19. Income Taxes

Effective Income Tax Rate – Three Months Ended March 31, 2026

The Company’s effective income tax rate during the three months ended March 31, 2026 was negative 58.6%, resulting in income tax expense of $8,549. Despite a pre-tax loss for the quarter, the Company recorded income tax expense primarily due to certain non-deductible amounts associated with the extinguishment of the Convertible Notes, which caused our effective tax rate to differ from the U.S. federal statutory rate of 21.0%. Other items impacting our effective tax rate included non-deductible executive compensation, partly offset by state and local taxes and tax windfalls associated with the vesting of stock-based compensation awards.

Effective Income Tax Rate – Three Months Ended March 31, 2025

The Company’s effective income tax rate during the three months ended March 31, 2025 was 18.9%, resulting in income tax expense of $5,739. The effective income tax rate differs from the federal statutory tax rate of 21.0% primarily due to tax windfalls associated with the vesting of stock-based compensation awards and a lower tax rate on foreign earnings. These items were partly offset by state and local income taxes.

Income Tax Payments

Disclosed below is a summary of income taxes paid by jurisdiction pursuant to the disclosure requirements of ASU 2023-09.

	Three Months Ended March 31, 2026
United States—Federal	$	—
United States—State and local		305
United Kingdom		7,341
Other		13
	$	7,659

Deferred Tax Assets

A summary of the components of the Company’s deferred tax assets at March 31, 2026 and December 31, 2025 is as follows:

	March 31, 2026			December 31, 2025
Deferred tax assets:
Capital losses	$	6,538		$	6,689
Interest carryforward		2,833			—
Accrued expenses		2,821			6,584
Stock-based compensation		1,047			3,210
Acquisition costs		953			970
Operating lease liabilities		546			631
NOLs—Foreign		521			745
Other		290			289
Deferred tax assets		15,549			19,118
Deferred tax liabilities:
Software capitalization		938			912
Right of use assets—operating leases		543			627
Foreign currency translation adjustment		286			592
Goodwill and intangible assets		261			74
Unrealized gains		203			494
Fixed assets and prepaid assets		202			356
Unremitted earnings—European subsidiaries		92			65
Deferred tax liabilities		2,525			3,120
Total deferred tax assets less deferred tax liabilities		13,024			15,998
Less: Valuation allowance		(6,335	)		(6,195	)
Deferred tax assets, net	$	6,689		$	9,803

Capital Losses – U.S.

The Company’s tax effected capital losses at March 31, 2026 were $6,538. These capital losses expire between the years 2026 and 2028. The table below sets forth the aggregate changes in these capital losses:

Balance at January 1, 2026	$	6,689
Expirations		—
Utilizations		(151	)
Balance at March 31, 2026	$	6,538

Net Operating Losses – Europe

One of the Company’s European subsidiaries generated net operating losses (“NOLs”) outside the U.S. These tax effected NOLs, all of which are carried forward indefinitely, were $521 at March 31, 2026.

Valuation Allowance

The Company’s valuation allowance has been established on its net capital losses (net of unrealized gains), as it is more-likely-than-not that these deferred tax assets will not be realized.

Income Tax Examinations

The Company is subject to U.S. federal income tax as well as income tax of multiple state, local and certain foreign jurisdictions. As of March 31, 2026, with few exceptions, the Company was no longer subject to income tax examinations by any taxing authority for the years before 2021.

Uncertain Tax Positions

There were no unrecognized tax benefits at March 31, 2026 and December 31, 2025.

Undistributed Earnings of Foreign Subsidiaries

ASC 740-30, Income Taxes, provides guidance that U.S. companies do not need to recognize tax effects on foreign earnings that are indefinitely reinvested. The Company repatriates earnings of its foreign subsidiaries and therefore has recognized a deferred tax liability of $92 and $65 at March 31, 2026 and December 31, 2025, respectively.