Income Taxes

9 Months Ended

Oct. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

12. Income Taxes

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

	Three Months Ended October 31,						Nine Months Ended October 31,
	2021			2020			2021			2020
	(in thousands)
Loss before income taxes	$	(804	)	$	(15,576	)	$	(16,089	)	$	(43,922	)
Provision (benefit) for income taxes		(1,560	)		1,502			1,129			3,375
Effective tax rate	194.2%			(9.6)%			(7.0)%			(7.7)%

The Company recorded an income tax benefit of $1.6 million and an income tax provision of $1.5 million for the three months ended October 31, 2021 and 2020, respectively. The change from an income tax provision to an income tax benefit was primarily due to the changes in the amounts of pre-tax income, changes to the Company’s estimated annual effective tax rate, and an increase in tax benefits from excess stock-based compensation deductions. The Company recorded an income tax provision of $1.1 million and $3.4 million for the nine months ended October 31, 2021 and 2020, respectively. The decrease in income tax expense was primarily due to an increase in the U.S. federal research tax credit, and an increase in tax benefits from excess stock-based compensation deductions.

The Company files federal and state income tax returns in the United States and in various foreign jurisdictions. The Internal Revenue Service is currently examining the Company’s U.S. federal income tax return for the fiscal year ended January 31, 2017. The tax years 2013 to 2020 remain open to examination by U.S. federal tax authorities. The tax years 2009 to 2020 remain open to examination by U.S. state tax authorities. The tax years 2015 to 2020 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 October 31, 2021, the gross amount of unrecognized tax benefits was approximately $28.1 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. The Company does not anticipate significant changes to its uncertain tax positions during the next twelve months.