Income Taxes

12 Months Ended

Jan. 31, 2024

Income Tax Disclosure [Abstract]

Income Taxes

14 Income Taxes

The U.S. and foreign components of loss before income taxes are as follows for the periods presented (in thousands):

	Year Ended January 31,
	2024		2023		2022
U.S.	$	(168,587)	$	(273,467)	$	(306,814)
Foreign	92,772		(44,094)		(204,069)
Loss before income taxes	$	(75,815)	$	(317,561)	$	(510,883)

The components of the provision for income taxes are as follows for the periods presented (in thousands):

	Year Ended January 31,
	2024		2023		2022
Current expense (benefit)
Federal	$	(106)	$	213	$	—
State	(166)		493		80
Foreign	13,786		9,224		20,455
Total current expense	13,514		9,930		20,535
Deferred expense (benefit)
Federal	—		—		—
State	—		—		—
Foreign	554		861		(5,832)
Total deferred expense (benefit)	$	554	$	861	$	(5,832)
Total provision for income taxes	$	14,068	$	10,791	$	14,703

The following is a reconciliation of the statutory federal income tax rate to our effective tax rate for the periods presented:

	Year Ended January 31,
	2024		2023		2022
Federal statutory income tax rate	21.0	%	21.0	%	21.0	%
Foreign taxes	(2.0)		(2.2)		(3.7)
Non-deductible expenses	(17.9)		(2.1)		(2.7)
Stock-based compensation	(4.6)		(10.8)		27.1
Valuation allowance	(5.7)		(12.3)		(48.2)
Research and development credits	18.9		3.3		3.8
Cross border tax law	(27.4)		—		—
Other, net	(0.9)		(0.3)		(0.2)
Effective income tax rate	(18.6)	%	(3.4)	%	(2.9)	%

Significant components of DTAs and DTLs are as follows as of the periods presented (in thousands):

	As of January 31,
	2024		2023
Deferred tax assets:
Net operating loss carryforwards	$	344,067	$	387,822
Accruals and reserves	15,823		15,072
Stock-based compensation	11,888		25,665
Deferred revenue	25,942		9,477
Research and development	103,263		67,103
Depreciation and amortization	587		587
Excessive borrowing	—		1,668
Lease liabilities(1)	11,563		—
Other(1)	5,602		7,406
Total deferred tax assets, gross	518,735		514,800
Less: valuation allowance	(470,040)		(476,589)
Total deferred tax assets, net of valuation allowance	48,695		38,211
Deferred tax liabilities:
Intangible assets	(2,409)		(3,312)
Foreign exchange	(37)		(97)
Right-of-use assets(1)	(8,957)		—
Commissions	(32,747)		(29,245)
Total deferred tax liabilities	(44,150)		(32,654)
Net deferred tax assets	$	4,545	$	5,557
Net deferred tax assets	$	4,678	$	5,895
Net deferred tax liabilities (included in other liabilities, non-current)	(133)		(338)
Net deferred tax assets	$	4,545	$	5,557
(1) As of January 31, 2023, immaterial amounts related to lease liabilities and right-of-use assets and were presented as part of "Other."

In preparing the provision for income taxes, we assess the available positive and negative evidence to determine whether sufficient future taxable income will be generated to permit the use of existing deferred tax assets. A significant piece of objective negative evidence was the cumulative loss we incurred over the three-year period ending January 31, 2024. Such objective evidence outweighs other subjective evidence, such as our projections for future growth. Based on such evaluation we determined as of January 31, 2024 that it was more likely than not that the deferred tax assets will not be realized. Accordingly, we recorded a full valuation allowance against U.S. federal and state, Romanian, and U.K. DTAs as of January 31, 2024, consistent with January 31, 2023.

However, we may release some of these valuation allowances in future periods if objective negative evidence of cumulative losses is no longer present and positive evidence, such as projection of future growth, supports the realization of such deferred tax assets. Release of all or a portion of these valuation allowances would result in a decrease in the provision for income taxes in the period of the release.

The table below details the changes in DTA valuation allowances for the periods presented (in thousands):

	Beginning Balance		Additions During the Period		Reductions During the Period		Ending Balance
Year ended January 31, 2024	$	476,589	$	5,474	$	(12,023)	$	470,040
Year ended January 31, 2023	$	422,262	$	54,327	$	—	$	476,589

The reduction in valuation allowance during fiscal year 2024 was driven by a decrease in our deferred tax assets in Romania and the U.K.

As of January 31, 2024, we had U.S. federal NOLs of $827.4 million available to offset future taxable income, all of which can be carried forward indefinitely. As of January 31, 2023 we had U.S. federal NOLs of $979.9 million, all of which could be carried forward indefinitely.

As of January 31, 2024 and 2023, we had state NOLs of $824.7 million and $771.5 million, respectively, which begin expiring in 2025.

As of January 31, 2024 and 2023, we had Romanian NOLs of $549.9 million and $601.6 million, respectively, which begin expiring in 2025. As of January 31, 2024 and 2023, we had Japanese NOLs of $6.3 million and $10.4 million, respectively, which begin expiring in 2027. Additionally, as of January 31, 2024 and 2023, we had U.K. NOLs of $118.3 million and $135.1 million, respectively, which may be carried forward indefinitely.

Pursuant to Section 382 of the IRC, annual use of our U.S. NOLs may be limited in the event a cumulative change in ownership of more than 50% occurs within a three-year period. We determined that two such ownership changes have occurred. The first resulted in an annual limitation, independent of net unrealized built-in gains, of $0.1 million for our NOLs as of April 24, 2017 but did not result in permanent disallowance of any NOLs. The second resulted in an annual limitation, independent of net unrealized built-in gains, of $29.0 million for our NOLs as of July 9, 2020 but did not result in permanent disallowance of any NOLs.

We do not provide for deferred taxes on $109.2 million of the undistributed earnings of our foreign subsidiaries as of January 31, 2024, because we intend to indefinitely reinvest such undistributed earnings in our non-U.S. operations.

As of January 31, 2024, we had gross unrecognized tax benefits totaling $2.3 million related to income taxes, which would impact the effective tax rate if recognized. Of this amount, the total liability pertaining to uncertain tax positions was $0.5 million, excluding interest and penalties, which are accounted for as a component of our income tax provision. As of January 31, 2023, we had gross unrecognized tax benefits of $2.3 million. Of this amount, the total liability pertaining to uncertain tax positions was $0.5 million, excluding interest and penalties.

Our tax positions are subject to income tax audits in multiple tax jurisdictions globally, and we believe that we have provided adequate reserves for our income tax uncertainties in all open tax years. Our Romanian subsidiary is currently undergoing final procedures in the audit for tax years from 2017 through 2022. Our Indian subsidiary is currently going through the administrative dispute process for the audit for tax years from 2019 through 2021.

We file income tax returns in the U.S. federal jurisdiction, various state jurisdictions, and various international jurisdictions. Tax years 2020 and forward generally remain open for examination for federal and state tax purposes. Tax years 2017 and forward generally remain open for examination for foreign tax purposes. To the extent utilized in future years’ tax returns, NOLs at January 31, 2024 and 2023 will remain subject to examination until the respective tax year is closed.