Income taxes |
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| Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income taxes | Income taxes MediaAlpha, Inc. is taxed as a corporation and pays corporate federal, state and local taxes on income allocated to it from QLH based upon MediaAlpha, Inc.’s economic interest held in QLH. QLH is treated as a pass-through partnership for income tax reporting purposes and is not subject to federal income tax. Instead, QLH’s taxable income or loss is passed through to its members, including MediaAlpha, Inc. Accordingly, the Company is not liable for income taxes on the portion of QLH’s earnings not allocated to it. MediaAlpha, Inc. files and pays corporate income taxes for U.S. federal and state income tax purposes and its corporate subsidiary, Skytiger Studio, Ltd., is subject to taxation in Taiwan. The Company expects this structure to remain in existence for the foreseeable future. The Company estimates the annual effective tax rate for the full year to be applied to actual year-to-date income (loss) and adds the tax effects of any discrete items in the reporting period in which they occur. The following table summarizes the Company's income tax expense:
The Company's effective tax rate of (1.4)% and (1.1)% for the three and six months ended June 30, 2025, respectively, and 2.9% and 5.1% for the three and six months ended June 30, 2024, respectively, differed from the U.S. federal statutory tax rate of 21% due primarily to the tax impacts of changes in valuation allowance. There were no material changes to the Company’s unrecognized tax benefits during the three and six months ended June 30, 2025. The Company is currently under examination by various tax authorities in the United States. These examinations are in preliminary stages and the Company does not expect to have any significant changes to unrecognized tax benefits through the end of the fiscal year. During the three and six months ended June 30, 2025, holders of Class B-1 units exchanged zero units, and during the three and six months ended June 30, 2024 exchanged 3,439,800 and 6,496,800 units, respectively, together with an equal number of shares of Class B common stock, for shares of Class A common stock on a one-for-one basis (“Exchanges”). In connection with the Exchanges, the Company did not establish any additional liabilities related to the TRA, which are presented within additional-paid-in-capital in its consolidated statements of stockholders’ deficit. In connection with the Exchanges and the changes to the carrying value of the non-controlling interest, the Company also recognizes deferred tax assets associated with the basis difference in its investment in QLH through additional-paid-in-capital, but during the three and six months ended June 30, 2024, the Company did not recognize any additional deferred tax assets as the Company has recognized a full valuation allowance on its deferred tax assets. As of June 30, 2025 and December 31, 2024, the Company had a valuation allowance of $122.7 million and $120.6 million, respectively, against its deferred tax assets. The valuation allowance reflects the Company's recent history of pre-tax losses, which represents significant objective negative evidence that the Company will be able to generate sufficient taxable income to realize its deferred tax assets in the foreseeable future. Such negative evidence is difficult to overcome and limits the consideration of other subjective evidence, such as projected future earnings. Based on the significant improvement in the Company's pre-tax income during 2024 and its current forecasts, the Company expects that in the near future, the objective negative evidence in the form of historical pre-tax losses will no longer be present, in which event the Company would be able to release a portion or all of the valuation allowance. Release of any amount of valuation allowance would result in a benefit to income tax expense for the period the release is recorded, which could have a material impact on net income. On July 4, 2025, the One Big Beautiful Bill (OBBB) Act, which includes a broad range of tax reform provisions, was signed into law in the United States and the Company continues to assess its impact. The Company currently does not expect the OBBB Act to have a material impact on its estimated annual effective tax rate or deferred tax assets in 2025. Tax Receivables Agreement In connection with the Reorganization Transactions and the IPO, the Company entered into the TRA with Insignia, Senior Executives, and White Mountains. The Company expects to obtain an increase in its share of the tax basis in the net assets of QLH as Class B-1 units, together with shares of Class B common stock, are exchanged for shares of Class A common stock (or, at the Company’s election, redeemed for cash of an equivalent value). The Company intends to treat any redemptions and exchanges of Class B-1 units as direct purchases for U.S. federal income tax purposes. These increases in tax basis may reduce the amounts that it would otherwise pay in the future to various tax authorities. In the event the Company generates taxable income for any year, the Company would be required to recognize a portion or all of the liability under the TRA. In relation to the estimated payments under the TRA for the 2024 tax year, as these payments were deemed probable, the Company recorded a liability of $7.1 million and $7.0 million as of June 30, 2025 and December 31, 2024, respectively, within accrued expenses and liabilities under tax receivables agreement, net of current portion, on the consolidated balance sheets. If the Company had determined that it was probable that it would generate sufficient future taxable income to make future payments under the TRA, it would have also recorded an additional liability pursuant to the TRA of approximately $112 million and $115 million as of June 30, 2025 and December 31, 2024, respectively, in the consolidated balance sheets. No payments were made pursuant to the TRA during the three and six months ended June 30, 2025 and 2024.
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