Income Taxes

9 Months Ended

Oct. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company recorded a provision for income taxes of $2.2 million and $2.4 million for the three and nine months ended October 31, 2021, respectively, and a provision for income taxes of $0.9 million and $2.1 million for the three and nine months ended October 31, 2020, respectively. The provision recorded during the three months ended October 31, 2021 was driven by the increase in global income and the associated foreign taxes as the Company continues its global expansion. The provision for the nine months ended October 31, 2021, was the result of an increase in foreign taxes, partially offset by the release of the valuation allowance as a result of goodwill recorded associated with an immaterial business combination, as well as the reversal of the deferred tax liability associated with the convertible senior notes upon the adoption of ASU 2020-06. The calculation of income taxes was based upon the estimated annual effective tax rates for the year applied to the jurisdictional mix of current period income (loss) before tax plus the tax effect of any significant unusual items, discrete events or changes in tax law.

The Company regularly assesses the need for a valuation allowance against its deferred tax assets. In making that assessment, the Company considers both positive and negative evidence related to the likelihood of realization of the deferred tax assets to determine, based on the weight of available evidence, whether it is more likely than not that some or all of the deferred tax assets will not be realized. The Company has maintained a valuation allowance on U.S., U.K. and Ireland net deferred tax assets, as it is more likely than not that some or all of the deferred tax assets will not be realized.

The Company assesses uncertain tax positions in accordance with ASC 740-10, Accounting for Uncertainties in Tax. As of January 31, 2021, the Company’s net unrecognized tax benefits totaled $17.5 million, which would have no impact on the Company’s effective tax rate if recognized.

The Company continues to monitor and interpret the impact of proposed and enacted global tax legislation, such as the Coronavirus Aid, Relief, and Economic Security Act, and the impact of such tax legislation on the effective tax rate and tax provision thereunder. To date, based on the full valuation allowance against the Company’s two most significant tax jurisdictions, the United States and Ireland, the impact of global enacted and proposed legislation has not had an impact on the tax provisions of the financial statements. The Company continues to monitor to ensure both the Company’s financial results and its related tax disclosures are in compliance with any tax legislation.