INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2025

Schedule of components of net income (loss) before income taxes


	For the year ended December 31,
	2025			2024			2023
U.S.	$	30,742		$	9,174		$	(3,126)
Foreign		(23,163)			(7,265)			(18,548)
Net income (loss) before income taxes	$	7,579		$	1,909		$	(21,674)

Schedule of Income tax expense (benefit)


	For the year ended December 31,
	2025			2024			2023
Current income taxes:
Federal	$	3,416		$	1,448		$	(279)
State and local		2,712			855			1,568
Foreign		1,828			2,204			1,347
Total current		7,956			4,507			2,636
Deferred income taxes:
Federal		(1,740)			42,346			(9,224)
State and local		(359)			9,111			(1,552)
Foreign		(5,489)			(1,326)			(441)
Total deferred		(7,588)			50,131			(11,217)
Income tax expense (benefit)	$	368		$	54,638		$	(8,581)

Schedule of reconciliation of the effective tax rate to tax


		2025				2024				2023
		Total		Tax Rate		Total		Tax Rate		Total		Tax Rate
Pretax net income (loss)		$	7,579			$	1,909			$	(21,674)
Taxes:
U.S. federal income tax at statutory rate		$	1,591	21.0	%	$	401	21.0	%	$	(4,552)	21.0	%
State and local income taxes, net of federal income tax effect⁽¹⁾			1,783	23.5	%		9,835	515.2	%		(314)	1.4	%
Foreign tax effects
Austria
Statutory tax rate difference between Austria and United States			(481)	(6.3)	%		(87)	(4.6)	%		—	0.0	%
Nontaxable or nondeductible items
Stock-based compensation expense			862	11.4	%		50	2.6	%		—	0.0	%
Other adjustments			44	0.6	%		(5)	(0.3)	%		—	0.0	%
Brazil
Statutory tax rate difference between Brazil and United States			327	4.3	%		45	2.4	%		(367)	1.7	%
Changes in valuation allowances			1,120	14.8	%		(1,412)	(74.0)	%		1,448	(6.7)	%
Nontaxable or nondeductible items
Purchase commitment and contingent consideration liabilities			(1,708)	(22.5)	%		1,747	91.5	%		—	0.0	%
Other adjustments			50	0.7	%		119	6.2	%		(127)	0.6	%
Germany
Trade tax			85	1.1	%		64	3.4	%		101	(0.5)	%
Nontaxable or nondeductible items
Stock-based compensation expense			96	1.3	%		22	1.2	%		15	(0.1)	%
Other adjustments			(13)	(0.2)	%		41	2.1	%		85	(0.4)	%
Ireland
Statutory tax rate difference between Ireland and United States			79	1.0	%		572	30.0	%		1,602	(7.4)	%
Changes in valuation allowances			97	1.3	%		929	48.7	%		1,938	(8.9)	%
Other adjustments			71	0.9	%		59	3.1	%		87	(0.4)	%
Netherlands
Statutory tax rate difference between Netherlands and United States			197	2.6	%		95	5.0	%		31	(0.1)	%
Other adjustments			20	0.3	%		50	2.6	%		25	(0.1)	%
United Kingdom
Statutory tax rate difference between United Kingdom and United States			81	1.1	%		120	6.3	%		(3)	0.0	%
Other adjustments			50	0.7	%		(12)	(0.6)	%		(59)	0.3	%
Other foreign jurisdictions			41	0.5	%		11	0.6	%		5	0.0	%
Effect of cross-border tax laws			(131)	(1.7)	%		(17)	(0.9)	%		(232)	1.1	%
Tax credits
Research and development tax credits			(4,508)	(59.5)	%		(4,920)	(257.7)	%		(5,818)	26.8	%
Changes in valuation allowances			11,089	146.3	%		56,631	2,966.5	%		—	0.0	%
Nontaxable or nondeductible items
Nondeductible compensation			5,350	70.6	%		3,269	171.2	%		2,312	(10.7)	%
Purchase commitment and contingent consideration liabilities			(3,570)	(47.1)	%		3,675	192.5	%		—	0.0	%
Stock-based compensation expense			(12,881)	(170.0)	%		(17,213)	(901.7)	%		(5,228)	24.1	%
Transaction costs			8	0.1	%		357	18.7	%		—	0.0	%
Other			369	4.9	%		272	14.2	%		183	(0.8)	%
Changes in unrecognized tax benefits			172	2.3	%		98	5.1	%		451	(2.1)	%
Other adjustments			78	0.9	%		(158)	(8.2)	%		(164)	0.8	%
Taxes and effective tax rate		$	368	4.9	%	$	54,638	2,862.1	%	$	(8,581)	39.6	%
⁽¹⁾For December 31, 2025, taxes in California, Texas, and Illinois made up the majority (greater than 50%) of the state income taxes. For December 31, 2024, taxes in California, Illinois, New Jersey, New York, Pennsylvania, and Minnesota made up the majority of the state income taxes. For December 31, 2023, taxes in Georgia, Texas, Illinois, and Indiana made up the majority of the state income taxes.

Schedule of significant components of the Company's net deferred tax assets (liabilities)


	As of December 31,
Deferred tax assets:	2025			2024
Deferred revenue	$	1,342		$	1,512
State operating loss carry forwards		3,318			3,674
Federal and foreign loss carry forwards		13,495			8,651
Accrued expenses		2,923			1,754
Accrued compensation		7,875			9,223
Stock-based compensation		12,565			13,826
Operating lease liabilities		3,310			4,185
Tax credits		4,519			5,160
Original issue discount		7,353			9,396
Depreciation and amortization		34,182			14,964
Other		2,927			687
Deferred tax assets		93,809			73,032
Valuation allowance		(87,635)			(72,285)
Total deferred tax assets		6,174			747
Deferred tax liabilities:
Prepaid expenses		(1,214)			(671)
Right of use asset		(2,443)			(3,006)
Deferred commissions		(8,096)			(6,969)
Total deferred tax liabilities		(11,753)			(10,646)
Net deferred tax assets (liabilities)	$	(5,579)		$	(9,899)

Classification in the consolidated balance sheets:
Deferred income tax assets	$	85		$	19
Deferred income tax liabilities		(5,664)			(9,918)
Net deferred tax assets (liabilities)	$	(5,579)		$	(9,899)

Schedule of changes in valuation allowance


	For the year ended December 31,
	2025			2024			2023
Valuation allowance, at beginning of year	$	(72,285)		$	(5,941)		$	(2,285)
Increase in valuation allowance recorded through earnings		(15,891)			(68,377)			(3,656)
Decrease in valuation allowance recorded through earnings		541			2,033			—
Valuation allowance, at end of year	$	(87,635)		$	(72,285)		$	(5,941)

Schedule of unrecognized tax benefits


		For the year ended December 31,
		2025		2024		2023
Balance at beginning of period	$	1,427	$	666	$	—
Increases related to current year tax positions		387		362		215
Increases related to prior year tax positions		177		402		451
Impact of foreign exchange fluctuation		26		—		—
Lapse of statute		(1)		(3)		—
Balance at end of period	$	2,016	$	1,427	$	666

Schedule of income tax paid


		For the year ended December 31,
		2025		2024		2023
Federal	$	(345)	$	4,319	$	3,045
State
Illinois		—		418		329
Texas		251		186		162
Other		31		2,062		1,213
Foreign
Brazil		453		527		545
India		127		24		6
Netherlands		497		810		38
United Kingdom		750		250		243
Other		152		(3)		71
Total paid for income taxes, net of refunds	$	1,916	$	8,593	$	5,652

Vertex, Inc. 10-K