INCOME TAXES

3 Months Ended

Apr. 30, 2026

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

We compute our tax provision for interim periods by applying the estimated annual effective tax rate to year-to-date income from continuing operations and adjusting for discrete items arising in that quarter.

During the three months ended April 30, 2026, we incurred a discrete tax expense of $2.6 million related to the interest expense recognized on the tax liability arising from an assessment agreement (the Agreement) with the Israeli Tax Authority (ITA). During the three months ended April 30, 2025, we recorded a discrete tax expense of $136.0 million for an unrecognized tax benefit accrual, partially offset by $4.7 million of corresponding release of valuation allowance on Israel deferred tax assets, in connection with the ITA matter. Without respect to the discrete items, we had an effective tax rate of (4.5)% and (3.0)% for the three months ended April 30, 2026 and 2025, respectively.

The effective tax rate is primarily attributable to minimum taxes and profits in our foreign jurisdictions.

On January 8, 2026, we entered into the Agreement with the ITA that resolved certain transfer pricing matters related to intercompany transactions with our Israeli subsidiary, including the valuation of intellectual property. The Agreement represents a full and final resolution of these matters for the fiscal years ended January 31, 2021 through January 31, 2025.

The total tax expense associated with the Agreement of $180.0 million, exclusive of interest, was recorded during fiscal 2026. The Agreement provides for installment payments through our fiscal year 2031, with unpaid balances accruing interest at a rate of 7.0% per annum. We have the option to extend the payment schedule for up to two additional years. In the event of a change in control, 792.7 million Israeli New Shekels, or $267.1 million, less cumulative payments made, which represents all unpaid amounts, plus interest that would have accrued through the end of the seventh year, would accelerate in accordance with the terms of the Agreement.

During the three months ended April 30, 2026, we made an installment payment of $30.7 million under the Agreement and recorded interest expense of $2.6 million related to this liability, which is included in income tax expense.

As of April 30, 2026, the remaining liability associated with the Agreement was $164.1 million, of which $10.7 million and $153.4 million were recorded in accrued expenses and other current liabilities, and other liabilities, respectively, on our condensed consolidated balance sheets.