XML 15 R17.htm IDEA: XBRL DOCUMENT v3.20.1
Income Taxes
 12 Months Ended
Jan. 31, 2020
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The components of income before income taxes by U.S. and foreign jurisdictions were as follows for the periods shown (in thousands):
 
Fiscal Year Ended
January 31,
 
2020
 
2019
 
2018
United States
$
305,339

 
$
222,743

 
$
140,172

Foreign
8,358

 
15,900

 
25,599

Total
$
313,697

 
$
238,643

 
$
165,771

 
 
 
 
 
 
The majority of our revenues from international sales are invoiced from and collected by our U.S. entity and recognized as a component of income before taxes in the United States as opposed to a foreign jurisdiction.
Provision for income taxes consisted of the following for the periods shown (in thousands):
 
Fiscal Year Ended
January 31,
 
2020
 
2019
 
2018
Current provision:
 
 
 
 
 
Federal
$
11,143

 
$
5,466

 
$
5,315

State
4,695

 
4,089

 
209

Foreign
3,404

 
7,438

 
8,022

Total
$
19,242

 
$
16,993

 
13,546

Deferred provision:
 
 
 
 
 
Federal
(1,063
)
 
(1,910
)
 
1,681

State
(517
)
 
(619
)
 
330

Foreign
(5,083
)
 
(5,653
)
 
(963
)
Total
$
(6,663
)
 
$
(8,182
)
 
$
1,048

Provision for income taxes
$
12,579

 
$
8,811

 
$
14,594

 
 
 
 
 
 
Provision for income taxes differed from the amount computed by applying the federal statutory income tax rate of 21.0%, 21.0%, and 33.8% for the fiscal years ended January 31, 2020, 2019, and 2018, respectively, to income before income taxes as a result of the following for the periods shown (in thousands):
 
Fiscal Year Ended
January 31,
 
2020
 
2019
 
2018
Federal tax statutory tax rate
$
65,876

 
$
50,115

 
$
56,047

State taxes
3,035

 
3,139

 
3,936

Tax credits
(23,468
)
 
(21,415
)
 
(9,409
)
Domestic manufacturing deduction
—

 
—

 
(1,096
)
Stock-based compensation
(34,569
)
 
(33,332
)
 
(37,347
)
Foreign rate differential
411

 
610

 
(2,207
)
Valuation allowance
7,408

 
6,666

 
4,010

Impact of foreign operations
470

 
3,381

 
4,842

Foreign derived intangible income deduction (FDII)(1)
(4,836
)
 
(2,086
)
 
—

Others(1)
(1,748
)
 
1,733

 
(4,182
)
Provision for income taxes
$
12,579

 
$
8,811

 
$
14,594

 
 
 
 
 
 
________________
(1)
Note that prior periods have been adjusted due to prior period reclassifications.
The tax effects of temporary differences that give rise to significant portions of our deferred tax assets and liabilities related to the following (in thousands):
 
January 31,
 
2020
 
2019
Deferred Tax Assets:
 
 
 
Accruals and reserves
$
10,355

 
$
7,678

State income taxes
931

 
116

Stock-based compensation(1)
9,861

 
5,180

Net operating loss carryforward
32,916

 
2,885

Tax credit carryforward
21,458

 
15,411

Lease liabilities(2)
13,808

 
—

Other
217

 
435

Gross Deferred Tax Assets
$
89,546

 
$
31,705

Valuation Allowance
(22,694
)
 
(15,385
)
Total Deferred Tax Assets
$
66,852

 
$
16,320

Deferred Tax Liabilities:
 
 
 
Property and equipment
$
(650
)
 
$
(822
)
Intangible assets
(33,518
)
 
(7,159
)
Expensed internal-use software
(974
)
 
(608
)
Lease right-of-use assets(2)
(12,717
)
 
—

Deferred costs(1)
(8,922
)
 
(7,888
)
Other(1)
(619
)
 
—

Total Deferred Tax Liabilities
$
(57,400
)
 
$
(16,477
)
Net Deferred Tax Assets (Liabilities)
$
9,452

 
$
(157
)
 
 
 
 
________________
(1)
Note that prior periods have been adjusted due to prior period reclassifications.
(2)
Note that current period classifications reflect the adoption of Topic 842.
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. As a result, a valuation allowance was assessed as it is not more likely than not that we will recognize the future benefits on certain tax credits and net California deferred tax asset balances.
The net impact of our purchase price accounting allocation on our deferred tax assets and liabilities was immaterial.
As of January 31, 2020, the net operating loss carryforwards for federal and state income tax purposes were approximately $110.9 million and $106.3 million, respectively. The federal net operating losses do not expire and the state net operating losses begin to expire in 2033.
As of January 31, 2020, we had $34.8 million of California research and development tax credits available to offset future taxes, which do not expire.
We evaluate tax positions for recognition using a more-likely than-not recognition threshold, and those tax positions eligible for recognition are measured as the largest amount of tax benefit that is greater than 50% likely of being realized upon the effective settlement with a taxing authority that has full knowledge of all relevant information.  We classify unrecognized tax benefits that are not expected to result in payment or receipt of cash within one year as “other non-current liabilities” in the consolidated balance sheets. As of January 31, 2020, the total amount of gross unrecognized tax benefits was $14.5 million, of which $6.8 million, if recognized, would favorably impact our effective tax rate. The aggregate changes in our total gross amount of unrecognized tax benefits are summarized as follows for the periods shown (in thousands):
 
Fiscal Year Ended
January 31,
 
2020
 
2019
 
2018
Beginning balance
$
12,597

 
$
11,398

 
$
7,868

Increases related to tax positions taken during the prior period
796

 
968

 
256

Increases related to tax positions taken during the current period
3,420

 
2,697

 
4,032

Decreases related to tax positions taken during the prior period
(128
)
 
(1,754
)
 
(67
)
Audit settlements
—

 
(403
)
 
—

Lapse of statute of limitations
(2,170
)
 
(309
)
 
(691
)
Ending balance
$
14,515

 
$
12,597

 
$
11,398

 
 
 
 
 
 

Our policy is to classify interest and penalties associated with unrecognized tax benefits as a component of the provision for income taxes. Interest and penalties were not significant during fiscal year ended January 31, 2020.
We file tax returns in the United States for federal, California, and other states. Fiscal years ended January 31, 2017 and forward remain open to examination for federal income tax, and fiscal years ended January 31, 2015 and forward remain open to examination for California and other states. We file tax returns in multiple foreign jurisdictions. The fiscal years ended January 31, 2014 and forward remain open to examination in these foreign jurisdictions.