Income taxes

6 Months Ended

Jul. 31, 2020

Income Tax Disclosure [Abstract]

Income taxes

Income taxes

For the three and six months ended July 31, 2020, the Company recorded a tax provision of $66 and $177, respectively, compared to a tax provision of $51 and $119, respectively, for the corresponding three and six month periods in the prior year. The effective tax rate was negative 1.4% and negative 0.8% for the six months ended July 31, 2020 and 2019, respectively. The Company's effective tax rate differs from the U.S. statutory tax rate of 21% primarily because the Company records a valuation allowance against the majority of its deferred tax assets, and due to foreign income tax expense recorded for the Company's Canada branch.

Deferred tax assets and deferred tax liabilities are recognized based on temporary differences between the financial reporting and tax bases of assets and liabilities using statutory rates. Management of the Company has evaluated the positive and negative evidence pertaining to the realizability of its deferred tax assets, including the Company’s history of losses and concluded that it is more likely than not that the Company will not recognize the benefits for the majority of its deferred tax assets. On the basis of this evaluation, the Company has recorded a valuation allowance against its deferred tax assets that are not more likely than not to be realized at July 31, 2020 and January 31, 2020.