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Income Taxes
 12 Months Ended
Apr. 30, 2023
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The Company is incorporated in the Netherlands but operates in various countries with differing tax laws and rates. The geographical breakdown of income (loss) before provision for income taxes is summarized as follows (in thousands):
Year Ended April 30,
202320222021
Dutch$(283,010)$(261,097)$(163,770)
Foreign66,133 63,308 42,056 
Loss before income taxes$(216,877)$(197,789)$(121,714)
The components of the provision for income taxes were as follows (in thousands):
Year Ended April 30,
202320222021
Current:
Dutch$2,910 $2,187 $1,125 
Foreign17,042 6,892 3,896 
Total current tax expense19,952 9,079 5,021 
Deferred:
Dutch(71)(105)— 
Foreign(597)(2,915)2,699 
Total deferred tax expense (income)(668)(3,020)2,699 
Total provision for income taxes$19,284 $6,059 $7,720 
The Company’s effective tax rate substantially differed from the Dutch statutory tax rate of 25.8% primarily due to the valuation allowance for the Netherlands, United States and United Kingdom deferred tax assets. A reconciliation of income taxes at the statutory income tax rate to the provision for income taxes included in the consolidated statement of operations is as follows (in thousands, except for rates):
Year Ended April 30,
202320222021
Tax
Rate
Tax
Rate
Tax
Rate
Dutch statutory income tax$(55,954)25.8 %$(49,448)25.0 %$(30,428)25.0 %
Foreign income taxed at different rates(1,305)0.6 %(2,197)1.1 %(486)0.4 %
Stock-based compensation5,018 (2.3)%(31,372)15.9 %(100,931)82.9 %
Tax credits(7,349)3.4 %(10,834)5.5 %(11,020)9.0 %
Change in valuation allowance69,271 (31.9)%91,841 (46.4)%146,571 (120.4)%
Deferred tax asset revaluation6 — %(302)0.2 %(256)0.2 %
Foreign withholding taxes3,201 (1.5)%1,773 (0.9)%1,307 (1.1)%
Other6,396 (3.0)%6,598 (3.5)%2,963 (2.3)%
Provision for income taxes$19,284 (8.9)%$6,059 (3.1)%$7,720 (6.3)%
Deferred Income Taxes
Deferred tax assets and liabilities 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 a valuation allowance where management has concluded it is more likely than not that the deferred tax assets will not 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.
Significant components of the Company’s deferred tax assets and liabilities are summarized as follows (in thousands):
As of April 30,
20232022
Deferred tax assets:
Accrued compensation$3,799 $2,883 
Net operating loss carryforward533,051 458,733 
Deferred revenue7,690 8,780 
Stock-based compensation13,950 12,063 
Tax credits28,048 28,467 
Disallowed interest expense10,546 4,723 
Lease liabilities4,320 5,139 
Other5,045 4,516 
Gross deferred tax assets606,449 525,304 
Less valuation allowance(575,557)(498,996)
Total deferred tax assets30,892 26,308 
Deferred tax liabilities:
Deferred contract acquisition costs(27,988)(17,244)
Intangible assets(1,740)(6,752)
Right of use assets(2,862)(4,673)
Gross deferred tax liabilities(32,590)(28,669)
Net deferred tax liabilities$(1,698)$(2,361)
The valuation allowance for deferred tax assets as of April 30, 2023 and 2022 was $575.6 million and $499.0 million, respectively. As the Company has generated losses since inception in the Netherlands, management maintains a full valuation allowance against the net deferred tax assets in this jurisdiction. 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 and United Kingdom increased by $80.1 million and less than $0.1 million, respectively, for the year ended April 30, 2023 and $53.8 million and $5.1 million, respectively, for the year ended April 30, 2022. The valuation allowance in the United States decreased by $3.6 million for the year ended April 30, 2023 and increased by $30.3 million for the year ended April 30, 2022. The valuation allowance for the Netherlands deferred tax assets as of April 30, 2023 and 2022 was $283.3 million and $203.2 million, respectively, the valuation allowance for the United States deferred tax assets as of April 30, 2023 and 2022 was $272.7 million and $276.3 million, respectively, and the valuation allowance for the United Kingdom deferred tax assets as of both April 30, 2023 and April 30, 2022 was $19.5 million. To the extent sufficient positive evidence becomes available, the Company may release all or a portion of the valuation allowance in one or more future periods. A release of the valuation allowance, if any, would result in the recognition of certain deferred tax assets and a material income tax benefit for the period in which such release is recorded.
As of April 30, 2023, the Company had net operating loss (“NOL”) carryforwards for Netherlands, United States (federal and state, respectively) and United Kingdom income tax purposes of $1.0 billion, $973.4 million, $665.0 million and $74.5 million, respectively, which begin to expire in the years ending April 30, 2033 and April 30, 2024 in the United States (federal and state, respectively), with Netherlands and United Kingdom losses being carried forward indefinitely. The Company also has research and development tax credit carryforwards for United States (federal and state, respectively) and Canada income tax purposes of $20.4 million, $5.8 million and $0.6 million, respectively, which begin to expire April 30, 2033, April 30, 2024, and April 30, 2040, 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.
Uncertain Tax Positions
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 continues to grow in size, it will face increased complexity, and the Company’s unrecognized tax benefits may increase in the future. The Company adjusts 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 $18.2 million as of April 30, 2023, of which none would impact the effective tax rate before consideration of any valuation allowance. The activity within the Company’s unrecognized tax benefits is summarized as follows (in thousands):
As of April 30,
202320222021
Balance as of beginning of year$16,622 $13,656 $9,706 
Increase (decrease) related to tax positions taken in prior periods(1,050)(1,029)432 
Increase related to tax positions taken in the current period2,585 3,995 3,518 
Balance as of end of year$18,157 $16,622 $13,656 
Approximately $0.5 million of the decrease for the year ended April 30, 2023 for tax positions taken in prior periods is due to the filing of tax returns during such fiscal year and lapse of statute of limitations. The other approximately $0.5 million of the decrease is due to the audit settlement noted below. Approximately $2.0 million of the increase in tax positions related to the current period is primarily from the research and development tax credits generated for the year ended April 30, 2023 and $0.6 million is associated with acquisition-related tax structuring.
The Company’s policy is to recognize penalties and interest accrued on any unrecognized tax benefits as a component of income tax expense. For the years ended April 30, 2023, 2022 and 2021 the Company recognized interest and penalties of $0.2 million, $0.3 million and less than $0.1 million, respectively. The amount of accrued interest and penalties recorded on the consolidated balance sheet as of April 30, 2023 and 2022 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. During the year ended April 30, 2023, the Company was not subject to any new audits. The Company settled an examination with the Internal Revenue Service for foreign withholding taxes and related interest for the calendar year 2017.
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, 2018 remain open in various tax jurisdictions.
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 treated as being currently repatriated back to the Netherlands, even though no Dutch income taxes nor U.S. withholding taxes regarding to such repatriations are recorded due to the Netherlands participation exemption provisions and exemption from withholding taxes under the income tax treaty between the Netherlands and the United States. As of April 30, 2023, there were cumulative earnings of $146.3 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 $3.1 million, due to the various income tax treaties between the Netherlands and the respective foreign jurisdictions.