Income Taxes

9 Months Ended

Oct. 31, 2024

Income Tax Disclosure [Abstract]

Income Taxes

Note 9: Income Taxes

The Company recorded an income tax provision of $0.1 million and $0.9 million during the three and nine months ended October 31, 2024, respectively, and an income tax benefit of $3.0 million and $2.6 million during the three and nine months ended October 31, 2023, respectively. The income tax provision recorded in the first three quarters of fiscal 2025 were primarily attributable to state income taxes. The income tax benefit recorded in the third quarter of fiscal 2024 was primarily attributable to the release of $3.2 million valuation allowance on certain preexisting deferred tax assets that were realized as a result of deferred tax liabilities assumed in the Company's acquisition of 2600hz, Inc. ("2600Hz") in October 2023. As of October 31, 2024, the Company continued to maintain a full valuation allowance against its remaining deferred tax assets.

As of October 31, 2024, the Company had unrecognized tax benefits of approximately $11.8 million, none of which would currently affect the Company's effective tax rate if recognized due to the Company's deferred tax assets being fully offset by a valuation allowance. The Company does not anticipate that the amount of unrecognized tax benefits relating to tax positions existing at October 31, 2024 will significantly increase or decrease within the next twelve months. There were no interest expense or penalties related to unrecognized tax benefits recorded through October 31, 2024.

A number of years may elapse before an uncertain tax position is audited and finally resolved. While it is often difficult to predict the final outcome or the timing of resolution of any particular uncertain tax position, the Company believes that its reserves for income taxes reflect the most likely outcome. The Company adjusts these reserves, as well as the related interest, in light of changing facts and circumstances. Settlement of any particular position could require the use of cash.