Income Taxes

12 Months Ended

Feb. 06, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The geographical breakdown of loss before provision for income taxes is as follows (in thousands):

	Fiscal Year Ended
	2020		2021		2022
Domestic	$	(212,672)	$	(312,119)	$	(192,058)
International	18,006		41,959		63,562
Total	$	(194,666)	$	(270,160)	$	(128,496)

The components of the provision for income taxes are as follows (in thousands):

	Fiscal Year Ended
	2020		2021		2022
Current:
State	$	538	$	442	$	592
Foreign	7,774		8,006		12,525
Total	$	8,312	$	8,448	$	13,117
Deferred:
Federal	$	(1,559)	$	(218)	$	—
State	(198)		—		—
Foreign	(234)		3,686		1,646
Total	$	(1,991)	$	3,468	$	1,646
Provision for income taxes	$	6,321	$	11,916	$	14,763

The reconciliation of income taxes at the federal statutory income tax rate to the provision for income taxes is as follows (in thousands):

	Fiscal Year Ended
	2020		2021		2022
Tax at federal statutory rate	$	(40,880)	$	(56,734)	$	(26,984)
State tax, net of federal benefit	210		349		468
Stock-based compensation expense	(6,683)		(604)		(19,658)
Research and development tax credits	(11,033)		(14,138)		(16,783)
U.S. taxes on foreign income	—		14,021		25,059
Foreign rate differential	2,935		2,282		(1,698)
Change in valuation allowance	61,050		63,146		48,270
Non-deductible expenses	—		—		4,381
Other	722		3,594		1,708
Provision for income taxes	$	6,321	$	11,916	$	14,763

Deferred income taxes reflect the net 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 significant components of our deferred tax assets and liabilities were as follows (in thousands):

	At the End of Fiscal
	2021		2022
Deferred tax assets:
Net operating loss carryforwards	$	308,250	$	369,904
Tax credit carryover	104,247		134,085
Accruals and reserves	22,263		22,625
Deferred revenue	69,886		66,242
Stock-based compensation expense	28,310		25,247
Depreciation and amortization	120		—
Charitable contribution carryforwards	229		290
Interest expense limitation (163(j))	110		—
ASC 842 lease liabilities	33,302		28,577
Other	—		1,589
Total deferred tax assets	$	566,717	$	648,559
Valuation allowance	(484,437)		(554,553)
Total deferred tax assets, net of valuation allowance	$	82,280	$	94,006
Deferred tax liabilities:
Depreciation and amortization	$	—	$	(12,992)
Deferred commissions	(41,526)		(53,219)
Convertible debt	(8,147)		(4,642)
ASC 842 right-of-use assets	(29,183)		(24,608)
Acquired intangibles and goodwill	(8,727)		(6,850)
Intercompany interest	—		(874)
Other	(2,230)		—
Total deferred tax liabilities	$	(89,813)	$	(103,185)
Net deferred tax liabilities	$	(7,533)	$	(9,179)

At the end of fiscal 2022, the undistributed earnings of $134.2 million from non-U.S. operations held by our foreign subsidiaries are designated as permanently reinvested outside the U.S. Accordingly, no additional U.S. income taxes or additional foreign withholding taxes have been provided thereon. Determination of the amount of unrecognized deferred tax liability related to these earnings is not practicable.

At the end of fiscal 2022, we had net operating loss carryforwards for federal income tax purposes of approximately $1.5 billion and state income tax purposes of approximately $858.7 million. These net operating loss carryforwards will expire, if not utilized, beginning in 2028 for federal and state income tax purposes.

We had federal and state research and development tax credit carryforwards of approximately $98.7 million and $88.0 million at the end of fiscal 2022. The federal research and development tax credit carryforwards will expire commencing in 2028, while the state research and development tax credit carryforwards have no expiration date.

Realization of deferred tax assets is dependent on future taxable income, the existence and timing of which is uncertain. Based on our history of losses, management has determined that it is more likely than not that the U.S. deferred tax assets will not be realized, and accordingly has placed a full valuation allowance on the net U.S. deferred tax assets. The valuation allowance increased by $98.6 million and $70.1 million, respectively, during fiscal 2021 and 2022.

Utilization of the net operating loss carryforwards and credits may be subject to substantial annual limitation due to the ownership change limitations provided by Section 382 of the Internal Revenue Code of 1986, as amended, and similar state provisions. The annual limitation may result in the expiration of net operating losses and credits before utilization.

Uncertain Tax Positions

The activity related to the unrecognized tax benefits is as follows (in thousands):

	Fiscal Year Ended
	2020		2021		2022
Gross unrecognized tax benefits—beginning balance	$	18,891	$	28,570	$	39,571
Decreases related to tax positions taken during prior years	(34)		(345)		(173)
Increases related to tax positions taken during prior years	408		1,881		1,201
Increases related to tax positions taken during current year	9,305		9,465		10,983
Gross unrecognized tax benefits—ending balance	$	28,570	$	39,571	$	51,582

At the end of fiscal 2022, our gross unrecognized tax benefit was approximately $51.6 million, $3.5 million of which if recognized, would have an impact on the effective tax rate.

At the end of fiscal 2022, we had no current or cumulative interest and penalties related to uncertain tax positions.

It is difficult to predict the final timing and resolution of any particular uncertain tax position. Based on our assessment, including experience and complex judgments about future events, we do not expect that changes in the liability for unrecognized tax benefits during the next twelve months will have a significant impact on our consolidated financial position or results of operations.

We file income tax returns in the U.S. federal jurisdiction as well as many U.S. states and foreign jurisdictions. The tax returns for fiscal years 2009 and forward remain open to examination by the major jurisdictions in which we are subject to tax. The tax returns for fiscal years outside the normal statutes of limitation remain open to audit by tax authorities due to tax attributes generated in those early years, which have been carried forward and may be audited in subsequent years when utilized.