
	Year Ended April 30,
	2020		2019		2018
Current:
Dutch	$	518	$	—	$	—
Foreign	(560)		912		3,731
Total current tax expense	$	(42)	$	912	$	3,731
Deferred:
Dutch	$	—	$	(233)	$	—
Foreign	(1,926)		3,709		(355)
Total deferred tax expense	(1,926)		3,476		(355)
Total provision for income taxes	$	(1,968)	$	4,388	$	3,376

The Company’s effective tax rate substantially differed from the Dutch statutory tax rate of 25% primarily due to the valuation allowance on the Dutch, United States and United Kingdom deferred tax assets in addition to a deferred tax asset revaluation as a result of enacted tax legislation in the Netherlands, offset by stock based compensation. A reconciliation of


	Year Ended April 30,
	2020						2019						2018
	Tax		Rate		Tax		Rate		Tax		Rate
Dutch statutory income tax	$	(42,286)	25.0	%	$	(24,479)	25.0	%	$	(12,338)	25.0	%
Foreign income taxed at different rates	313		(0.2)	%	(310)		0.3	%	(670)		1.4	%
Stock-based compensation	(53,050)		31.4	%	(24,848)		25.3	%	4,669		(9.4)	%
Research and development credits	(7,771)		4.6	%	(2,161)		2.2	%	(697)		1.4	%
Change in valuation allowance	97,734		(57.8)	%	43,071		(44.0)	%	11,495		(23.3)	%
Deferred tax asset revaluation	1,991		(1.2)	%	11,883		(12.1)	%	1,081		(2.2)	%
Other	1,101		(0.6)	%	1,232		(1.2)	%	(164)		0.3	%
Provision for income taxes	$	(1,968)	1.2	%	$	4,388	(4.5)	%	$	3,376	(6.8)	%

Deferred tax assets are recognized for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities. Management assesses whether it is more likely than not that some portion or all of the deferred tax assets will be realized. Deferred tax assets are reduced by valuation allowance to the extent management believes it is not more likely than not to be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income. Management makes estimates and judgments about future taxable income based on assumptions that are consistent with the Company’s plans and estimates.


	As of April 30,
	2020		2019
Deferred tax assets:
Accrued compensation	$	3,267	$	1,685
Net operating loss carryforward	208,629		84,194
Deferred revenue	3,876		—
Intangibles/assets	—		2,321
Stock-based compensation	7,203		4,089
Research and development credits	15,333		3,584
Other	3,882		1,875
Gross deferred tax assets	242,190		97,748
Less valuation allowance	(225,197)		(92,309)
Total deferred tax assets	$	16,993	$	5,439
Deferred tax liabilities:
Deferred contract acquisition costs	$	(8,423)	$	(5,878)
Intangible assets	(8,841)		—
Deferred revenue	—		(858)
Other	(218)		(674)
Gross deferred tax liabilities	(17,482)		(7,410)
Net deferred tax assets (liabilities)	$	(489)	$	(1,971)

The valuation allowance for deferred tax assets as of April 30, 2020 and 2019 was $225.2 million and $92.3 million, respectively. As the Company has generated losses since inception in the Netherlands and California (United States) jurisdictions, management maintains a full valuation allowance against the net deferred tax assets in these jurisdictions. In addition, the United States and the United Kingdom jurisdictions are anticipated to have cumulative losses for the foreseeable future, and as such a valuation allowance has been established for these regions. The valuation allowance in the Netherlands, the United States and the United Kingdom jurisdictions increased by $35.3 million, $94.5 million and $3.1 million,

respectively, during the year ended April 30, 2020 and $10.6 million, $35.0 million and $0.8 million valuation allowance, respectively, for the year ended April 30, 2019. The valuation allowance for Dutch deferred tax assets as of April 30, 2020 and 2019 was $88.4 million and $53.1 million, respectively, the valuation allowance for the United States deferred tax assets as of April 30, 2020 and 2019 was $132.9 million and $38.4 million, respectively, and the valuation allowance for the United Kingdom deferred tax assets as of April 30, 2020 was $3.9 million and there was $0.8 million valuation allowance as of April 30, 2019.

As of April 30, 2020, the Company had net operating loss (“NOL”) carryforwards for Dutch, United States (Federal and State) and United Kingdom income tax purposes of $396.2 million, $490.2 million, $416.8 million and $18.6 million, respectively, which begin to expire in the year ending April 30, 2022, April 30, 2031 and April 30, 2024, respectively, with United Kingdom losses being carried forward indefinitely. The Company also has research and development tax credit carryforwards for United States (Federal and State) and Canada, income tax purposes of $11.3 million , $1.3 million and $0.6 million respectively, which begin to expire April 30, 2030, April 30, 2022 and April 30, 2037, respectively. The deferred tax assets associated with the NOL carryforwards and other tax attributes in the Netherlands, the United States, and the United Kingdom are subject to a full valuation allowance.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (the “CARES Act”) Act was signed into United States law. The Act provides emergency assistance, opportunities for additional liquidity and other government programs to support individuals, families and businesses affected by the 2020 coronavirus pandemic, in part through amending United States tax law. Previously limited to 80% of taxable income by the TCJA, section 172(a), the CARES Act removes the limitation and grants taxpayers a five-year carryback period for NOLs arising in tax years beginning after December 31, 2017 and before January 1, 2021. Due to significant losses in the year ended April 30, 2019, and as a result of the CARES Act, the Company is planning to carry back the NOLs from the year ended April 30, 2019 back to five previous fiscal years (April 30, 2014 – April 30, 2018) to fully offset the taxable income in those tax years with an estimated income tax benefit of $3.3 million.

The calculation of the Company’s tax obligations involves dealing with uncertainties in the application of complex tax laws and regulations. ASC 740, Income Taxes, provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, on the basis of the technical merits. The Company has assessed its income tax positions and recorded tax benefits for all years subject to examination, based upon the Company’s evaluation of the facts, circumstances and information available at each period end.

Although the Company believes that it has adequately reserved for its uncertain tax positions, the Company can provide no assurance that the final tax outcome of these matters will not be materially different. As the Company expands, it will face increased complexity, and the Company’s unrecognized tax benefits may increase in the future. The Company makes adjustments to its reserves when facts and circumstances change, such as the closing of a tax audit or the refinement of an estimate. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will affect the provision for income taxes in the period in which such determination is made.

The Company had unrecognized tax benefits of $9.7 million as of April 30, 2020, of which none would impact the effective tax rate before consideration of any valuation allowance. The activity within the Company’s unrecognized gross tax benefits is summarized as follows (in thousands):


	As of April 30,
	2020		2019		2018
Balance as of beginning of year	$	3,870	$	2,019	$	1,196
Increase related to tax positions taken in prior periods	2,283		240		6
Increase related to tax positions taken in the current period	3,553		1,611		817
Balance as of end of year	$	9,706	$	3,870	$	2,019

Approximately $2.3 million of the increase in fiscal 2020 for tax positions taken in prior periods is due to the amended U.S. Federal income tax return the Company is planning to file as part of the enacted CARES Act, which will generate additional research and development tax credit carryforward from prior years. Approximately $3.6 million of the increase in tax positions related to the current period is from the research and development tax credits from the acquisition of Endgame Inc.

The Company’s policy is to recognize penalties and interests accrued on any unrecognized tax benefits as a component of income tax expense. During the year ended April 30, 2020, 2019 and 2018 the Company recognized less than $0.1 million, $0.1 million and $0.2 million, respectively, of interest and penalties. The amount of accrued interest and penalties recorded on the consolidated balance sheet as of April 30, 2020 and 2019 was $0.2 million and $0.3 million, respectively.

The Company is subject to periodic examination of income tax returns by various domestic and international tax authorities. The Company is currently under audit with the Dutch tax authority for the tax years ended April 30, 2015 to April 30, 2017 and the German tax authority for the tax years ended April 30, 2016 to April 30, 2018

The Company does not anticipate any significant increases or decreases in its uncertain tax positions within the next twelve months. The Company files tax returns in multiple jurisdictions, including the Netherlands and United States. The Company’s tax filings for fiscal years starting with the year ended April 30, 2014 remain open in various tax jurisdictions. If the examinations are resolved unfavorably, there is a possibility they may have a material negative impact on its results of operations.

Dutch income taxes and non-Dutch withholding taxes associated with the repatriation of earnings or for temporary differences related to investments in non-Dutch subsidiaries, excluding the U.S subsidiaries, have not been provided for, as the Company intends to reinvest the earnings of such subsidiaries indefinitely or the Company has concluded that an immaterial additional tax liability would arise on the distribution of such earnings. Earnings from the Company’s U.S. subsidiaries are being treated as being currently repatriated back to the Netherlands though no Dutch income taxes nor U.S. withholding taxes in regard to such repatriations are being recorded due to the Dutch participation exemption provisions and exemption from withholding taxes under the income tax treaty between the Netherlands and the United States. At April 30, 2020, there were cumulative earnings of $48.9 million, from the non-U.S. subsidiaries. If such earnings were to be repatriated they would be exempt from taxation in the Netherlands and the amount of dividend withholding taxes from such foreign jurisdictions would be $0.8 million, due to the various income tax treaties between the Netherlands and the respective foreign jurisdictions.

On December 22, 2017, the TCJA was signed into law making significant changes to the United States Internal Revenue code. Changes include, but are not limited to, a U.S. corporate income tax rate (“U.S. federal tax rate”) decrease to from 35% to 21% effective January 1, 2018.

The TCJA contains several new tax provisions that became effective on January 1, 2018, such as the introduction of Global Intangible Low Taxed Income (“GILTI”). Due to the Company’s net operating loss, GILTI provision was $0.5 million and did not have a material impact on the Company’s results for the year ended April 30, 2020.