ZIFF DAVIS, INC.ZD
ZIFF DAVIS, INC. Income Taxes Disclosure
Income Taxes
The income tax (expense) benefit consisted of the following (in thousands):
Years ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Current: | |||||||||||||||||
| Federal | $ | 736 | $ | (33,333) | $ | (29,040) | |||||||||||
| State | (3,407) | (8,625) | (8,179) | ||||||||||||||
| Foreign | (18,815) | (18,234) | (16,940) | ||||||||||||||
| Total current | (21,486) | (60,192) | (54,159) | ||||||||||||||
| Deferred: | |||||||||||||||||
| Federal | (5,003) | 14,684 | 20,817 | ||||||||||||||
| State | 2,550 | 2,144 | 7,177 | ||||||||||||||
| Foreign | (1,508) | 1,994 | 2,023 | ||||||||||||||
| Total deferred | (3,961) | 18,822 | 30,017 | ||||||||||||||
Income tax expense | $ | (25,447) | $ | (41,370) | $ | (24,142) | |||||||||||
Income before income taxes for the years ended December 31, 2025, 2024, and 2023, respectively is as follows (in thousands):
Years ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
Income from domestic operations | $ | 20,888 | $ | 25,117 | $ | 25,762 | |||||||||||
Income from foreign operations | 59,859 | 68,077 | 49,212 | ||||||||||||||
Income before income tax | $ | 80,747 | $ | 93,194 | $ | 74,974 | |||||||||||
A reconciliation of the statutory federal income tax rate with the Company’s effective income tax rate for the year ended December 31, 2025 is as follows (amounts in thousands):
Year ended December 31, 2025 | |||||||||||
Amount | Percentage | ||||||||||
| Income before income tax expense | $ | 80,747 | |||||||||
U.S. Federal statutory rate | 16,986 | 21.0 | % | ||||||||
State and local income taxes, net of federal tax effect (1) | 864 | 1.1 | % | ||||||||
Foreign tax effect | |||||||||||
Canada | |||||||||||
Provincial taxes | 1,269 | 1.6 | % | ||||||||
Changes in valuation allowances | 3,292 | 4.1 | % | ||||||||
Goodwill impairment | 885 | 1.1 | % | ||||||||
Other | 425 | 0.5 | % | ||||||||
Finland | |||||||||||
Return to Provision adjustments | (1,162) | (1.5) | % | ||||||||
Other | (245) | (0.3) | % | ||||||||
United Kingdom | 1,773 | 2.2 | % | ||||||||
Other foreign jurisdiction | 4,237 | 5.2 | % | ||||||||
Effect of cross-border tax laws | |||||||||||
Global intangible low-taxed income (“GILTI”) | 3,102 | 3.8 | % | ||||||||
Foreign derived intangible income (“FDII”) | (2,120) | (2.6) | % | ||||||||
Subpart F inclusion | 756 | 0.9 | % | ||||||||
Tax credits | |||||||||||
| Research and development | (3,259) | (4.0) | % | ||||||||
| Foreign tax credits | (6,257) | (7.7) | % | ||||||||
Changes in valuation allowances | 417 | 0.5 | % | ||||||||
| Nontaxable or nondeductible items | |||||||||||
Goodwill impairment | 2,079 | 2.6 | % | ||||||||
Share-based payments awards | 6,033 | 7.5 | % | ||||||||
Domestic-Foreign Intercompany Offset | (1,852) | (2.3) | % | ||||||||
Other | 419 | 0.5 | % | ||||||||
Changes in unrecognized tax benefits | (1,883) | (2.3) | % | ||||||||
Other adjustments | (312) | (0.4) | % | ||||||||
Effective tax rate | $ | 25,447 | 31.5 | % | |||||||
(1)In year 2025, state and local income taxes in California, Maryland, and Missouri comprise the majority of the domestic, state, and local income taxes, net of federal effect category.
The effective tax rate for the year ended December 31, 2025 differs from the federal statutory rate primarily due to the expense recognized for book purposes on the goodwill impairment that resulted in no corresponding tax benefit, a tax expense recognized due to recording a valuation allowance related to the Company’s U.S. and Canadian tax attributes and a tax expense recognized from the shortfall of share-based payments awards. The reduction to our effective tax rate was partially offset by tax benefits from tax credits and a decrease in the reserve for uncertain tax positions that was primarily due to the lapse of the statute of limitations.
A reconciliation of the statutory federal income tax rate with the Company’s effective income tax rate for the years ended December 31, 2024 and 2023 is as follows:
| Years Ended December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Statutory tax rate | 21.0 | % | 21.0 | % | |||||||
| State income taxes, net | 5.9 | 6.5 | |||||||||
| Foreign rate differential | 4.3 | 3.1 | |||||||||
| Foreign income inclusion | 3.1 | 6.0 | |||||||||
| Foreign tax credit | (3.1) | (4.7) | |||||||||
| Reserve for uncertain tax positions | (6.1) | (5.9) | |||||||||
| Valuation allowance | 6.3 | — | |||||||||
| Impact on deferred taxes of enacted tax law and rate changes | — | 0.6 | |||||||||
| Tax credits and incentives | (6.5) | (8.4) | |||||||||
Impairment of goodwill | 19.2 | 16.0 | |||||||||
Return to provision adjustments | (2.3) | (5.1) | |||||||||
| Executive compensation | 3.2 | 2.4 | |||||||||
| Other | (0.6) | 0.7 | |||||||||
| Effective tax rates | 44.4 | % | 32.2 | % | |||||||
The effective tax rate for the year ended December 31, 2024 differs from the federal statutory rate primarily due to the expense recognized for book purposes on the goodwill impairment related to two of the Company’s reporting units that resulted in no corresponding tax benefit and a tax expense recognized due to recording a valuation allowance related to the Company’s U.S. capital loss carryforwards. The detrimental impact to our effective tax rate was partially offset by a tax benefit recognized as a result of a decrease in the reserve for uncertain tax positions that was primarily due to the lapse of the statute of limitations.
The effective tax rate for the year ended December 31, 2023 differs from the federal statutory rate primarily due to the expense recognized for book purposes on the goodwill impairment related to one of the Company’s reporting units that resulted in no corresponding tax benefit and had a detrimental impact to the effective tax rate. The detrimental impact to our effective tax rate was partially offset by a tax benefit recognized as a result of a decrease in the reserve for uncertain tax positions that was primarily due to the lapse of the statute of limitations.
The Organization for Economic Co-operation and Development (“OECD”) established a Pillar Two Framework that was supported by over 130 countries worldwide. On December 15, 2022, the European Union (“EU”) Member States adopted the EU’s Pillar Two Directive, which generally provides for a minimum effective tax rate of 15% with effective dates of January 1, 2025 for certain provisions of the directive. A significant number of other countries are also implementing similar legislation. The Company has analyzed the impact of the Pillar Two framework’s corporate minimum income tax rate of 15% and does not expect that it will have a material effect on the Company’s liability for corporate taxes and the Company’s consolidated effective tax rate.
Deferred tax assets and liabilities result from differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. Temporary differences and carryforwards which give rise to deferred tax assets and liabilities from continuing operations are as follows (in thousands):
Years ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Deferred tax assets: | |||||||||||
| Net operating loss and other carryforwards | $ | 19,776 | $ | 14,923 | |||||||
| Tax credit carryforwards | 3,780 | 3,727 | |||||||||
| Accrued expenses | 12,416 | 12,019 | |||||||||
| Allowance for bad debt | 1,924 | 2,514 | |||||||||
| Share-based compensation expense | 10,266 | 8,634 | |||||||||
| Operating lease liabilities | 4,941 | 5,717 | |||||||||
| Basis difference in fixed assets | 30,559 | 39,242 | |||||||||
| Deferred revenue | 5,654 | 3,413 | |||||||||
Convertible debt | 2,062 | 2,952 | |||||||||
| State taxes | 699 | 2,526 | |||||||||
| Other | 3,398 | 1,675 | |||||||||
| 95,475 | 97,342 | ||||||||||
| Less: valuation allowance | (10,379) | (7,669) | |||||||||
| Total deferred tax assets | $ | 85,096 | $ | 89,673 | |||||||
| Deferred tax liabilities: | |||||||||||
| Operating lease right-of-use assets | (4,753) | (5,040) | |||||||||
| Basis difference in intangible assets | (104,458) | (103,676) | |||||||||
| Unrealized gains on investments | (2,949) | (13,364) | |||||||||
| Prepaid insurance | (3,357) | (2,111) | |||||||||
| Other | (5,706) | (4,014) | |||||||||
| Total deferred tax liabilities | (121,223) | (128,205) | |||||||||
| Net deferred tax liabilities | $ | (36,127) | $ | (38,532) | |||||||
The Company had approximately $85.1 million and $89.7 million in deferred tax assets, net of valuation allowances as of December 31, 2025 and 2024, respectively, related primarily to capital loss carryforwards, net operating loss carryforwards, capitalized research and development expenses, fixed asset basis, and accrued expenses being treated differently between its financial statements and its tax returns. Based on the weight of available evidence, the Company assesses whether it is more likely than not that some portion or all of a deferred tax asset will not be realized. If necessary, the Company records a valuation allowance sufficient to reduce the deferred tax asset to the amount that is more likely than not to be realized. The deferred tax assets should be realized through future operating results and the reversal of temporary differences.
The Company had a valuation allowance on deferred tax assets from continuing operations of $10.4 million and $7.7 million as of December 31, 2025 and 2024, respectively.
The rollforward of the valuation allowance on the deferred tax assets from continuing operations is as follows (in thousands):
Years ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Beginning balance | $ | 7,669 | $ | 1,720 | $ | 1,699 | |||||||||||
Charges to costs and expenses | 3,809 | 5,949 | 21 | ||||||||||||||
| Write-offs and recoveries | (1,099) | — | — | ||||||||||||||
| Ending balance | $ | 10,379 | $ | 7,669 | $ | 1,720 | |||||||||||
As of December 31, 2025, the Company had federal net operating loss carryforwards (“NOLs”) of $27.1 million, after considering substantial restrictions on the utilization of these NOLs due to “ownership changes”, as defined in the Internal Revenue Code of 1986, as amended. The Company estimates that all of the above-mentioned federal NOLs will be available for use before their expiration. Approximately $2.0 million of the NOLs expire through 2031 with the remainder able to be carried forward indefinitely, depending on the year the loss was incurred. Additionally, the Company had tax-effected NOLs, net of valuation allowances of $1.7 million for foreign tax jurisdictions and $5.5 million for state tax jurisdictions.
As of December 31, 2025, the Company’s deferred tax assets included federal capital loss limitation carryforwards of $10.3 million that begin to expire in 2026 through 2028. In addition, as of December 31, 2025, the Company had available state research and development tax credit carryforwards of $3.2 million, which last indefinitely. The Company had no foreign tax credit carryforwards as of December 31, 2025.
The Company has not provided for deferred taxes on approximately $173.5 million of undistributed earnings from foreign subsidiaries as of December 31, 2025 or with respect to items such as foreign withholding taxes, state income tax or foreign exchange gain or loss that would be due when cash is actually repatriated to the U.S. because those foreign earnings are considered permanently reinvested in the business or may be remitted substantially free of any additional taxes. In addition, because of the various avenues in which to repatriate the earnings, it is not practicable to determine the amount of the unrecognized deferred tax liability related to the undistributed earnings if eventually remitted.
Certain taxes are prepaid during the year and, where appropriate, included within ‘Prepaid expenses and other current assets’ on the Consolidated Balance Sheets. The Company’s prepaid taxes were $26.2 million and $6.4 million at December 31, 2025 and 2024, respectively.
Uncertain Income Tax Positions
Tax positions are evaluated in a two-step process. The Company first determines whether it is more likely than not that a tax position will be sustained upon examination. If a tax position meets the more-likely-than-not recognition threshold, it is then measured to determine the amount of benefit to recognize in the financial statements. The tax position is measured as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. The Company classifies gross interest and penalties and unrecognized tax benefits that are not expected to result in payment or receipt of cash within one year as non-current liabilities in the Consolidated Balance Sheets. The Company has classified $9.1 million of unrecognized tax benefits including interest as a current liability as it expects to settle the balance within one year.
As of December 31, 2025, the total amount of unrecognized tax benefits for continuing operations was $18.4 million, of which $17.0 million, if recognized, would affect the Company’s effective tax rate. As of December 31, 2024, the total amount of unrecognized tax benefits for continuing operations was $22.6 million, of which $21.2 million, if recognized, would affect the Company’s effective tax rate. As of December 31, 2023, the total amount of unrecognized tax benefits for continuing operations was $29.2 million, of which $27.4 million, if recognized, would affect the Company’s effective tax rate.
The aggregate changes in the balance of unrecognized tax benefits, which excludes interest and penalties, for the years ended December 31, 2025, 2024, and 2023, is as follows (in thousands):
Years ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Beginning balance | $ | 22,617 | $ | 29,158 | $ | 34,208 | |||||||||||
| Increases related to tax positions during a prior year | 379 | 275 | 218 | ||||||||||||||
| Decreases related to tax positions taken during a prior year | (166) | (540) | (1,023) | ||||||||||||||
| Increases related to tax positions taken in the current year | 422 | 635 | 744 | ||||||||||||||
| Decreases related to expiration of statute of limitations | (4,846) | (6,911) | (4,989) | ||||||||||||||
| Ending balance | $ | 18,406 | $ | 22,617 | $ | 29,158 | |||||||||||
The Company includes interest and penalties related to unrecognized tax benefits within ‘Income tax expense’ on the Consolidated Statements of Operations. As of December 31, 2025, 2024, and 2023, the total amount of interest and penalties accrued was $10.2 million, $7.4 million, and $7.1 million, respectively, which is presented within ‘Liability for uncertain tax positions’ on the Consolidated Balance Sheets. In connection with the liability for unrecognized tax benefits, the Company recognized interest and penalty expense during the years ended December 31, 2025, 2024, and 2023 of $2.8 million, $0.3 million, and $0.7 million, respectively.
We conduct business on a global basis and as a result, one or more of our subsidiaries file income tax returns in the U.S. federal and in multiple state, local, and foreign tax jurisdictions. Our U.S. federal income tax returns for years 2012
through 2016 are under various stages of audit by the IRS. We are also under audit for various U.S. state and local tax purposes. With limited exception, our significant foreign tax jurisdictions are no longer subject to an income tax audit by the various tax authorities for tax years prior to 2022.
It is reasonably possible that these audits may conclude in the next twelve months and that the uncertain tax positions the Company has recorded in relation to these tax years may change compared to the liabilities recorded for these periods. If the recorded uncertain tax positions were inadequate to cover the associated tax liabilities, the Company would be required to record additional tax expense in the relevant period, which could be material. If the recorded uncertain tax positions were adequate to cover the associated tax liabilities, the Company would be required to record any excess as reduction in tax expense in the relevant period, which could be material. However, it is not currently possible to estimate the amount, if any, of such change.
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law which, among other things, provided a permanent extension of certain tax measures initially established under the 2017 Tax Cuts and Jobs Act, which were set to expire at the end of 2025, and modified tax legislation affecting bonus depreciation rules and the tax treatment of research and development expenses and interest deductions. Specifically, the OBBBA provides for 100% bonus depreciation and eliminates the requirement under Internal Revenue Code Section 174 to capitalize and amortize U.S. based research and experimental expenditures over five years, making these expenditures fully deductible in the period incurred beginning after 2024. The Company currently does not expect the OBBBA to have a material impact on its effective tax rate but expects these provisions to result in a reduction of current income tax liabilities and an increase in deferred tax liabilities. The Company will continue to assess the implications of the OBBBA and will provide further disclosures in subsequent reporting periods, as necessary.
Income Taxes Paid
Income taxes paid, net of refunds during the year ended December 31, 2025 were as follows (in thousands):
| Year ended | |||||
| December 31, 2025 | |||||
U. S. Federal | $ | 25,375 | |||
State | 5,016 | ||||
Foreign | |||||
Canada | 3,737 | ||||
United Kingdom | 8,616 | ||||
Other foreign jurisdictions | 5,865 | ||||
Income taxes paid, net of refunds | $ | 48,609 | |||
Income taxes paid, net of refunds during the years ended December 31, 2024 and 2023 were as follows (in thousands):
| Years ended December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Income taxes paid, net of refunds | $ | 68,731 | $ | 64,594 | |||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 24, 2026 | Showing above |
| 2024 | Feb 25, 2025 | |
| 2023 | Feb 26, 2024 | |
| 2022 | Mar 1, 2023 | |
| 2021 | Mar 15, 2022 | |
| 2020 | Mar 1, 2021 | |
| 2019 | Mar 2, 2020 | |
| 2018 | Mar 1, 2019 | |
| 2017 | Mar 1, 2018 | |
| 2016 | Mar 1, 2017 | |
| 2015 | Feb 29, 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.