Income Taxes

9 Months Ended

Oct. 31, 2024

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company recorded a provision for income taxes of $2.7 million and $9.1 million for the three and nine months ended October 31, 2024, respectively, and $3.6 million and $9.7 million for the three and nine months ended October 31, 2023, respectively. The provisions recorded during each of the three and nine months ended October 31, 2024 and 2023 were driven by the change in global income by jurisdiction and the associated foreign taxes. 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 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, 2024, the Company’s net unrecognized tax benefits totaled $81.6 million, $0.7 million of which would have an impact on the Company’s effective tax rate if recognized.

In 2021, the Organization for Economic Cooperation and Development (“OECD”) published Pillar Two Model Rules defining a global minimum tax, which calls for the taxation of large corporations at a minimum rate of 15%. The OECD has since issued administrative guidance providing transition and safe harbor rules around the implementation of the Pillar Two global minimum tax. In the first quarter of the Company’s fiscal year ending January 31, 2025, enacted Pillar Two legislation of a number of countries became effective. Pillar Two did not have a significant impact on the Company’s condensed consolidated financial statements for the nine months ended October 31, 2024. While the Company is monitoring developments and evaluating the potential impact on future periods, the Company does not expect Pillar Two to have a significant impact on its consolidated financial statements for the fiscal year ending January 31, 2025.

The Company continues to monitor and interpret the impact of proposed and enacted global tax legislation. To date, globally enacted tax legislation has not materially impacted income tax expense of the financial statements due to the presence of net operating losses and full valuation allowances within the Company’s two most significant tax jurisdictions, the United States and Ireland.