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Income Taxes
 12 Months Ended
Jan. 31, 2022
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The following table presents the domestic and foreign components of loss before benefit from income taxes for the periods presented (in thousands):

For the year ended
January 31,
202220212020
United States$(380,337)$(243,435)$(106,743)
Foreign8,629 (1,068)4,976 
Loss before benefit from income taxes$(371,708)$(244,503)$(101,767)

The benefit from income taxes is composed of the following (in thousands):

For the year ended
January 31,
202220212020
Current income taxes:
State$615 $216 $126 
Foreign11,178 2,891 2,246 
Total current income taxes11,793 3,107 2,372 
Deferred income taxes:
Federal(8,727)(52,715)(10,125)
State348 (7,991)(1,510)
Foreign(6,016)(6,787)(1,672)
Total deferred income taxes(14,395)(67,493)(13,307)
Total benefit from income taxes$(2,602)$(64,386)$(10,935)

The effective tax rate differs from the federal statutory rate as follows:

For the year ended
January 31,
202220212020
Federal statutory income tax rate21.0 %21.0 %21.0 %
State tax, net of federal benefit3.8 3.4 3.2 
Change in valuation allowance(33.8)(48.9)(107.1)
Stock-based compensation12.3 45.2 90.3 
Other non-deductible items(3.8)(0.1)0.8 
Foreign rate differential(0.6)1.9 (1.4)
Tax credits1.8 3.8 3.9 
Total0.7 %26.3 %10.7 %

The difference between the U.S. federal statutory tax rate of 21% and the Company’s effective tax rate in all periods presented is primarily due to a full valuation allowance related to the Company’s U.S. deferred tax assets offset by foreign tax expense on the Company’s profitable foreign operations.
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The following table presents the significant components of the Company’s deferred tax assets and liabilities for the periods presented (in thousands):
As of January 31,
20222021
Deferred tax assets:
Net operating loss carryforwards$488,163 $412,850 
Accruals and reserves15,773 9,209 
Lease liabilities11,177 11,217 
Stock-based compensation10,650 8,994 
Tax credits29,858 23,116 
Gross deferred tax assets555,621 465,386 
Valuation allowance(305,271)(177,918)
Total deferred tax assets, net of valuation allowance
250,350 287,468 
Deferred tax liabilities:
Fixed assets and intangibles assets(121,854)(146,441)
Accruals and reserves(1,466)(1,874)
Right-of-use assets(10,867)(10,743)
Discount on convertible notes(132,657)(158,438)
Gross deferred tax liabilities(266,844)(317,496)
Net deferred tax (liabilities) assets$(16,494)$(30,028)

A valuation allowance is provided for deferred tax assets where the recoverability of the assets is uncertain. The determination to provide a valuation allowance is dependent upon the assessment of whether it is more likely than not that sufficient future taxable income will be generated to utilize the deferred tax assets. Based on the weight of the available evidence, which includes the Company's historical operating losses, and lack of taxable income, the Company provided a full valuation allowance against the deferred tax assets for the U.S. and some of the international entities. The valuation allowance increased by $127.4 million, $17.4 million and $47.0 million during the years ended January 31, 2022, 2021 and 2020, respectively.

As of January 31, 2022, the Company had net operating loss carryforwards of approximately $2.0 billion and $1.2 billion available to reduce future taxable income, if any, for federal and state income tax purposes, respectively. The U.S. federal and state net operating loss carryforwards will begin to expire in 2028 and 2023, respectively. As of January 31, 2022, the Company had research and development credit carryforwards of approximately $24.2 million and $17.0 million available to reduce its future tax liability, if any, for federal and California state income tax purposes, respectively. The federal credit carryforwards begin to expire in 2029. California credit carryforwards have no expiration date. As of January 31, 2022, the Company has U.S. federal foreign tax credits carryforwards of $700,000 that will begin to expire in 2025. As of January 31, 2022, the Company had foreign net operating loss carryforwards of $45.0 million, the majority of which may be carried forward indefinitely.

Federal and state laws impose restrictions on the utilization of net operating loss carryforwards and R&D credit carryforwards in the event of a change in ownership of the Company, which constitutes an ‘ownership change’ as defined by Internal Revenue Code Section 382 and 383. The Company experienced an ownership change in the past that does not materially impact the availability of its net operating losses and tax credits. Should there be ownership change in the future, the Company’s ability to utilize existing carryforwards could be substantially restricted.

As of January 31, 2022, the Company did not have unremitted earnings when evaluating the outside basis difference relating to its U.S. investment in foreign subsidiaries. However, there could be local withholding taxes payable due to various foreign countries if certain lower tier earnings are distributed. Withholding taxes and state income taxes that would be payable upon remittance of these lower tier earnings were not material as of January 31, 2022.

The Company accounts for uncertainty in income taxes in accordance with ASC 740. Tax positions are evaluated in a two-step process, whereby the Company first determines whether it is more likely than not that a tax position will be sustained upon examination by tax authorities, including resolutions of any related appeals or litigation processes, based on technical merit. If a tax position meets the more-likely-than-not recognition threshold it is then measured to determine the amount of benefit to recognized in the financial statements. The tax position is measured as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement.
The following table summarizes the activity related to unrecognized tax benefits (in thousands):

For the year ended
January 31,
202220212020
Unrecognized tax benefit — beginning of year$20,592 $14,864 $20,077 
Gross increases — prior year tax positions1,806 52 620 
Gross decreases — prior year tax positions— (160)(11,538)
Gross increases — acquisitions— 3,282 4,174 
Gross increases — current year tax positions3,715 2,586 1,531 
Foreign currency remeasurement(679)— — 
Settlements— (32)— 
Unrecognized tax benefit — end of year$25,434 $20,592 $14,864 

As of January 31, 2022, 2021 and 2020, $11.8 million, $10.2 million, and $6.4 million of the unrecognized tax benefits were accounted for as a reduction in the Company’s deferred tax assets. Due to the Company’s valuation allowance, only $14.3 million of the $25.4 million of unrecognized tax benefits would affect the Company’s effective tax rate, if recognized. The Company does not believe it is reasonably possible that its unrecognized tax benefits will significantly change in the next twelve months, aside from $3.7 million related to ongoing audit activity which the Company expects to settle.

The Company recognizes interest and penalties related to unrecognized tax benefits as income tax expense. There was $2.0 million of accrued interest and penalties related to unrecognized tax benefits as of January 31, 2022, and $1.4 million as of January 31, 2021.

The Company’s material income tax jurisdictions are the United States (federal) and California. As a result of net operating loss carryforwards, the Company is subject to audits for tax years 2008 and forward for federal purposes and 2009 and forward for California purposes. There are tax years which remain subject to examination in various other jurisdictions that are not material to the Company’s financial statements.