Income Taxes

3 Months Ended

Oct. 31, 2020

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company recognized an income tax benefit of $10.7 million and $6.7 million for the three months ended October 31, 2020 and 2019, respectively. The change in the amount of income taxes recorded for the three months ended October 31, 2020 compared to the same period a year ago was primarily due to the increase in the loss before taxes and a tax status change of a foreign subsidiary for U.S. tax purposes. The effective tax rate of 35% for the three months ended October 31, 2020 differs from the statutory U.S. federal income tax rate of 21% mainly due to permanent differences for stock-based compensation including excess tax benefits, global intangible low-taxed income ("GILTI") inclusion, research and development credits, certain non-deductible expenses including executive compensation, and the tax status change of a foreign subsidiary.

During the three months ended October 31, 2020, unrecognized tax benefits increased by $0.3 million. As of October 31, 2020, the Company had unrecognized tax benefits of $18.2 million that, if recognized, would affect the Company’s effective tax rate.

The Company is currently under examination by the California Franchise Tax Board for the state income tax returns filed for fiscal years 2018 and 2017. If any issues addressed in the tax audit are resolved in a manner not consistent with the Company's expectations, the Company may be required to adjust its provision for income tax in the period such resolution occurs. The Company does not believe the audit will have a material impact on the Company's financial position, results of operations, or cash flows.