Veritone, Inc.VERI
Veritone, Inc. Income Taxes Disclosure
Income Taxes
The components of loss from continuing operations before income taxes were as follows:
| Year Ended | ||||||||||||||
| December 31, 2025 | December 31, 2024 | |||||||||||||
| Domestic | $ | (91,023) | $ | (73,159) | ||||||||||
| Foreign | (20,937) | (27,034) | ||||||||||||
| Total | $ | (111,960) | $ | (100,193) | ||||||||||
Income taxes were as follows:
| Year Ended | ||||||||||||||
| December 31, 2025 | December 31, 2024 | |||||||||||||
| Current tax expense: | ||||||||||||||
| Federal | $ | — | $ | 51 | ||||||||||
| State | 221 | 397 | ||||||||||||
| Foreign | 883 | 446 | ||||||||||||
| Total current tax expense | 1,104 | 894 | ||||||||||||
| Deferred tax expense: | ||||||||||||||
| Federal | (15,707) | (13,381) | ||||||||||||
| State | (5,317) | (6,016) | ||||||||||||
| Foreign | (4,242) | (4,781) | ||||||||||||
| Change in valuation allowance | 23,934 | 19,423 | ||||||||||||
| Total deferred tax expense | (1,332) | (4,755) | ||||||||||||
| Total tax expense | $ | (228) | $ | (3,861) | ||||||||||
The significant categories of temporary differences that gave rise to deferred income tax assets and liabilities were as follows:
| December 31, 2025 | December 31, 2024 | |||||||||||||
| Deferred tax assets: | ||||||||||||||
| Net operating loss carryforwards | $ | 59,394 | $ | 44,928 | ||||||||||
| Stock-based compensation | 21,131 | 21,460 | ||||||||||||
| Accrued expenses | 364 | 165 | ||||||||||||
| Capital loss carryforward | 5,678 | 5,031 | ||||||||||||
| Capitalized research and development | 15,640 | 15,856 | ||||||||||||
| Fixed assets | 225 | 341 | ||||||||||||
| Operating lease liabilities | 54 | 134 | ||||||||||||
| Research credits | 9,902 | 9,283 | ||||||||||||
| Interest expense carryforward | 9,337 | 4,836 | ||||||||||||
| Other | 1,537 | 1,368 | ||||||||||||
| Gross deferred tax assets | 123,262 | 103,402 | ||||||||||||
| Less: valuation allowance | (117,740) | (93,159) | ||||||||||||
| Total deferred tax assets | 5,522 | 10,243 | ||||||||||||
| Deferred tax liabilities: | ||||||||||||||
| Operating lease right-of-use assets | (52) | (132) | ||||||||||||
| Unremitted foreign earnings | (1,419) | (1,086) | ||||||||||||
| Installment sale | — | (2,090) | ||||||||||||
| Intangible assets and goodwill | (7,326) | (11,549) | ||||||||||||
| Other | — | — | ||||||||||||
| Total deferred tax liabilities | (8,797) | (14,857) | ||||||||||||
| Total net deferred tax assets | $ | (3,275) | $ | (4,614) | ||||||||||
The following table presents a reconciliation of the provision for income taxes to the amount computed by applying the 21% statutory U.S. federal income tax rate to our income before income taxes:
| Year Ended December 31, 2025 | ||||||||||||||
| Amount | % of Income Before Income Taxes | |||||||||||||
| U.S. federal statutory income tax rate | $ | (23,511) | 21.00 | % | ||||||||||
| State and local income taxes, net of federal income tax effect (1) | 176 | (0.16) | % | |||||||||||
| Foreign tax effects | ||||||||||||||
| Israel | ||||||||||||||
| Changes in Israel valuation allowances | 2,950 | (2.63) | % | |||||||||||
| Other | (583) | 0.52 | % | |||||||||||
| Other countries | 1,090 | (0.97) | % | |||||||||||
| Effect of cross-border tax laws | ||||||||||||||
| Subpart F | 1,104 | (0.99) | % | |||||||||||
| Other | 317 | (0.28) | % | |||||||||||
| Tax credits | (260) | 0.23 | % | |||||||||||
| Changes in valuation allowance | 16,785 | (15.00) | % | |||||||||||
| Nontaxable or nondeductible items | ||||||||||||||
| Stock compensation and officers' compensation | 1,169 | (1.04) | % | |||||||||||
| Other | 45 | (0.04) | % | |||||||||||
| Changes in unrecognized tax benefits | 226 | (0.20) | % | |||||||||||
| Other adjustments | 264 | (0.24) | % | |||||||||||
| (228) | 0.20 | % | ||||||||||||
(1) State taxes in California, Maryland, Texas and Illinois made up the majority (greater than 50 percent) of the tax effect in this category.
The reconciliation between the provision for income taxes at the statutory rate and the provision for income taxes at the effective tax rate is as follows:
| Year Ended | ||||||||
| December 31, 2024 | ||||||||
| Tax expense at United States statutory rate | 21.00 | % | ||||||
| Increase (decrease) in tax resulting from: | ||||||||
| State taxes, net of federal effect | 3.75 | % | ||||||
| Impact of foreign operations | (1.39) | % | ||||||
| Research & development credits | 0.68 | % | ||||||
| Stock-based compensation | (1.26) | % | ||||||
| Change in valuation allowance | (18.94) | % | ||||||
| Total | 3.84 | % | ||||||
The Company has evaluated the available positive and negative evidence supporting the realization of its gross deferred tax assets, including its cumulative losses, and the amount and timing of future taxable income, and has determined it is more likely than not that historical U.S. federal and state deferred tax assets will not be realized. Accordingly, the Company recorded a valuation allowance as of December 31, 2025 and 2024 against these deferred tax assets.
The change in the valuation allowance for the years ended December 31, 2025 and 2024 is as follows:
| Year Ended | ||||||||||||||
| December 31, 2025 | December 31, 2024 | |||||||||||||
| Valuation allowance, at beginning of year | $ | 93,159 | $ | 93,566 | ||||||||||
| Increase (decrease) recognized in other comprehensive income (loss) | 647 | (311) | ||||||||||||
| Increase recognized in tax provision, continuing operations | 23,934 | 19,423 | ||||||||||||
| Increase recognized in tax provision, discontinued operations | — | (19,519) | ||||||||||||
| Valuation allowance, at end of year | $ | 117,740 | $ | 93,159 | ||||||||||
As of December 31, 2025, the Company continues to provide a valuation allowance against federal and state deferred tax assets that are not expected to be realizable. The Company continues to evaluate the realizability of deferred tax assets and the related valuation allowance. If the Company’s assessment of the deferred tax assets or the corresponding valuation allowance were to change, the Company would record the related adjustment to income during the period in which the determination is made.
As of December 31, 2025, the Company has federal, state, and foreign income tax net operating loss carryforwards of approximately $195,092, $173,325, and $40,035 respectively. The U.S. federal and state net operating losses are projected to expire beginning in 2037 and 2030, respectively, unless previously utilized. Net federal operating loss carryforwards generated after January 1, 2018 may be carried forward indefinitely, subject to the 80% taxable income limitation on the utilization of the carryforwards. The foreign net operating loss carryforwards do not expire. In addition, the Company had federal and state research and development credit carryforwards of approximately $8,131 and $5,195, respectively, as of December 31, 2025. The federal research and development credit will begin to expire in 2036 if unused and the state research and expenditure credit may be carried forward indefinitely. Utilization of the Company’s U.S. net operating loss and tax credit carryforwards may be subject to a substantial annual limitation due to the ownership change limitations set forth in Internal Revenue Code Section 382 and similar state provisions. Such an annual limitation could result in the expiration of the net operating loss and tax credit carryforwards before utilization. As of December 31, 2025, the Company has foreign net loss carryforwards of $40,035 which can be carried forward indefinitely.
In accordance with the U.S. global intangible low-taxed income (“GILTI”) provisions, we include in our U.S. income tax return foreign subsidiary earnings in excess of an allowable return on the foreign subsidiary’s tangible assets. We account for the GILTI tax in the period in which it is incurred, and therefore have not provided any deferred tax impacts of GILTI in our consolidated financial statements.
As of December 31, 2025 and 2024, the Company had approximately $7,457 and $6,954 respectively, of unrecognized tax benefits of which $3,775 would impact the Company’s effective tax rate if recognized. If recognized, $4,777 would result in a deferred tax asset for tax attribute carryforwards, out of which $2,891 is expected to require a full valuation allowance based on present circumstances. The Company estimates that none of its unrecognized tax benefits will materially change within the next twelve months. As of December 31, 2025 and 2024, amounts accrued for interest were recorded within income tax expense and were $180 and $71, respectively, and amounts accrued for penalties of $430 and $381, were also recorded within income tax expense, respectively.
A reconciliation of the unrecognized tax benefits from January 1, 2024 to December 31, 2025 is as follows:
| Year Ended | ||||||||||||||
| December 31, 2025 | December 31, 2024 | |||||||||||||
| Unrecognized tax benefit as of January 1 | $ | 6,954 | $ | 6,873 | ||||||||||
| Gross increase for tax positions for the prior year | (62) | (303) | ||||||||||||
| Gross decrease for tax positions for the prior year | 497 | 393 | ||||||||||||
| Gross increase for tax positions of the current year | 140 | 170 | ||||||||||||
| Gross decrease for lapse of statute of limitations | (72) | (179) | ||||||||||||
| Unrecognized tax benefits balance at December 31 | $ | 7,457 | $ | 6,954 | ||||||||||
The Company is subject to taxation in the United States, Israel, the United Kingdom, France, Australia, and various U.S. states. In general, the U.S. federal statute of limitations is three years. However, the Internal Revenue Service may still adjust a tax loss or credit carryover in the year the tax loss or credit carryover is utilized. As such, our U.S. federal tax returns and state tax returns are open for examination since inception. The Israeli statute of limitations period is generally three years commencing at the end of the year in which the return was filed. The United Kingdom statute of limitations period is generally one year commencing the day the Company has filed its tax return, or, for larger companies, the statutory due date of such return. The France statute of limitations period is generally three years commencing at the end of the year that has triggered the tax liability. The Australia statute of limitations period is generally four years commencing the day the Company has filed its tax return. The Company is not currently under examination from income tax authorities in the jurisdictions in which the Company does business.
On August 16, 2022, the U.S. government enacted the Inflation Reduction Act (“IRA”), which, among others, implements a 15% corporate alternative minimum tax based on the adjusted financial statement income for certain large corporations and a 1% excise tax on net share repurchases. The minimum tax and excise tax, if applicable, are effective for fiscal years beginning after December 31, 2022. The IRA had no material impact on our financial position, results of operations or cash flows. We will continue to monitor additional future guidance from the IRS.
On July 4, 2025, the U.S. enacted H.R. 1 “A bill to provide for reconciliation pursuant to Title II of H. Con. Res. 14”, commonly referred to as the One Big Beautiful Bill Act (the “OBBBA”). The OBBBA contains significant provisions, including the permanent extension or restoration of certain expiring corporate income tax provisions, originally introduced by the Tax Cuts and Jobs Act of 2017, and incremental modifications to the international framework. The legislation has multiple effective dates, with certain provisions effective for the tax year beginning after December 31, 2024, and others effective for tax years beginning after December 31, 2025. Veritone has evaluated the OBBBA provisions enacted and has included the related impact in the provision for income taxes. The OBBBA did not have a material impact to our tax expense in 2025 and is not expected to have a material impact on future periods.
Cash paid for income taxes was as follows:
| Year Ended December 31, 2025 | ||||||||
| Federal | $ | — | ||||||
| State | ||||||||
| Massachusetts | 124 | |||||||
| Other states | 366 | |||||||
| Foreign | ||||||||
| United Kingdom | 650 | |||||||
| Israel | 843 | |||||||
| Other foreign | 25 | |||||||
| — | ||||||||
| $ | 2,008 | |||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Apr 15, 2026 | Showing above |
| 2024 | Apr 1, 2025 | |
| 2023 | Apr 1, 2024 | |
| 2022 | Mar 16, 2023 | |
| 2021 | Mar 17, 2022 | |
| 2020 | Mar 5, 2021 | |
| 2019 | Mar 11, 2020 | |
| 2018 | Mar 18, 2019 | |
| 2017 | Mar 9, 2018 | |
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.