits in its income tax provision (benefit). For the year ended December 31, 2025, the Company recognized $2.2 million of accrued interest and penalties, which are reflected in the table above. Accrued interest and penalties recognized for the year ended December 31, 2024 were $0.1 million.
The Company is subject to taxation in the United States, various states, and several foreign jurisdictions. The Company establishes reserves for open tax years for uncertain tax positions that may be subject to challenge by various taxing authorities. The consolidated tax provision and related accruals include the impact of such reasonably estimable losses and related interest and penalties as deemed appropriate. United States and foreign jurisdictions have statutes of limitations generally ranging from 3 to 5 years. However, the statute of limitations does not begin for years that a net operating loss carryforward was generated until the loss is applied against taxable income. In that scenario, the taxing authority can only make adjustments in the original loss year to the extent of the net operating loss. The open audit years are 2022 through 2025 in the U.S., 2023 through 2025 in U.K, and 2021 through 2025 in Israel. The Company is currently under audit for 2018 through 2021 in Germany and 2022 through 2024 in Japan.
The table below provides the updated requirements of ASU 2023-09 for cash paid for income taxes, net of refunds:
Year Ended December 31, 2025 | |||||
| (In thousands) | |||||
Federal | $ | 2,631 | |||
State | 612 | ||||
Foreign: | |||||
France | 6,873 | ||||
Israel | 2,051 | ||||
Italy (IRES) | 3,740 | ||||
Japan (National) | 1,420 | ||||
United Kingdom | (2,422) | ||||
Other | 8,879 | ||||
Total Foreign | 20,541 | ||||
Total cash paid for income taxes, net of refunds | $ | 23,784 | |||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 16, 2026 | Showing above |
| 2024 | Mar 7, 2025 | |
| 2023 | Mar 8, 2024 | |
| 2022 | Mar 15, 2023 | |
| 2021 | Mar 18, 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.