Crocs Inc.

02/12/2026 | Press release | Distributed by Public on 02/12/2026 14:04

Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)

Management's Discussion and Analysis of Financial Condition and Results of Operations
Business Overview
Crocs, Inc. and its consolidated subsidiaries (collectively, the "Company," "we," "us," or "our") are engaged in the design, development, worldwide marketing, distribution, and sale of casual lifestyle footwear and accessories for all. We strive to be the world leader in innovative casual footwear for all, combining comfort and style with a value that consumers want. The vast majority of shoes within the Crocs Brand's collection contain Croslite™ material, a proprietary, molded footwear technology, delivering extraordinary comfort with each step. The HEYDUDE Brand provides an innovative loafer concept that is differentiated through easy on and off, quality, and comfort. The broad appeal of our footwear has allowed us to market our products through a wide range of distribution channels. We currently sell our products in more than 85 countries, through two distribution channels: wholesale and direct-to-consumer. Our wholesale channel includes domestic and international multi-brand retailers, mono-branded partner stores, e-tailers, and distributors; our direct-to-consumer channel includes company-operated retail stores, company-operated e-commerce sites, and third-party marketplaces.
Known or Anticipated Trends
Based on our recent operating results and our assessment of the current operating environment, we anticipate certain trends will continue to impact our future operating results:
•We continue to operate in an environment where consumers are feeling the effects of elevated interest rates, inflation, and future expected price increases, among other things, and as a result, there is more pressure on discretionary spending. Given this, our wholesale partners are also acting cautiously. In addition, geopolitical tensions have increased across the globe. The United States ("U.S.") has imposed tariffs on foreign imports from multiple countries, including, most relevant to us, an incremental tariff of 20%, 20%, 19%, 18%, and 19% on all imports from Vietnam, China, Indonesia, India, and Cambodia, respectively. We are continuing to monitor developments with respect to these policy changes and proposals. We are continuing to mitigate the potential impacts of tariffs and the resulting effect on the consumer, including diversifying our sourcing mix, refining our cost structure, and implementing select price increases. Refer to the risk factor under "Risks Related to International Operations - Government actions and regulations, such as export restrictions, tariffs, and other trade protection measures could adversely affect our business" included in Item 1A. Risk Factorsof this Annual Report on Form 10-K for additional information.
•We have taken cost saving actions across the business that are designed to simplify the organization and reduce our cost base. These cost reduction initiatives include approximately $50 million of gross cost savings achieved for the year ended December 31, 2025, and approximately $100 million of gross cost savings identified for 2026. In connection with these initiatives, we incurred charges of just over $14 million during the year ended December 31, 2025, primarily related to operational workforce reductions. The estimates of the duration of these initiatives, the charges and expenditures that we expect to incur in connection therewith, and the timing thereof, are subject to a number of assumptions and actual amounts may differ materially from estimates. In addition, we may incur other charges or cash expenditures not currently contemplated due to unanticipated events that may occur, including in connection with the implementation of these initiatives.
•We are prioritizing returning to growth in North America for both brands, while making progress on our long-term strategic initiatives. Specifically for the Crocs Brand, we believe this will be driven by product innovation, diversification within key product categories, growth within our sandals business, and ultimately prioritizing stricter segmentation and pricing discipline across the marketplace. For the HEYDUDE Brand, we are focused on refining our marketing toward our target consumers, focusing on our core product offering, and refreshing the marketplace. For both brands, scaling digital capabilities continues to be a priority.
•Our liquidity position remains strong with approximately $130.4 million in cash and cash equivalents and $952 million in available borrowing capacity as of December 31, 2025. Our total borrowings were $1.2 billion as of December 31, 2025. We repurchased $577.2 million of our common stock during the year.
Use of Non-GAAP Financial Measures
In addition to financial measures presented on the basis of accounting principles generally accepted in the United States of America ("U.S. GAAP"), we present certain information related to our results of operations through "constant currency," which is a non-GAAP financial measure and should be viewed as a supplement to our results of operations and presentation of reportable segments under U.S. GAAP. Constant currency represents current period results that have been retranslated using
prior year average foreign exchange rates for the comparative period to enhance the visibility of the underlying business trends excluding the impact of foreign currency exchange rates on reported amounts.
Management uses constant currency to assist in comparing business trends from period to period on a consistent basis in communications with the Board, stockholders, analysts, and investors concerning our financial performance. We believe constant currency is useful to investors and other users of our consolidated financial statements as an additional tool to evaluate operating performance and trends. Investors should not consider constant currency in isolation from, or as a substitute for, financial information prepared in accordance with U.S. GAAP.
Key Performance Indicators
Management utilizes the key performance metrics of gross margin, operating margin, footwear unit sales, and average footwear selling price to gauge the Company's operational efficiency and market competitiveness, identify trends, formulate financial projections, and make strategic decisions. Management continuously monitors and analyzes these metrics in an effort to ensure we remain agile, competitive, and aligned with our long-term growth objectives. The titles and/or definitions of certain of these metrics may vary from company to company. As a result, our calculation of certain of these metrics may not be comparable to similarly titled metrics used by other companies.
Gross Margin
Gross margin is defined as gross profit divided by revenues. Management uses this metric and believes it is useful for investors because it provides insights into profitability, cost management, and pricing strategy.
Operating Margin
Operating margin is defined as income from operations divided by revenues. Management uses this metric and believes it is useful for investors because it provides a comprehensive view of profitability from its core business operations, excluding the effects of financing and tax considerations.
Footwear Unit Sales
Footwear unit sales is defined as wholesale and DTC footwear only sales. Management uses this metric and believes it is useful for investors because it provides a direct measure of our sales volume and can offer valuable insights into its market performance and growth potential.
Average Footwear Selling Price
Average footwear selling price is defined as footwear and footwear accessories revenues divided by footwear units. Management uses this metric and believes it is useful for investors because it provides insights into our pricing strategy, market positioning, and revenue generation capabilities.
2025 Financial and Operational Highlights
Revenues were $4,040.6 million for the year ended December 31, 2025, a 1.5% decrease compared to the year ended December 31, 2024. The decrease was due to the net effects of: (i) lower unit sales volume in the HEYDUDE Brand, which decreased revenues by $87.4 million, or 2.1%; (ii) higher average selling price on a constant currency basis ("ASP") driven by the HEYDUDE Brand, which increased revenues by $16.5 million, or 0.4%; and (iii) net favorable changes in exchange rates, which increased revenues by $9.4 million, or 0.2%.
The following were significant developments affecting our businesses during the year ended December 31, 2025:
•We grew Crocs Brand revenues 1.5% compared to the same period in 2024. HEYDUDE Brand revenues decreased 13.3%.
•Gross margin was 58.3% compared to 58.8% in 2024, a decrease of 50 basis points, primarily due to unfavorable duties for both brands as a result of the aforementioned incremental tariffs.
•Selling, general & administrative expenses ("SG&A") were $1,469.4 million compared to $1,364.3 million 2024, primarily as a result of increased investment in talent and higher costs in the DTC channel. As a percent of revenues, SG&A increased to 36.4% of revenues compared to 33.3% in 2024.
•Asset impairments were $738.1 million, primarily driven by the partial impairment of the HEYDUDE indefinite-lived trademark and HEYDUDE Brand reporting unit goodwill. Refer to Note 4 - Goodwill and Intangible Assets, Net in the accompanying notes to the consolidated financial statements included in Part II - Item 8. Financial Statements of this Annual Report on Form 10-K.
•Income from operations was $149.5 million for the year ended December 31, 2025, compared to income from operations of $1,021.9 million for the year ended December 31, 2024. Net loss was $81.2 million, or $1.50 per diluted share, compared to net income of $950.1 million, or $15.88 per diluted share, in 2024.
Results of Operations
Comparison of the Years Ended December 31, 2025, and 2024
A discussion of our comparison between 2025 and 2024 is presented below. A discussion of the changes in our results of operations between the years ended December 31, 2024, and December 31, 2023, has been omitted from this Annual Report on Form 10-K but may be found in Item 7.Management's Discussion and Analysis of Financial Condition and Results of Operationsof our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on February 13, 2025, which is available free of charge on the SEC's website at www.sec.gov and our corporate website (www.crocs.com).
Year Ended December 31, $ Change % Change
Favorable (Unfavorable)
2025 2024 2025-2024 2025-2024
(in thousands, except per share data, margin, and average selling price data)
Revenues $ 4,040,647 $ 4,102,108 $ (61,461) (1.5) %
Cost of sales 1,683,592 1,691,850 8,258 0.5 %
Gross profit 2,357,055 2,410,258 (53,203) (2.2) %
Selling, general and administrative expenses
1,469,425 1,364,265 (105,160) (7.7) %
Goodwill impairment
307,000 - (307,000) (100.0) %
Asset impairments
431,115 24,082 (407,033) (1,690.2) %
Income from operations
149,515 1,021,911 (872,396) (85.4) %
Foreign currency gains (losses), net
9,843 (6,777) 16,620 245.2 %
Interest income 1,844 3,484 (1,640) (47.1) %
Interest expense (88,287) (109,264) 20,977 19.2 %
Other income, net
63 1,231 (1,168) (94.9) %
Income before income taxes
72,978 910,585 (837,607) (92.0) %
Income tax expense (benefit)
154,176 (39,486) (193,662) (490.5) %
Net income (loss)
$ (81,198) $ 950,071 $ (1,031,269) (108.5) %
Net income (loss) per common share:
Basic $ (1.50) $ 16.00 $ (17.50) (109.4) %
Diluted $ (1.50) $ 15.88 $ (17.38) (109.4) %
Gross margin (1)
58.3 % 58.8 % (50) bp (0.9) %
Operating margin (1)
3.7 % 24.9 % (2,120) bp (85.1) %
Footwear unit sales:
Crocs Brand 128,938 127,000 1,938 1.5 %
HEYDUDE Brand
22,457 26,950 (4,493) (16.7) %
Average footwear selling price - nominal basis (2):
Crocs Brand $ 25.40 $ 25.52 $ (0.12) (0.5) %
HEYDUDE Brand
$ 31.67 $ 30.54 $ 1.13 3.7 %
(1)Changes for gross margin and operating margin are shown in basis points ("bp").
(2)Average footwear selling price is calculated as footwear and footwear accessories revenues divided by footwear units.
Revenues by Channel
Year Ended December 31, % Change
Constant
Currency % Change(1)
Favorable (Unfavorable)
2025 2024 2025-2024 2025-2024
(in thousands)
Crocs Brand:
Wholesale $ 1,599,374 $ 1,607,546 (0.5) % (0.5) %
Direct-to-consumer 1,726,433 1,670,421 3.4 % 2.9 %
Total Crocs Brand 3,325,807 3,277,967 1.5 % 1.3 %
HEYDUDE Brand:
Wholesale 336,325 456,472 (26.3) % (26.5) %
Direct-to-consumer 378,515 367,669 2.9 % 2.8 %
Total HEYDUDE Brand 714,840 824,141 (13.3) % (13.5) %
Total consolidated revenues
$ 4,040,647 $ 4,102,108 (1.5) % (1.7) %
(1)Reflects year over year change as if the current period results were in constant currency, which is a non-GAAP financial measure. See "Use of Non-GAAP Financial Measures" for more information.
Revenues.In the year ended December 31, 2025, revenues decreased $61.5 million, or 1.5%, compared to 2024. The decrease in revenue was driven by lower volume of $87.4 million, or 2.1%, primarily due to lower volume in the HEYDUDE Brand, partially offset by higher volume in the Crocs Brand. Higher average selling price on a constant currency basis ("ASP") for the HEYDUDE Brand increased revenues by $26.7 million, or 0.7%, driven mostly by favorable channel mix, partially offset by unfavorable product mix. This increase was partially offset by lower ASP for the Crocs Brand, which decreased revenues by $10.2 million, or 0.2%, driven mostly by increased discounting, partially offset by favorable channel mix. Net favorable foreign currency fluctuations also increased revenues by $9.4 million, or 0.2%, primarily due to favorable fluctuations in the Euro, partially offset by unfavorable fluctuations in the South Korean Won.
Gross margin.Gross margin was 58.3% compared to 58.8% in 2024. This was primarily due to incremental duties of 130 basis points and higher freight and fulfillment costs of 40 basis points, for both brands. The overall decrease in gross margin was offset in part by lower product costs in the Crocs Brand of 70 basis points, and favorable brand mix of 30 basis points.
In the years ended December 31, 2025, and 2024, cost of sales included $488.4 million and $487.1 million, respectively, of distribution expenses primarily related to receiving, inspecting, warehousing, and packaging product in owned and third-party warehouses, combined with transportation costs associated with delivering products from distribution centers to wholesale partners, retail stores, and end customers.
Selling, general and administrative expenses.SG&A increased $105.2 million, or 7.7%, during the year ended December 31, 2025, compared to the same period in 2024, primarily driven by increased investment in talent of $45.1 million, costs associated with an operational workforce reduction of $13.4 million, increased marketing of $16.1 million, higher DTC costs, as a result of investment in the channel and variable costs associated with increased channel revenues, of $39.1 million, and net decreases in other costs of $8.5 million.
Goodwill and Asset impairments.Goodwill and Asset impairments increased $714.0 million during the year ended December 31, 2025, compared to the same period in 2024, primarily due to non-cash impairment charges in the current year of $430.0 million related to the indefinite-lived HEYDUDE trademark and $307.0 million for HEYDUDE Brand reporting unit goodwill. The increase in Goodwill and Asset impairments was partially offset by prior year non-cash impairment charges of $18.2 million for information technology systems related to the HEYDUDE integration, $5.5 million for our former HEYDUDE Brand warehouses in Las Vegas, Nevada, and $0.4 million for our former Crocs Brand warehouse in Oudenbosch, the Netherlands, none of which recurred in the current year. For additional information, refer to Note 4 - Goodwill and Intangible Assets, Net in the accompanying notes to the consolidated financial statements included in Part II - Item 8. Financial Statements of this Annual Report on Form 10-K.
Foreign currency gains (losses), net. Foreign currency gains (losses), net, consists of unrealized and realized foreign currency gains and losses from the remeasurement and settlement of monetary assets and liabilities denominated in non-functional currencies as well as realized and unrealized gains and losses on certain foreign currency derivative instruments. During the
year ended December 31, 2025, we recognized realized and unrealized net foreign currency gains of $9.8 million compared to losses of $6.8 million during the year ended December 31, 2024.
Interest expense. Interest expense during the year ended December 31, 2025, decreased $21.0 million, or 19.2%, primarily due to lower outstanding borrowings and lower weighted average interest rates on each of the Term Loan B Facility (as defined herein) and the Revolving Facility (as defined herein) in the current year.
Income tax expense (benefit). During the year ended December 31, 2025, we recognized an income tax expense of $154.2 million on pre-tax book income of $73.0 million, representing an effective tax rate of 211.3%, compared to an income tax benefit of $39.5 million on pre-tax book income of $910.6 million in 2024, which represented an effective tax rate of (4.3)%. The current year effective tax rate is higher primarily due to the impairments of the indefinite-lived HEYDUDE trademark and HEYDUDE Brand reporting unit goodwill in 2025, which are not deductible for tax purposes. Our effective tax rate has varied dramatically in recent years due to intra-entity intellectual property rights transactions, differences in our profitability levels and relative operating earnings across multiple jurisdictions, and by changes in the valuation allowance.
In 2025, in one relevant jurisdiction, we settled a portion of the uncertain tax positions associated with the 2023 IP transactions that resulted in the release of uncertain tax positions of $34.1 million. The other relevant uncertain tax positions associated with the 2023 IP transactions remain unchanged. The impairments of the indefinite-lived HEYDUDE trademark and HEYDUDE Brand reporting unit goodwill also impact the net deferred tax assets since the GAAP carrying value decreased. As of December 31, 2025, the related net deferred tax asset, net of applicable valuation allowance and uncertain tax positions, was $114.2 million.
In 2024, we completed an intra-entity transaction related to certain intellectual property rights primarily to align with current and future international operations. The transaction resulted in a step-up in tax basis of intellectual property rights and a correlated increase in foreign deferred tax assets based on the fair value of the intellectual property rights. Foreign deferred tax assets increased by $268.8 million and this benefit was offset by an increase in uncertain tax positions of $145.6 million. As such, a net change in deferred tax asset of $123.2 million was recognized along with a corresponding foreign income tax benefit in 2024. In 2024, we received new information and remeasured the reserve for uncertain tax positions related to the 2020 and 2021 intellectual property rights transactions which resulted in the release of uncertain tax positions of $141.2 million along with a corresponding foreign income tax benefit. As of December 31, 2025, the related net deferred tax asset, net of applicable valuation allowance and uncertain tax positions, was $289.8 million.
Our valuation allowances are primarily the result of uncertainties regarding the future realization of tax attributes recorded in various jurisdictions. The measurement of deferred tax assets is reduced by a valuation allowance if, based upon available evidence, it is more likely than not that the deferred tax assets will not be realized. We have evaluated the realizability of our deferred tax assets in each jurisdiction by assessing the adequacy of expected taxable income, including the reversal of existing temporary differences, historical and projected operating results and the availability of prudent and feasible tax planning strategies. In assessing our valuation allowance as of December 31, 2025, we considered all available evidence, including the magnitude of recent and current operating results, the duration of statutory carryforward periods, our historical experience utilizing tax attributes prior to their expiration dates, the historical volatility of operating results of these jurisdictions and our assessment regarding the sustainability of their profitability. The weight we give to any particular item is, in part, dependent upon the degree to which it can be objectively verified. Valuation allowances recorded against deferred tax assets increased by a net $58.8 million.
The 2025 impact of changes in valuation allowances to the effective tax rate was an unfavorable impact of $58.2 million, equating to a 79.7% unfavorable impact. We maintain valuation allowances of approximately $300.4 million as of December 31, 2025, which may be reduced in the future depending upon the achieved profitability of certain jurisdictions as well as the magnitude of the profitability.
Reportable Operating Segments
The following table sets forth information related to our reportable operating segments for the years ended December 31, 2025 and 2024.
Year Ended December 31, % Change
Constant
Currency % Change (1)
Favorable (Unfavorable)
2025 2024 2025-2024 2025-2024
(in thousands)
Revenues:
Crocs Brand revenues
$ 3,325,807 $ 3,277,967 1.5 % 1.3 %
HEYDUDE Brand revenues
714,840 824,141 (13.3) % (13.5) %
Total consolidated revenues $ 4,040,647 $ 4,102,108 (1.5) % (1.7) %
Income from operations:
Crocs Brand income from operations
$ 1,111,679 $ 1,182,012 (6.0) % (5.7) %
HEYDUDE Brand income from operations
(668,855) 137,401 (586.8) % (586.7) %
Enterprise corporate
(293,309) (297,502) 1.4 % 1.5 %
Total consolidated income from operations
149,515 1,021,911 (85.4) % (85.1) %
Foreign currency gains (losses), net 9,843 (6,777) 245.2 %
Interest income 1,844 3,484 (47.1) %
Interest expense (88,287) (109,264) 19.2 %
Other income (expense), net 63 1,231 (94.9) %
Income before income taxes
$ 72,978 $ 910,585 (92.0) %
(1)Reflects year over year change as if the current period results were in constant currency, which is a non-GAAP financial measure. See "Use of Non-GAAP Financial Measures" for more information.
Crocs Brand
Revenues.The Crocs Brand segment grew revenues for the year ended December 31, 2025, compared to 2024, primarily due to higher volume. Net favorable currency fluctuations also increased revenues. The overall increase in Crocs Brand revenues was offset in part by lower ASP, mainly due to increased discounting, partially offset by favorable channel mix.
Income from Operations.During the year ended December 31, 2025, income from operations for our Crocs Brand segment was $1,111.7 million, a decrease of $70.3 million, or 6.0% from 2024. Gross margin was 61.3% for the year ended December 31, 2025, a decrease of 30 basis points compared to 2024. The decrease in gross margin was primarily due to unfavorable duties and higher freight and fulfillment costs, partially offset by lower product costs.
During the year ended December 31, 2025, SG&A for our Crocs Brand segment increased by $89.5 million, or 10.7%, compared to 2024, primarily due to increased investments in talent and marketing and higher costs in the DTC channel, as a result of investment in the channel and variable costs.
HEYDUDE Brand
Revenues. During the year ended December 31, 2025, HEYDUDE revenues decreased compared to 2024, primarily due to lower volume. The overall decrease in revenues was partially offset by higher ASP, primarily due to favorable channel mix, partially offset by unfavorable product mix.
Income from Operations. For the HEYDUDE Brand, loss from operations during the year ended December 31, 2025, was $668.9 million, a decrease of $806.3 million, or 586.8%, compared to 2024. Gross margin was 44.8% for the year ended December 31, 2025, a decrease of 290 basis points, primarily due to unfavorable duties, higher freight and fulfillment costs, and higher product costs, partially offset by favorable channel mix.
During the year ended December 31, 2025, SG&A, including asset impairments, for the HEYDUDE Brand segment increased by $733.0 million, or 286.5%, primarily due to the partial impairment of the indefinite-lived HEYDUDE trademark and
HEYDUDE Brand reporting unit goodwill, as discussed above, which was partially offset by prior year impairments costs of the right-of-use assets for our former HEYDUDE Brand warehouses in Las Vegas, Nevada, that did not recur in the current year. SG&A also increased overall for the HEYDUDE Brand due to increased investments in talent and higher costs in the DTC channel, as a result of investment in the channel and variable costs, mostly offset by decreased investments in variable marketing.
Enterprise Corporate
During the year ended December 31, 2025, total net costs within 'Enterprise corporate' increased $4.2 million, or 1.4%, compared to the same period in 2024, primarily due to an increased investment in talent, costs associated with an operational workforce reduction, and higher information technology costs, mostly offset by a prior year non-cash impairment charge for information technology systems related to the HEYDUDE integration that did not recur in the current year.
Store Locations and Digital Sales Percentage
As of December 31, 2025, we had 439 company-operated retail locations for the Crocs Brand, inclusive of 200 retail locations in North America and 239 retail locations internationally. As of December 31, 2025, we had 75 company-operated retail locations for the HEYDUDE Brand. As of December 31, 2024, we had 390 company-operated retail locations for the Crocs Brand, inclusive of 184 retail locations in North America and 206 retail locations internationally. As of December 31, 2024, we had 52 company-operated retail locations for the HEYDUDE Brand.
Digital sales, which includes sales through our company-owned website, third-party marketplaces, and e-tailers (which are reported in our wholesale channel), as a percent of total revenues, by reportable operating segment were:
Year Ended December 31,
2025 2024
Digital sales as a percent of total revenues:
Crocs Brand 36.5 % 36.4 %
HEYDUDE Brand
43.5 % 40.3 %
Total 37.8 % 37.2 %
Liquidity and Capital Resources
Our liquidity position as of December 31, 2025, was:
December 31, 2025
(in thousands)
Cash and cash equivalents $ 130,354
Available borrowings 952,416
As of December 31, 2025, we had $130.4 million in cash and cash equivalents and up to $952.4 million of available borrowings, including $937.4 million remaining borrowing availability under the Revolving Facility (as defined below) and $15.0 million of remaining borrowing availability under the Citibank Facility (as defined below). As of December 31, 2025, the Term Loan B Facility (as defined below) was fully drawn, and there was no available borrowing capacity. We believe that our cash flows from operations, our cash and cash equivalents on hand, and available borrowings under our Revolving Facility and Citibank Facility will be sufficient to meet our ongoing liquidity needs and capital expenditure requirements for at least the next twelve months.
Additional future financing may be necessary to fund our operations and there can be no assurance that, if needed, we will be able to secure additional debt or equity financing on terms acceptable to us or at all. Although we believe we have adequate sources of liquidity over the long term, the success of our operations, the global economic outlook, and the pace of sustainable growth in our markets could each impact our business and liquidity.
Repatriation of Cash and Cash Equivalents
As a global business, we have cash balances in various countries and amounts are denominated in various currencies. Fluctuations in foreign currency exchange rates impact our results of operations and cash positions. Future fluctuations in foreign currencies may have a material impact on our cash flows and capital resources. Cash balances held in foreign countries may have additional restrictions and covenants associated with them which could adversely impact our liquidity and our ability to timely access and transfer cash balances between entities.
All of the cash held outside of the U.S. could be repatriated to the U.S. as of December 31, 2025, without incurring additional U.S. federal income taxes. In some countries, repatriation of certain foreign balances is restricted by local laws. These limitations may affect our ability to fully utilize our cash resources for needs in the U.S. or other countries and could adversely affect our liquidity. As of December 31, 2025, we held $118.2 million of our total $130.4 million in cash and cash equivalents in international locations. This cash is primarily used for the ongoing operations of the business in the locations in which the cash is held. Of the $118.2 million, an insignificant amount is currently restricted by local laws or otherwise.
Senior Revolving Credit Facility
In July 2019, the Company and certain of its subsidiaries (the "Borrowers") entered into a Second Amended and Restated Credit Agreement (as amended, the "Credit Agreement"), with the lenders named therein and PNC Bank, National Association, as a lender and administrative agent for the lenders. Since that time, we have amended the Credit Agreement, which, as amended to date, provides for a revolving credit facility of $1.0 billion, which can be increased by an additional $400.0 million, subject to certain conditions (the "Revolving Facility"). Borrowings under the Credit Agreement bear interest at a variable interest rate based on (A) a Base Rate (defined as the highest of (i) the Overnight Bank Funding Rate (as defined in the Credit Agreement), plus 0.25%, (ii) the Prime Rate (as defined in the Credit Agreement), and (iii) the Daily Simple SOFR (as defined in the Credit Agreement), plus 1.00%), plus an applicable margin ranging from 0.25% to 0.875% based on our leverage ratio or 1.35% to 1.975% for the Daily Simple SOFR based on the leverage ratio, inclusive of a 0.10% SOFR adjustment, or (B) the Term SOFR Rate (as defined in the Credit Agreement), plus an applicable margin ranging from 1.35% to 1.975% based on our leverage ratio for one-month interest periods and three-month interest periods, inclusive of a 0.10% SOFR adjustment. Borrowings under the Credit Agreement are secured by all of the assets of the Borrowers and guaranteed by certain other subsidiaries of the Borrowers.
The Credit Agreement requires us to maintain a minimum interest coverage ratio of 3.00 to 1.00, and a maximum leverage ratio of 3.25 to 1.00 (subject to adjustment in certain circumstances). The Credit Agreement permits, among other things, (i) stock repurchases subject to certain restrictions, including after giving effect to such stock repurchases, the maximum leverage ratio does not exceed certain levels; and (ii) certain acquisitions so long as there is borrowing availability under the Credit Agreement of at least $40.0 million. As of December 31, 2025, we were in compliance with all financial covenants under the Credit Agreement.
As of December 31, 2025, the total commitments available from the lenders under the Revolving Facility were $1.0 billion. At December 31, 2025, we had $62.0 million in outstanding borrowings and $0.6 million in outstanding letters of credit under the Revolving Facility, which reduces amounts available for borrowing under the Revolving Facility. As of December 31, 2025, and 2024, we had $937.4 million and $809.4 million, respectively, of available borrowing capacity under the Revolving Facility, which matures in November 2027.
Term Loan B Facility
On February 17, 2022, the Company entered into a credit agreement (the "Original Term Loan B Credit Agreement") with Citibank, N.A., as administrative agent and lender, which was amended on August 8, 2023, (the "August 2023 Amendment") and on February 13, 2024 (the "February 2024 Amendment"). The Original Term Loan B Credit Agreement, as amended by the August 2023 Amendment and the February 2024 Amendment is referred to herein as the "Term Loan B Credit Agreement."
The Original Term Loan B Credit Agreement provided for an aggregate term loan B facility in the principal amount of $2.0 billion. Prior to the February 2024 Amendment, the outstanding balance was $820.0 million. Among other things, the February 2024 Amendment provided for a new $820.0 million tranche of term loans (the "2024 Refinancing Term Loans" and, such facility, the "Term Loan B Facility"), to refinance the then-outstanding principal balance. The 2024 Refinancing Term Loans are secured by substantially all of the Company's and each subsidiary guarantor's assets on a pari passu basis with their obligations arising from the Term Loan B Credit Agreement and is scheduled to mature on February 17, 2029, though we have the ability to request extensions as set forth in the Term Loan B Credit Agreement. Additionally, subject to certain conditions, including, without limitation, satisfying certain leverage ratios, the Company may, at any time, on one or more occasions, add
one or more new classes of term facilities and/or increase the principal amount of the loans of any existing class by requesting one or more incremental term facilities.
Pursuant to the reduced interest rate margins applicable to the 2024 Refinancing Term Loans, each term loan borrowing which is an alternate base rate borrowing bears interest at a rate per annum equal to the Alternate Base Rate (as defined in the Term Loan B Credit Agreement), plus 1.25%. Each term loan borrowing which is a term SOFR borrowing bears interest at a rate per annum equal to the Adjusted Term SOFR Rate (as defined in the Term Loan B Credit Agreement) plus 2.25%.
As of December 31, 2025, the Term Loan B Facility was fully drawn with no remaining borrowing capacity, and we had $500.0 million in outstanding principal on the Term Loan B Facility.
The Term Loan B Credit Agreement also contains customary affirmative and negative covenants, incurrence financial covenants, representations and warranties, events of default and other provisions. As of December 31, 2025, we were in compliance with all financial covenants under the Term Loan B Credit Agreement.
Asia Revolving Credit Facility
During the year ended December 31, 2025, we had one revolving credit facility in Asia with Citibank (China) Company Limited, Shanghai Branch (the "Citibank Facility"), which, as amended, provides up to an equivalent of $15.0 million.
As of December 31, 2025, and 2024, we had no borrowings outstanding on the Citibank Facility.
Senior Notes Issuances
In March 2021, the Company completed the issuance and sale of $350.0 million aggregate principal amount of 4.250% Senior Notes due March 15, 2029 (the "2029 Notes"), pursuant to the indenture related thereto (as amended and/or supplemented to date, the "2029 Notes Indenture"). Additionally, in August 2021, the Company completed the issuance and sale of $350.0 million aggregate principal amount of 4.125% Senior Notes due August 15, 2031 (the "2031 Notes"), pursuant to the indenture related thereto (as amended and/or supplemented to date, "the 2031 Notes Indenture" and, together with the 2029 Notes Indenture, the "Indentures" and, each, an "Indenture"). Interest on each of the 2029 Notes and the 2031 Notes (collectively, the "Notes") is payable semi-annually.
The Company has the option to redeem all or any portion of the 2029 Notes, at once or over time, at any time on or after March 15, 2024, at a redemption price equal to 100% of the principal amount thereof, plus a premium declining ratably on an annual basis to par and accrued and unpaid interest, if any, to, but excluding, the date of redemption. The Company also had the option to redeem some or all of the 2029 Notes at any time before March 15, 2024 at a redemption price of 100% of the principal amount to be redeemed, plus a "make-whole" premium and accrued and unpaid interest, if any, to, but excluding, the date of redemption. In addition, at any time before March 15, 2024, the Company could have redeemed up to 40% of the aggregate principal amount of the 2029 Notes at a redemption price of 104.250% of the principal amount with the proceeds from certain equity issuances, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption.
The Company will have the option to redeem all or any portion of the 2031 Notes, at once or over time, at any time on or after August 15, 2026, at a redemption price equal to 100% of the principal amount thereof, plus a premium declining ratably on an annual basis to par and accrued and unpaid interest, if any, to, but excluding, the date of redemption. The Company will also have the option to redeem some or all of the 2031 Notes at any time before August 15, 2026, at a redemption price of 100% of the principal amount to be redeemed, plus a "make-whole" premium and accrued and unpaid interest, if any, to, but excluding, the date of redemption. In addition, at any time before August 15, 2024, the Company could have redeemed up to 40% of the aggregate principal amount of the 2031 Notes at a redemption price of 104.125% of the principal amount with the proceeds from certain equity issuances, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption.
The Notes rank pari passu in right of payment with all of the Company's existing and future senior debt, including the Credit Agreement, and are senior in right of payment to any of the Company's future debt that is, by its term, expressly subordinated in right of payment to the Notes. The Notes are unconditionally guaranteed by each of the Company's restricted subsidiaries that is a borrower or guarantor under the Credit Agreement and by each of the Company's wholly-owned restricted subsidiaries that guarantees any debt of the Company or any guarantor under any syndicated credit facility or capital markets debt in an aggregate principal amount in excess of $25.0 million.
The Indentures contain covenants that, among other things, limit the ability of the Company and its restricted subsidiaries to incur additional debt or issue certain preferred stock; pay dividends or repurchase or redeem capital stock or make other
restricted payments; declare or pay dividends or other payments; incur liens; enter into certain types of transactions with the Company's affiliates; and consolidate or merge with or into other companies. As of December 31, 2025, we were in compliance with all financial covenants under the Notes.
Consolidated Statements of Cash Flows
Our consolidated statements of cash flows are summarized as follows:
Year Ended December 31, $ Change % Change
2025 2024 Favorable (Unfavorable)
(in thousands)
Cash provided by operating activities
$ 710,431 $ 992,486 $ (282,055) (28.4) %
Cash used in investing activities
(51,231) (69,347) 18,116 26.1 %
Cash used in financing activities
(714,565) (886,048) 171,483 19.4 %
Effect of exchange rate changes on cash, cash equivalents, and restricted cash
5,598 (6,510) 12,108 (186.0) %
Net change in cash, cash equivalents, and restricted cash $ (49,767) $ 30,581 $ (80,348) (262.7) %
Operating Activities. Our primary source of liquidity is cash provided by operating activities, consisting of net income adjusted for non-cash items and changes in working capital. Cash provided by operating activities decreased $282.1 million for the year ended December 31, 2025, compared to the year ended December 31, 2024, driven by decreases in operating assets and liabilities of $288.9 million, primarily due to the decrease in income taxes payable, accounts receivable, and inventories, partially offset by an increase in net income, adjusted for non-cash items, of $6.8 million.
Investing Activities. There was a $18.1 million decrease in cash used in investing activities for the year ended December 31, 2025, compared to the year ended December 31, 2024. This was due to a decrease in purchases of property, equipment, and software.
Financing Activities.Cash used in financing activities decreased by $171.5 million in the year ended December 31, 2025, compared to the year ended December 31, 2024. The decrease in cash used in financing activities was primarily due to a decrease in repayments, net of borrowings, of $195.2 million. There were other decreases in cash used of $6.2 million. The overall decrease in cash used in financing activities was partially offset by an increase of $29.9 million in repurchases of common stock, including excise tax.
Stock Repurchases
On February 10, 2025, the Board approved a $1.0 billion increase to our then-existing common stock repurchase authorization. The number, price, structure, and timing of the repurchases are at our sole discretion and may be made depending on market conditions, liquidity needs, restrictions under the agreements governing our indebtedness, and other factors. The Board of Directors may suspend, modify, or terminate the program at any time without prior notice. Share repurchases may be made in the open market or in privately negotiated transactions. The repurchase authorization does not have an expiration date and does not obligate us to acquire any amount of our common stock. Under Delaware state law, these shares are not retired, and we have the right to resell any of the shares repurchased.
During the year ended December 31, 2025, we repurchased 6.5 million shares of our common stock at a cost of $577.2 million, including commissions. During the year ended December 31, 2024, we repurchased 4.3 million shares of our common stock at a cost of $551.2 million, including commissions.
As of December 31, 2025, we had remaining authorization to repurchase approximately $746.8 million of our common stock, subject to restrictions under our Indentures, Credit Agreement, and Term Loan B Credit Agreement.
See Note 10 - Equity in the accompanying notes to the consolidated financial statements included in Item 8. Financial Statements and Supplementary Dataof this Annual Report on Form 10-K for more information on our repurchases and repurchase authorizations.
Contractual Obligations
We believe we have sufficient liquidity to fund our operations and meet our short-term and long-term obligations. Our material future cash obligations as of December 31, 2025, include the following:
Less than 1 Year Thereafter Total
(approximately, in thousands)
Debt-related:
Debt obligations (1)
$ - $ 1,262,000 $ 1,262,000
Interest on debt obligations (1)
62,600 176,300 238,900
Purchase commitments (2)
274,200 - 274,200
Lease-related (3):
Lease obligations
98,500 362,300 460,800
Total $ 435,300 $ 1,800,600 $ 2,235,900
(1)Represents future interest payment obligations, which are estimated by assuming the amounts outstanding under our Term Loan B Facility, Notes, Revolving Facility, and Citibank Facility and the interest rates in effect as of December 31, 2025, will remain constant into the future. This is only an estimate, as actual amounts borrowed and rates may vary over time for certain borrowing instruments, as described in Note 9 - Borrowings.
(2)Represents purchase commitments to our third-party manufacturers, primarily for materials and supplies used in the manufacture of our products. We expect to fulfill our commitments under these agreements in the next twelve months in the normal course of business and are only liable for the portion of the purchase obligations that have been purchased by the third-party manufacturer or manufactured by the vendor, with the remainder cancellable without penalty. Refer to Note 15 - Commitments and Contingencies in the accompanying notes to the consolidated financial statements included in Item 8. Financial Statements and Supplementary Data of this Annual Report on Form 10-K for more information.
(3)Our operating lease obligations consist of leases for real estate, which includes retail, warehouse, distribution center, and office spaces and represent the minimum cash commitment under contract to various third parties for operating lease obligations. For more information on our lease obligations and obligations for leases not yet commenced, refer to Note 6 - Leases in the accompanying notes to the consolidated financial statements included in Item 8. Financial Statements and Supplementary Dataof this Annual Report on Form 10-K for more information.
We had no material off-balance sheet arrangements as of December 31, 2025, other than certain purchase commitments, as described in the footnote (2) above.
Critical Accounting Policies and Estimates
General
Our discussion and analysis of financial condition and results of operations, outside of discussions regarding constant currency, is based on the consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, and contingencies as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. We evaluate our assumptions and estimates on an on-going basis.
An accounting policy is considered to be critical if it is important to our results of operations, financial condition, and cash flows, and requires significant judgment and estimates on the part of management in its application. Our estimates are often based on historical experience, complex judgments, assessments of probability, and assumptions that management believes to be reasonable, but that are inherently uncertain and unpredictable. We believe that the following discussion represents those accounting policies that are the most critical to the reporting of our financial condition and results of operations. For a discussion of our significant accounting policies, see Note 1 - Basis of Presentation and Summary of Significant Accounting Policies in the accompanying notes to the consolidated financial statements included in Item 8. Financial Statements and Supplementary Dataof this Annual Report on Form 10-K.
Impairment of Goodwill and Indefinite-Lived Intangible Assets
Our goodwill and indefinite-lived intangible assets, which primarily consist of the HEYDUDE trademark, are not amortized. We evaluate the carrying value of our goodwill and indefinite-lived intangible assets at least annually or when an interim triggering event has occurred indicating potential impairment. Our annual test is performed as of the first day of the fourth
quarter. Our impairment evaluations represent a critical accounting policy as they require significant judgments and assumptions that we believe to be reasonable but that are inherently uncertain and unpredictable.
We perform our goodwill impairment testing for each reporting unit that has goodwill. During the years ended December 31, 2025, 2024, and 2023, we had two reporting units, comprised of a reporting unit within the HEYDUDE Brand segment and a reporting unit within the Crocs Brand segment. We perform our indefinite-lived intangible impairment testing at the asset level.
When performing our annual test for impairment, we may assess goodwill and indefinite-lived intangible assets for potential impairment using either a qualitative or quantitative assessment. The qualitative assessment may evaluate factors such as macroeconomic conditions, industry and market considerations, and overall financial performance, among other factors. If we determine that it is more likely than not that the fair value of a reporting unit or an indefinite-lived intangible asset is less than its carrying value, a quantitative assessment is performed. For the quantitative assessment, we compare the estimated fair value of the trademark and reporting unit with their respective carrying value, including the goodwill assigned to the reporting unit. If carrying value of the reporting unit exceeds its estimated fair value, an impairment charge is recorded. In the second quarter of the fiscal year ended 2025, we recorded an impairment charge related a triggering event for the HEYDUDE Brand indefinite-lived intangible assets (which consists solely of the HEYDUDE trademark) (the "trademark") and the HEYDUDE Brand reporting unit (the "reporting unit") goodwill.
Our impairment evaluations represent a critical accounting policy as they require significant judgments and assumptions that we believe to be reasonable but that are inherently uncertain and unpredictable. The primary assumptions developed by management and used in the quantitative assessments included annual revenue growth rates, averaging approximately 8% for both the trademark and reporting unit goodwill, projected earnings before interest, taxes, depreciation, and amortization ("EBITDA") margins, averaging approximately 20% for both the trademark and reporting unit goodwill, and a market-based discount rate of 15% for both the trademark and reporting unit goodwill, which was based on, most significantly, a risk-free rate of return, an equity market risk premium, and a company-specific risk premium. Changes in the assumptions used to estimate the fair value of our goodwill and indefinite-lived intangible assets could result in additional impairment charges in future periods as the key assumptions are inherently uncertain, require significant judgment and are subject to change based on, among others, industry and geopolitical conditions, our ability to navigate changing macroeconomic conditions and trends as well as the timing and success of strategic initiatives.
Certain factors, such as failure to achieve forecasted revenue growth rates, EBITDA, or increases in the discount rates, have the potential to create variances in the estimated fair values of our goodwill and indefinite-lived intangible assets that could result in impairment charges in future periods. Refer to the risk factor under "Financial and Accounting Risks - We may incur impairments of the carrying value of our goodwill and other intangible assets, which could have a material adverse effect on our business and financial results" included in Item 1A. Risk Factorsof this Annual Report on Form 10-K for additional information.
We did not record any impairment charges in the years ended December 31, 2024, or 2023, based on the results of our goodwill and indefinite-lived intangible assets impairment testing, and we did not record any additional impairment charge based on the results of the annual 2025 goodwill and indefinite-lived intangible assets impairment testing. As of December 31, 2025, our HEYDUDE Brand reporting unit had $403.0 million in recorded goodwill and the estimated fair value of the reporting unit exceeded the assigned carrying value by more than 10%. As of December 31, 2025, the recorded amount of our HEYDUDE Brand indefinite-lived intangible asset was $1.1 billion and the estimated fair value exceeded the assigned carrying value by less than 10%. Refer to Note 1 - Basis of Presentation and Summary of Significant Accounting Policies and Note 4 - Goodwill and Intangible Assets, Net in the accompanying notes to the consolidated financial statements included in Part II - Item 8. Financial Statements and Supplementary Dataof this Annual Report on Form 10-K for further information related to our goodwill and indefinite-lived intangible assets.
Impairment of Long-Lived Assets
Property and equipment, right-of-use assets, and definite-lived intangible assets, such as customer relationships and capitalized software, are evaluated for impairment whenever events or changes in circumstances indicate that their carrying values may not be fully recoverable. This represents a critical accounting policy as our impairment evaluations include significant judgments and assumptions that we believe to be reasonable but that are inherently uncertain and unpredictable. Testing of long-lived assets for impairment is at the level of an asset group, which is the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. In our retail business, the asset group for impairment testing is each individual retail store. For customer relationships, impairment testing is performed at the HEYDUDE Brand asset group level. In evaluating long-lived assets for recoverability, we use our best estimate of future cash flows expected to result from the use of the asset and its eventual disposition, where applicable. To the extent that estimated future undiscounted net cash flows
attributable to the asset are less than its carrying value, an impairment loss is recognized equal to the difference between the carrying value of such asset and its fair value. Assets to be disposed of and for which there is a committed plan of disposal are reported at the lower of carrying value or fair value, less costs to sell.
In determining future cash flows, we take various factors into account, including the remaining useful life of each asset group, forecasted growth rates, EBITDA, pricing, working capital, capital expenditures, and other cash needs specific to the asset group. Additional considerations when assessing impairment include changes in our strategic operational and financial decisions, global and regional economic conditions, demand for our product, and other corporate initiatives which may eliminate or significantly decrease the realization of future benefits from our long-lived assets. Since the determination of future cash flows is an estimate of future performance, future impairments may arise in the event that future cash flows do not meet expectations.
In 2025, we recorded non-cash impairments of $1.1 million related to the discontinuation of an information technology project. In 2024, we recorded non-cash impairments of $18.2 million for information technology systems related to the HEYDUDE integration and $5.9 million related to our former HEYDUDE Brand warehouse in Las Vegas, Nevada, and our former Crocs Brand warehouse in Oudenbosch, the Netherlands. In 2023, we recorded non-cash impairments of $9.3 million related to our former corporate headquarters. See Note 7 - Fair Value Measurements in the accompanying notes to the consolidated financial statements included in Item 8. Financial Statements and Supplementary Dataof this Annual Report on Form 10-K for further information related to long-lived asset impairments.
Revenues and Reserves for Sales Returns and Allowances
While our revenue recognition does not involve significant judgment, it does represent a key accounting policy as it is important to our results of operations. Revenues are recognized in the amount expected to be received when control of the product transfers to customers. Revenues are reported net of various promotions, which range from contractually-fixed percentage price reductions to sales returns, discounts, rebates, and other incentives that may vary in amount, must be estimated, and are reported as a reduction in revenues. An area of judgment affecting our reported revenues and net income involves estimating reserves for sales returns and allowances, which represent a portion of revenues not expected to be realized. Revenues in our direct-to-consumer channels are reduced by an estimate of returns. We may also accept returns from our wholesale customers, on an exception basis, to ensure that our products are merchandised in the proper assortments and may provide markdown allowances at our sole discretion to key wholesalers and distributors to facilitate sales of slower moving products. Wholesale revenues are reduced by estimates of returns and allowances.
Our estimated sales returns and allowances are based on customer return history and actual outstanding returns yet to be received. Changes to our estimates for customer returns and allowances may be caused by many factors, including, but not limited to, whether customers accept our new styles, customer inventory levels, shipping delays or errors, known or suspected product defects, the seasonal nature of our products, and macroeconomic factors affecting our customers. Historically, actual amounts of customer returns and allowances have not differed significantly from our estimates. A hypothetical 10% increase in our reserves for returns and allowances as of December 31, 2025, would have decreased our revenues during the year ended December 31, 2025, by $0.7 million.
Income Taxes
Income Tax Accounting
We account for income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of other assets and liabilities. We provide for income taxes at the current and future enacted tax rates and laws applicable in each taxing jurisdiction. We account for the tax effects of global intangible low tax income ("GILTI") as a component of income tax expense in the period the tax arises, to the extent applicable. We use a two-step approach for recognizing and measuring tax benefits taken or expected to be taken in a tax return and disclosures regarding uncertainties in income tax positions. The impact of an uncertain tax position that is more likely than not to be sustained upon examination by the relevant taxing authority must be recognized at the largest amount that is more likely than not to be sustained. No portion of an uncertain tax position will be recognized if the position has less than a 50% likelihood of being sustained. Interest expense is recognized on the full amount of deferred benefits for uncertain tax positions. While the validity of any tax position is a matter of tax law, the body of statutory, regulatory and interpretive guidance on the application of the law is complex and often ambiguous. Our analysis of unrecognized tax benefits contains uncertainties based on judgment used to apply the more likely than not recognition and measurement thresholds. Due to the complexity of some of these judgments and uncertainties, the ultimate resolution may result in a payment that is materially different from the current estimate of the tax liabilities. To the extent we prevail in matters
for which unrecognized tax benefit liabilities have been established, or are required to pay amounts in excess of our recorded unrecognized tax benefit liabilities, our effective tax rate in a given financial statement period could be materially affected. An unfavorable tax settlement would require use of our cash and generally result in an increase in our effective tax rate in the period of resolution. A favorable tax settlement would generally be recognized as a reduction in our effective tax rate in the period of resolution. We recognize interest and penalties related to unrecognized tax benefits within the 'Income tax expense (benefit)' line in the accompanying consolidated statements of operations. Accrued interest and penalties are included within the related tax liability line in the consolidated balance sheets.
We evaluate our ability to realize the tax benefits associated with deferred tax assets by analyzing our forecasted taxable income using both historical and projected future operating results, the reversal of existing temporary differences, taxable income in prior carry back years (if permitted) and the availability of tax planning strategies. A valuation allowance is required unless management determines that it is more likely than not that we will ultimately realize the tax benefit associated with a deferred tax asset. We determine on a regular basis the amount of undistributed earnings that will be indefinitely reinvested in our non-U.S. operations. This assessment is based on the cash flow projections and operational and fiscal objectives of each of our U.S. and foreign subsidiaries. Foreign withholding taxes have not been provided on cumulative undistributed foreign earnings of the non-U.S. subsidiaries as of December 31, 2025, which are considered to be indefinitely reinvested outside of the U.S.
See Note 13 - Income Taxes in the accompanying notes to the consolidated financial statements included in Item 8.Financial Statements and Supplementary Dataof this Annual Report on Form 10-K for further information related to income taxes.
Intellectual Property Income Tax Implications
In 2025, in one relevant jurisdiction, we settled a portion of the uncertain tax positions associated with the 2023 intellectual property ("IP") transactions that resulted in the release of uncertain tax positions of $34.1 million. The other relevant uncertain tax positions associated with the 2023 IP transactions remain unchanged. The impairments of the indefinite-lived HEYDUDE trademark and HEYDUDE Brand reporting unit goodwill also impact the net deferred tax assets since the GAAP carrying value decreased. As of December 31, 2025, the related net deferred tax asset, net of applicable valuation allowance and uncertain tax positions was $114.2 million.
In 2024, we completed an intra-entity transaction related to certain IP rights primarily to align with current and future international operations. The transaction was executed using transfer pricing guidelines issued by the relevant taxing authorities. Significant estimates and assumptions were required to compute the valuation of this transaction. These estimates and assumptions include, but are not limited to, estimated future revenue growth, which is inherently uncertain and, therefore, may ultimately differ materially from our actual results. Foreign deferred tax assets increased by $268.8 million and this benefit was offset by an increase in uncertain tax positions of $145.6 million. As such, a net change in deferred tax asset of $123.2 million was recognized along with a corresponding foreign income tax benefit in 2024. In 2024, we received new information and remeasured the reserve for uncertain tax positions related to the 2020 and 2021 intellectual propertyrights transactions which resulted in the release of uncertain tax positions of $141.2 million along with a corresponding foreign income tax benefit. As of December 31, 2025, the related net deferred tax asset, net of applicable valuation allowance and uncertain tax positions, was $289.8 million.
In 2023, we completed transactions that created an amortizable step-up in tax basis of the intangible asset and a corresponding increase in foreign deferred tax assets based on the fair value of that IP. These transactions were also executed using transfer pricing guidelines issued by the relevant taxing authorities. Significant estimates and assumptions were required to compute the valuation of these transactions. These estimates and assumptions include, but are not limited to, estimated future revenue growth and discount rates, which by their nature are inherently uncertain and, therefore, may ultimately differ materially from our actual results. As of December 31, 2024, the related net deferred tax asset, net of applicable valuation allowance and uncertain tax positions was $271.7 million.
In 2020 and in 2021, we completed transactions that created an amortizable step-up in tax basis of the intangible asset and a corresponding increase in foreign deferred tax assets based on the fair value of that IP. These transactions were also executed using transfer pricing guidelines issued by the relevant taxing authorities. Significant estimates and assumptions were required to compute the valuation of these transactions. These estimates and assumptions include, but are not limited to, estimated future revenue growth and discount rates, which by their nature are inherently uncertain and, therefore, may ultimately differ materially from our actual results. As of December 31, 2024, the related net deferred tax asset, net of applicable valuation allowance and uncertain tax positions was $377.1 million. In 2024, we received new information and remeasured the reserve for uncertain tax positions related to the 2020 and 2021 intellectual property rights transactions which resulted in the release of uncertain tax positions of $141.2 million along with a corresponding foreign income tax benefit. As of December 31, 2025, the related net deferred tax asset, net of applicable valuation allowance and uncertain tax positions was $401.6 million.
In order to support and sustain the amortizable tax basis for these transactions (and associated deferred tax asset, net of uncertain tax position), we must demonstrate economic ownership, including the appropriate authority and expertise to manage the IP owned and serviced in the Netherlands and Singapore. The determination of economic substance is a judgment that has to be evaluated by management on a continual basis requiring understanding and expertise of local laws of each associated tax jurisdiction. The Netherlands and Singapore subsidiaries serve as the primary corporate headquarters outside of the U.S. and already perform significant functions in support of the economic ownership of the IP. In 2025, we undertook activities to align business operations that support the economic substance of the IP.
We have also recorded certain tax reserves to address potential differences involving our income tax positions. These potential tax liabilities result from the varying application of statutes, rules, regulations and interpretations by different taxing jurisdictions. While our tax position is not uncertain, because of the significant estimates used in the value of certain intellectual property rights, our tax reserves contain assumptions based on past experiences and judgments about the interpretation of statutes, rules and regulations by taxing jurisdictions. It is possible that the costs of the ultimate tax liability or benefit from these matters may be materially more or less than the amount that we estimated.
Recent Accounting Pronouncements
See Note 2 - Recent Accounting Pronouncements in the accompanying notes to the consolidated financial statements included in Item 8. Financial Statements and Supplementary Dataof this Annual Report on Form 10-K for a description of recently adopted accounting pronouncements and issued accounting pronouncements that we believe may have an impact on our consolidated financial statements when adopted.
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