Income Taxes

12 Months Ended

Jan. 31, 2020

The domestic and international components of the Company's loss from operations before income taxes are as follows:


	Fiscal year ended January 31,
(in thousands)	2020		2019		2018
Domestic	$	(63,390)	$	(64,653)	$	(58,875)
International	(57,057)		(9,962)		(7,528)
Loss from operations before income taxes	$	(120,447)	$	(74,615)	$	(66,403)

The Company's (provision for) benefit from income taxes is comprised of the following:


	Fiscal year ended January 31,
(in thousands)	2020		2019		2018
Current:
Federal	$	(19)	$	(19)	$	—
State	(120)		(91)		—
International	(1,051)		(155)		(291)
Total current	(1,190)		(265)		(291)
Deferred:
Federal	—		—		100
State	—		—		—
International	93		43		29
Total deferred	93		43		129
Total (provision for) benefit from income taxes	$	(1,097)	$	(222)	$	(162)

The Company reconciled its income taxes at the federal statutory income tax rate to the (provision for) benefit from income taxes included within its consolidated statements of operations and comprehensive loss. The reconciliation is as follows:


	Fiscal year ended January 31,
(in thousands)	2020		2019		2018
U.S. federal tax (provision) benefit at statutory rate	$	25,294	$	15,669	$	21,849
State taxes, net of federal (provision) benefit	4,124		6,499		1,766
Foreign tax rate differential	970		448		(637)
Non-deductible expenses	(2,967)		(1,737)		(3,503)
Change in valuation allowance	(24,377)		(37,808)		1,599
Rate change	(7,017)		7		(21,580)
Excess tax benefits from stock-based compensation	6,519		16,847		—
Return to provision adjustment	(2,323)		(337)		(93)
Other, net	(1,320)		190		437
Total (provision for) benefit from income taxes	$	(1,097)	$	(222)	$	(162)

Deferred Income Taxes

Deferred income taxes reflect the net tax effects of (a) temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, and (b) operating loss carryforwards. The components of the Company's deferred income taxes were as follows:


	Fiscal year ended January 31,
(in thousands)	2020		2019
Deferred tax assets:
Net operating loss carryforwards	$	102,064	$	76,259
Stock-based compensation	9,285		7,710
Allowance for doubtful accounts	255		65
Operating lease liability	29,280		758
Accrued expenses	1,974		2,081
Unearned revenue	26		26
Property and equipment	730		414
Intangible assets	—		712
Other	208		133
Total deferred tax assets	143,822		88,158
Less: valuation allowance	(105,277)		(80,901)
Deferred tax assets, net of valuation allowance	38,545		7,257
Deferred tax liabilities:
Prepaid expenses	—		(57)
Intangible assets	(1,479)		—
Costs to obtain revenue contracts	(9,767)		(6,966)
Operating lease right-of-use assets	(26,518)		—
Other	(686)		(231)
Total deferred tax liabilities	(38,450)		(7,254)
Net deferred tax asset (liability)	$	95	$	3

As of January 31, 2020, for federal income tax purposes, the Company had $361.3 million of gross U.S. federal NOL carryforwards, with pre-2018 NOL expiring starting in fiscal 2028 and others indefinitely carried forward.

As of January 31, 2020, for state income tax purposes, the Company had $15.5 million of post-apportioned, tax-effected NOL carryforwards, which expire in fiscal 2024 through fiscal 2039. As of January 31, 2020, the Company had $10.7 million of tax-effected foreign NOL carryforwards which expires starting in fiscal 2025.

Utilization of the Company’s NOL carryforwards in the future will be dependent upon its ability to generate taxable income and could be limited due to ownership changes, as defined under the provisions of Section 382 of the Code and similar state provisions. Utilization of the Company’s foreign NOL carryforwards in the future will be dependent upon the local tax law and regulation.

The Company regularly evaluates the realizability of its deferred tax assets and establishes a valuation allowance if it is more likely than not that some or all the deferred tax assets will not be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, loss carryback and tax-planning strategies. Generally, more weight is given to objectively verifiable evidence, such as the cumulative loss in recent years, as a significant piece of negative evidence to overcome. During the fiscal year ended January 31, 2020, the valuation allowance increased $24.4 million from approximately $80.9 million to $105.3 million, primarily due to the impact of the NOL carryforwards established in the current period and other increases in U.S. deferred tax assets. During the fiscal year ended January 31, 2019, the valuation allowance increased $37.8 million from approximately $43.1 million to $80.9 million, primarily due to the impact of the NOL carryforwards established in the current period and other increases in U.S. deferred tax assets. The Company will continue to assess the realizability of the deferred tax assets in each applicable jurisdiction going forward.

Other Considerations

The Company has not recorded deferred income taxes and withholding taxes with respect to the undistributed earnings of its foreign subsidiaries as such earnings are determined to be reinvested indefinitely. Upon distribution of those earnings in the form of dividends or otherwise, the Company may be subject to income taxes and withholding taxes, the determination of which is not practical as it is dependent on the amount of tax losses or other tax attributes available at the time of repatriation.

A reconciliation of the beginning and ending balance of total unrecognized tax benefits for the fiscal years ended January 31, 2020, 2019, and 2018 is as follows:


	Fiscal year ended January 31,
(in thousands)	2020		2019		2018
Beginning of period	$	233	$	233	$	233
Tax positions taken in prior period:
Gross increases	262		—		—
Gross decreases	(8)		—		—
Tax positions taken in current period
Gross increases	13		—		—


Currency translation effect	(7)		—		—
End of period	$	493	$	233	$	233

The Company recognizes accrued interest and penalties related to unrecognized tax benefits in the (provision for) benefit from income taxes and recognized less than $0.1 million for interest and penalties in each of the fiscal years ended January 31, 2020, 2019, and 2018. As of January 31, 2020, 2019, and 2018 accrued unrecognized tax benefits were $0.5 million, $0.2 million, and $0.2 million, respectively, and if recognized would reduce the (provision for) benefit from income taxes, and the Company's effective tax rate. The Company does not expect any significant change in its unrecognized tax benefits during the next twelve months.

The Company is subject to taxation in the United States and various state and foreign jurisdictions. The Company’s most significant operations are in the United States and the earliest open tax year subject to potential examination in the United States is 2008.