Income Taxes

12 Months Ended

Jan. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

Our loss before provision for income taxes for fiscal 2022, 2021 and 2020 consisted of the following (in thousands):

	Year Ended January 31,
	2022		2021		2020
Domestic	$	(274,270)	$	(18,159)	$	(1,700)
Foreign	4,173		(98,954)		(74,630)
Loss before provision for income taxes	$	(270,097)	$	(117,113)	$	(76,330)

The components of provision for income taxes for fiscal 2022, 2021, and 2020 consisted of the following (in thousands):

	Year Ended January 31,
	2022		2021		2020
Current:
State	82		62		52
Foreign	1,011		398		185
Total current	1,093		460		237
Deferred:
Foreign	(89)		—		—
Total deferred	(89)		—		—
Total provision for income taxes	$	1,004	$	460	$	237

A reconciliation of the expected provision for (benefit from) income taxes at the statutory federal income tax rate to our recorded provision for income taxes consisted of the following (in thousands):

	Year Ended January 31,
	2022		2021		2020
Benefit from income taxes at U.S. federal statutory rate	$	(56,720)	$	(24,594)	$	(16,029)
State taxes, net of federal benefit	82		49		41
Foreign tax rate differential	(1,297)		(1,836)		(6,852)
Stock-based compensation	(23,442)		1,195		771
Non-deductible expenses	322		84		109
Change in valuation allowance	81,739		25,564		22,857
Other	320		(2)		(660)
Total provision for income taxes	$	1,004	$	460	$	237

Significant components of our net deferred tax assets and liabilities as of January 31, 2022 and 2021 consisted of the following (in thousands):

	As of January 31,
	2022		2021
Deferred tax assets:
Net operating loss carryforwards	$	174,646	$	70,735
Research and development expenses	36,989		11,479
Accruals and reserves	18,708		12,986
Operating lease liabilities	11,158		5,416
Stock-based compensation	7,936		140
Other	2,012		532
Gross deferred tax assets	251,449		101,288
Valuation allowance	(218,981)		(86,032)
Total deferred tax assets	32,468		15,256
Deferred tax liabilities:
Acquired intangibles, property and equipment	(6,235)		(1,217)
Deferred contract acquisition costs	(16,722)		(9,697)
Operating lease right-of-use assets	(9,422)		(4,342)
Total deferred tax liabilities	(32,379)		(15,256)
Net deferred tax assets	$	89	$	—

Based upon available objective evidence, we believe it is more likely than not that the net U.S. and Israel deferred tax assets will not be fully realizable. Accordingly, we have established a valuation allowance for the U.S. and Israel gross deferred tax assets. As of January 31, 2022 and 2021, we had a valuation allowance of $219.0 million and $86.0 million, respectively, against our deferred tax assets. During fiscal 2022 and 2021, total valuation allowance increased by $132.9 million and $28.0 million, respectively, primarily due to additional net operating losses.

As of January 31, 2022, we had federal net operating loss carryforwards of $436.8 million, which will begin to expire in 2031, and state net operating loss carryforwards of $268.9 million, which will begin to expire in 2023. We also had foreign net operating loss carryforwards of $281.9 million, which do not expire.

In addition, we had federal research and development credit carryforwards of $1.1 million, which will begin to expire in 2037, and state research and development credit carryforwards of $1.1 million, which do not expire.

Federal and state tax laws impose substantial restrictions on the utilization of the net operating loss carryforwards and tax credit carryforwards in the event of an ownership change as defined in Section 382 of the Internal Revenue Code of 1986, as amended. Accordingly, our ability to utilize these carryforwards may be limited as a result of such ownership change. Such a limitation could result in the expiration of carryforwards before they are utilized. The carryforwards are currently subject to a valuation allowance.

Foreign withholding taxes have not been provided for the cumulative undistributed earnings of certain foreign subsidiaries of us as of January 31, 2022 and 2021 due to our intention to permanently reinvest such earnings. Determination of the amount of unrecognized deferred tax liability related to these earnings is not practicable.

As of January 31, 2022 and 2021, we do not have any material uncertain tax positions. As of and for fiscal 2022 and 2021, no interest and penalties have been accrued with respect to unrecognized tax benefits.

We file income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. Our tax years generally remain open and subject to examination by federal, state, or foreign tax authorities. We are currently under examination by the Israel Tax Authorities for the 2016 through 2020 tax years. We are not currently under audit in any other tax jurisdictions.