WORKIVA INCWK
WORKIVA INC Income Taxes Disclosure
Income Taxes
Loss before income tax provision (benefit) consisted of the following (in thousands):
Year ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| United States | $ | (29,251) | $ | (56,114) | $ | (125,715) | |||||||||||
| Foreign | 6,836 | 6,673 | 1,617 | ||||||||||||||
Total | $ | (22,415) | $ | (49,441) | $ | (124,098) | |||||||||||
The provision (benefit) for income taxes consisted of the following (in thousands):
Year ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Current | |||||||||||||||||
Federal | $ | 10 | $ | 87 | $ | 700 | |||||||||||
State | 335 | 1,153 | 937 | ||||||||||||||
Foreign | 3,772 | 5,003 | 1,838 | ||||||||||||||
| Total Current | $ | 4,117 | $ | 6,243 | $ | 3,475 | |||||||||||
| Deferred | |||||||||||||||||
Foreign | (363) | (642) | (48) | ||||||||||||||
| Total Deferred | $ | (363) | $ | (642) | $ | (48) | |||||||||||
| Total | $ | 3,754 | $ | 5,601 | $ | 3,427 | |||||||||||
The items accounting for the difference between income taxes computed at the federal statutory income tax rate and the provision for income taxes consisted of the following (in thousands, except percentages):
Year ended December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Federal statutory rate | 21.0 | % | 21.0 | % | |||||||
| Effect of: | |||||||||||
Tax benefit at federal statutory rate | $ | (10,383) | $ | (26,061) | |||||||
State taxes, net of federal benefit | (3,113) | (8,397) | |||||||||
| Section 162(m) limitations | 5,518 | 11,715 | |||||||||
| Stock-based compensation | (3,052) | (9,652) | |||||||||
Net impact of global intangible low-taxed income inclusion | 911 | 2,259 | |||||||||
Induced conversion | — | 8,834 | |||||||||
Meals & entertainment | 971 | 821 | |||||||||
Base erosion waived deductions | 3,452 | — | |||||||||
Permanent items | 502 | (108) | |||||||||
Tax benefit of federal R&D credit | (7,271) | (8,036) | |||||||||
Effect of foreign operations | 3,194 | 1,337 | |||||||||
Valuation allowance | 15,385 | 30,636 | |||||||||
Other | (513) | 79 | |||||||||
| Total income tax provision | $ | 5,601 | $ | 3,427 | |||||||
ASU 2023-09 was adopted prospectively and the items accounting for the difference between income taxes computed at the federal statutory income tax rate and the provision for income taxes consisted of the following (in thousands, except percentages):
Year ended December 31, | |||||||||||
| 2025 | |||||||||||
Federal tax benefit at the statutory rate | $ | (4,707) | 21.0 | % | |||||||
State and local income taxes, net of federal income tax effect* | 335 | (1.5) | |||||||||
Foreign tax effects | |||||||||||
| Canada | |||||||||||
Stock based compensation | 268 | (1.2) | |||||||||
Provincial taxes | 305 | (1.4) | |||||||||
Other | (12) | 0.1 | |||||||||
| Denmark | |||||||||||
Amortization | 757 | (3.4) | |||||||||
Other | (229) | 1.0 | |||||||||
| Netherlands | |||||||||||
Stock based compensation | 533 | (2.4) | |||||||||
Other | 370 | (1.7) | |||||||||
| United Kingdom | 244 | (1.1) | |||||||||
Other foreign jurisdictions | (156) | 0.7 | |||||||||
| Effect of changes in tax laws or rates enacted in the current period | — | — | |||||||||
| Effect of cross-border tax laws | |||||||||||
Global intangible low-taxed income inclusion | 7,152 | (31.9) | |||||||||
Base erosion waived deductions | 1,581 | (7.1) | |||||||||
Tax credits | |||||||||||
Tax benefit of federal R&D credit | (5,727) | 25.5 | |||||||||
Change in domestic valuation allowance | (1,283) | 5.7 | |||||||||
Nontaxable or nondeductible items | |||||||||||
| Section 162(m) limitations | 9,095 | (40.6) | |||||||||
Stock based compensation | (5,987) | 26.7 | |||||||||
Meals & entertainment | 904 | (4.0) | |||||||||
| Other | 98 | (0.1) | |||||||||
Changes in unrecognized tax benefits | 213 | (1.0) | |||||||||
Provision for taxes at the effective tax rate | $ | 3,754 | (16.7) | % | |||||||
*State taxes in Pennsylvania and Texas made up the majority (greater than 50%) of the tax effect in this category.
The components of deferred tax assets and liabilities were as follows (in thousands):
| As of December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Deferred tax assets: | |||||||||||
Property and equipment | $ | 3,061 | $ | 3,133 | |||||||
Accruals and reserves | 259 | 255 | |||||||||
Lease liability | 5,824 | 6,554 | |||||||||
Compensation and benefits | 19,666 | 20,720 | |||||||||
Deferred revenue | 61,621 | 50,163 | |||||||||
Net operating loss and credits | 108,621 | 99,037 | |||||||||
| IRC 174 Capitalization | 77,485 | 101,865 | |||||||||
Other | 513 | 2,287 | |||||||||
Total deferred tax assets | 277,050 | 284,014 | |||||||||
Valuation allowance | (257,585) | (266,956) | |||||||||
Total deferred tax assets | 19,465 | 17,058 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Right-of-use asset | (5,774) | (6,412) | |||||||||
Acquired intangibles | (1,951) | (2,920) | |||||||||
| Deferred commissions | (7,991) | (6,572) | |||||||||
Other deferred tax liabilities | (2,579) | (441) | |||||||||
Deferred tax liabilities | (18,295) | (16,345) | |||||||||
| Total | $ | 1,170 | $ | 713 | |||||||
Management assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets. A significant piece of objective negative evidence evaluated was the cumulative loss incurred over the three-year period ended December 31, 2025. Such objective evidence limits the ability to consider other subjective evidence, such as our projections for future growth. On the basis of this evaluation, we recognized a full valuation allowance against our net US deferred tax assets at December 31, 2025, because we believe it is more likely than not that these benefits will not be realized.
Beginning in 2022, the Tax Cuts and Jobs Act of 2017 (“TCJA”) amended Internal Revenue Code Section 174 to require specific research and experimental (“R&E”) expenditures be capitalized and amortized over five years (U.S. R&E) or fifteen years (non-U.S. R&E). However, the One Big Beautiful Bill Act (the “OBBB”), signed into law on July 4, 2025, amended the TCJA provision requiring capitalization and amortization of U.S. R&E to now allow full expensing of U.S. R&E in the year paid. Non-U.S. R&E is unchanged from the TCJA. In connection with this amendment, we elected not to immediately deduct the balance of previously capitalized U.S. R&E and therefore have a remaining deferred tax asset related to the Section 174 amortization of $77.5 million as of December 31, 2025.
As of December 31, 2025, we have federal and state net operating loss carryforwards of approximately $208.3 million and $283.9 million, respectively, available to reduce future taxable income. Federal and some state net operating losses incurred after 2017 will have an indefinite carryforward. The state net operating loss carryforwards will expire in varying amounts beginning in 2026. Additionally, we have total net operating loss carryforwards from international operations of $0.6 million that do not expire. We also have approximately $42.8 million of federal and $6.9 million of state tax credit carryforwards as of December 31, 2025. The federal credits will expire in varying amounts between the
years 2036 and 2045. The state credits expire beginning in 2026. Utilization of our net operating loss and tax credit carryforwards may be subject to substantial annual limitations due to the ownership change limitations provided by Section 382 of the Internal Revenue Code, as amended, and similar state provisions.
A reconciliation of the gross unrecognized tax benefits is as follows (in thousands):
Year ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Unrecognized tax benefits-beginning of period | $ | 2,766 | $ | 2,276 | $ | 1,870 | |||||||||||
| Additions for tax positions related to prior year | — | — | 200 | ||||||||||||||
Reductions for tax positions related to prior year | (187) | (100) | — | ||||||||||||||
Foreign currency adjustments | 21 | (10) | 6 | ||||||||||||||
Additions for tax positions related to current year | 400 | 600 | 200 | ||||||||||||||
| Unrecognized tax benefits-end of period | $ | 3,000 | $ | 2,766 | $ | 2,276 | |||||||||||
We have analyzed our inventory of tax positions taken with respect to all applicable income tax issues for all open tax years. The gross unrecognized tax benefits, if recognized, would not materially affect the effective tax rate as of December 31, 2025.
We are subject to taxation in the U.S. and various states and foreign jurisdictions. As of December 31, 2025, tax years for 2021 through 2024 are subject to examination by the tax authorities. Generally, as of December 31, 2025, we are no longer subject to federal, state, local or foreign examinations by tax authorities for years before 2021. However, to the extent allowed by law, the tax authorities may have the right to examine prior periods where net operating losses or tax credits were generated and carried forward, and make adjustments up to the amount of the net operating loss or credit carryforward.
Income taxes paid (net of refunds) are as follows (in thousands):
Year ended December 31, | |||||
| 2025 | |||||
Federal | $ | (1,224) | |||
State | 296 | ||||
Foreign | 6,422 | ||||
Total | $ | 5,494 | |||
Income taxes paid (net of refunds) exceeded 5% of total income taxes paid (net of refunds) in the following jurisdictions (in thousands):
| Year ended December 31, | |||||
| 2025 | |||||
| Canada | $ | 1,579 | |||
| Germany | 316 | ||||
| Netherlands | 2,218 | ||||
| United Kingdom | 1,620 | ||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 19, 2026 | Showing above |
| 2024 | Feb 25, 2025 | |
| 2023 | Feb 20, 2024 | |
| 2022 | Feb 21, 2023 | |
| 2021 | Feb 22, 2022 | |
| 2020 | Feb 17, 2021 | |
| 2019 | Feb 20, 2020 | |
| 2018 | Feb 20, 2019 | |
| 2017 | Feb 22, 2018 | |
| 2016 | Feb 23, 2017 | |
| 2015 | Mar 1, 2016 | |
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.