Weave Communications, Inc.WEAV
Weave Communications, Inc. Income Taxes Disclosure
Income Taxes
Loss before income taxes was as follows for the periods presented (in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| United States | $ | (30,088) | $ | (28,776) | $ | (30,622) | |||||||||||
| Foreign | 1,112 | 619 | (149) | ||||||||||||||
| Total | $ | (28,976) | $ | (28,157) | $ | (30,771) | |||||||||||
The components of the provision for (benefit from) income taxes were as follows for the periods presented (in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Current | |||||||||||||||||
| Federal | $ | — | $ | — | $ | — | |||||||||||
| State | 76 | 9 | 53 | ||||||||||||||
| Foreign | 343 | 226 | 247 | ||||||||||||||
| Deferred | |||||||||||||||||
| Federal | (1,233) | — | — | ||||||||||||||
| State | (46) | — | — | ||||||||||||||
| Foreign | (64) | (46) | (40) | ||||||||||||||
| Total | $ | (924) | $ | 189 | $ | 260 | |||||||||||
The income tax benefit for the year ended December 31, 2025 was primarily attributable to a partial release of the valuation allowance related to deferred tax liabilities recognized in connection with the Vidurama acquisition.
The following reconciles the differences between the federal statutory income tax rate in effect in each year to the Company’s effective tax rate for the periods presented:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
Statutory federal tax rate | 21.00 | % | 21.00 | % | 21.00 | % | |||||||||||
State tax, net of federal tax effect | 1.75 | 3.80 | 2.70 | ||||||||||||||
Stock-based compensation | 13.97 | % | 22.76 | % | 7.54 | % | |||||||||||
Section 162(m) | (21.01) | (22.67) | (13.40) | ||||||||||||||
Change in valuation allowance | (11.36) | (32.87) | (19.97) | ||||||||||||||
Other | (1.16) | 7.31 | 1.29 | ||||||||||||||
Effective tax rate | 3.19 | % | (0.67) | % | (0.84) | % | |||||||||||
The components of deferred tax assets and liabilities were as follows for the periods presented (in thousands):
| Year Ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Deferred tax assets: | |||||||||||
| Net operating losses | $ | 56,267 | $ | 51,550 | |||||||
| Sales and use tax reserves | 253 | 197 | |||||||||
Stock-based compensation | 2,360 | 2,914 | |||||||||
| Compensation related accruals | 1,889 | 1,307 | |||||||||
| Interest expense limitations | — | 309 | |||||||||
Leases - Right-of-use liability | 9,742 | 10,749 | |||||||||
| Other | 571 | 327 | |||||||||
| Fixed assets | 598 | 651 | |||||||||
| Capitalized research expenses | 15,064 | 11,082 | |||||||||
| Valuation allowance | (70,195) | (64,119) | |||||||||
| Total deferred tax assets - net | 16,549 | 14,967 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Intangible assets | (2,003) | (367) | |||||||||
Leases - Right-of-use asset | (8,392) | (9,360) | |||||||||
| Deferred contract costs | (5,978) | (5,129) | |||||||||
| Total deferred tax liabilities | (16,373) | (14,856) | |||||||||
| Net deferred taxes assets | $ | 176 | $ | 111 | |||||||
Activity of the deferred tax asset valuation allowance was as follows for the periods presented (in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Balance at beginning of the year | $ | 64,119 | $ | 54,867 | $ | 48,723 | |||||||||||
Charged to benefit or expense | 6,076 | 9,252 | 6,144 | ||||||||||||||
| Balance at end of the year | $ | 70,195 | $ | 64,119 | $ | 54,867 | |||||||||||
The Company evaluates the realizability of its deferred tax assets by considering all available positive and negative evidence, including historical operating results, projections of future taxable income, tax planning strategies and sources of future taxable income. Due to cumulative losses, the Company has recorded a valuation allowance against its domestic deferred tax assets as of December 31, 2025.
Deferred tax liabilities recognized in connection with the Vidurama acquisition were considered as a source of future taxable income in the Company’s valuation allowance assessment. Accordingly, the Company recorded a partial release of its valuation allowance related to these deferred tax liabilities. The Company continues to maintain a valuation allowance against its remaining domestic deferred tax assets. Net deferred tax assets are included in other non-current assets on the consolidated balance sheet.
As of December 31, 2025, the Company had U.S. federal and state net operating loss (“NOL”) carryforwards of approximately $227.5 million and $170.9 million, respectively. U.S. federal NOLs generated after 2017 and prior begin to expire in 2034. U.S. federal NOLs generated after 2017 may be carried forward indefinitely but are limited to utilization of 80% of taxable income in any given year. Of the total U.S. federal NOL carryforwards, approximately $195.6 million may be carried forward indefinitely. Certain state NOLs begin to expire in 2026. The realization of these NOLs is dependent upon the generation of sufficient taxable income prior to their expiration. In addition, utilization of the NOLs may be limited under Sections 382 and 383 of the Internal Revenue Code following an ownership change.
ASC 740-10 provides guidance for the recognition and measurement of uncertain tax positions. The Company had no unrecognized tax benefits at December 31, 2025 or 2024. The Company does not anticipate any significant changes in unrecognized tax benefits within the next 12 months.
The Company files income tax returns in the U.S. federal jurisdiction, various state jurisdictions, and foreign jurisdictions. U.S. federal tax years 2022 and forward remain subject to examination. Although tax years prior to 2022 are generally closed under the applicable statue of limitations, net operating loss carryforwards generated in those years may be subject to examination to the extent utilized in future periods. State and foreign tax years remain open beginning in 2022 and 2021, respectively, depending on jurisdiction.
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted into law. The Company evaluated the impact of the legislation and determined that it did not have a material effect on the Company’s consolidated financial statements for the year ended December 31, 2025. The Company will continue to monitor and evaluate the effects of OBBBA on future reporting periods.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 5, 2026 | Showing above |
| 2024 | Mar 13, 2025 | |
| 2023 | Mar 13, 2024 | |
| 2022 | Mar 16, 2023 | |
| 2021 | Mar 23, 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.