Income Taxes

6 Months Ended

Jul. 31, 2024

Income Tax Disclosure [Abstract]

Income Taxes

13. Income Taxes

The following table provides details of income taxes for the periods indicated:

	Three Months Ended July 31,						Six Months Ended July 31,
	2024			2023			2024			2023
	(in thousands)
Loss before income taxes	$	(34,142	)	$	(34,602	)	$	(71,316	)	$	(68,858	)
Provision (benefit) for income taxes		747			(3,404	)		1,505			(1,758	)
Effective tax rate	(2.2)%			9.8%			(2.1)%			2.6%

The Company recorded an expense for income taxes of $0.7 million and $1.5 million for the three and six months ended July 31, 2024, respectively. The Company recorded a benefit for income taxes of $3.4 million and $1.8 million for the three and six months ended July 31, 2023, respectively. The increases in income tax expense for the three and six months ended July 31, 2024, as compared to the same periods in the prior fiscal year, were primarily due to tax benefit from the release of $3.6 million of valuation allowance on the deferred tax assets of Oculii Corp, or Oculii, in fiscal year 2024 that did not recur in the current fiscal year.

The Company files federal and state income tax returns in the United States and in various foreign jurisdictions. The Company’s fiscal years 2021 through 2024 are generally open and subject to potential examination by U.S. federal tax authorities. The Company’s fiscal years 2020 through 2024 are generally open and subject to potential examination by state tax authorities. The Company’s fiscal years 2017 to 2024 remain open to examination by foreign tax authorities. Fiscal years outside of the normal statute of limitations remain open to audit by tax authorities due to tax attributes generated in those earlier years, which have been carried forward and may be audited in subsequent years when utilized.

The Company regularly assesses the likelihood of adverse outcomes resulting from potential tax examinations to determine the adequacy of its provision for income taxes. These assessments can require considerable estimates and judgments. As of July 31, 2024, the gross amount of unrecognized tax benefits was approximately $23.0 million. If the estimates of income tax liabilities prove to be less than the ultimate assessment, then a further charge to expense could be required. If events occur, and the payment of these amounts ultimately proves to be unnecessary, the reversal of the liabilities could result in tax benefits being recognized in the period in which the Company determines the liabilities are no longer necessary. It is reasonably possible that within the next 12 months the Company's unrecognized tax benefits could potentially be reduced by up to $9.0 million.