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Income Taxes
 12 Months Ended
Apr. 30, 2021
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The components of the Company’s net loss before provision for income taxes for the fiscal years ended April 30, 2021, 2020 and 2019 was as follows (in thousands):
Fiscal Year Ended April 30,
202120202019
Domestic$(58,407)$(69,887)$(33,868)
Foreign3,415 889 788 
Net loss before provision for income taxes$(54,992)$(68,998)$(33,080)
The components of the Company’s provision for income taxes for the fiscal years ended April 30, 2021, 2020 and 2019 was as follows (in thousands):
Fiscal Year Ended April 30,
202120202019
Current expense
Federal$— $— $— 
State286 113 2 
Foreign418 267 264 
Total704 380 266 
Deferred expense
Federal— — — 
State— — — 
Foreign— — — 
Total— — — 
Total provision for income taxes$704 $380 $266 
The reconciliation of U.S. federal statutory rate to the Company’s effective tax rate was follows (in thousands):
Fiscal Year Ended April 30,
202120202019
Expected benefit at federal statutory rate$(11,628)$(14,489)$(6,947)
State tax expense—net of federal benefit286 113 2 
Impact of foreign operations(299)85 306 
Federal research and development credit(694)(530)(389)
Change in valuation allowance30,587 14,837 6,587 
Stock-based compensation(17,667)(23)337 
Meals and entertainment35 242 207 
Other permanent items84 145 163 
Total provision for income taxes$704 $380 $266 
The difference in the Company’s effective tax rate and the U.S. federal statutory tax rate is primarily due to recording a full valuation allowance on the Company’s U.S. deferred tax assets.
The components of deferred tax assets and liabilities as of April 30, 2021 and 2020 was as follows (in thousands):
As of April 30,
20212020
Deferred tax assets
Accrued payroll$889 $2,081 
Other accruals & reserves4,053 3,174 
Operating lease liability1,323 2,235 
Deferred revenue1,258 2,959 
Depreciation1,588 1,365 
Net operating losses73,189 40,242 
R&D tax credit4,778 3,617 
Stock based compensation3,690 2,628 
Other327 (7)
Gross deferred tax assets91,095 58,294 
Valuation allowance(88,015)(55,812)
Total deferred tax assets3,080 2,482 
Deferred tax liabilities
Prepaid expenses(1,883)(436)
Operating lease right-of-use assets(1,197)(2,046)
Total deferred tax liabilities(3,080)(2,482)
Net deferred tax assets (liabilities)$— $— 
In determining the need for a valuation allowance, the Company weighs both positive and negative evidence in the various jurisdictions in which it operates to determine whether it is more likely than not that its deferred tax assets are recoverable. In assessing the ultimate realizability of its net deferred tax assets, the Company considers all available evidence, including cumulative losses since inception and expected future losses and as such, management does not believe it is more likely than not that the deferred tax assets will be realized. Accordingly, a full valuation allowance has been established in the U.S. and no deferred tax assets and related tax benefit have been recognized in the accompanying financial statements. The valuation allowance as of April 30, 2021 and 2020 was $88.0 million and $55.8 million, respectively. The increase of $32.2 million in the Company’s valuation allowance compared to the prior fiscal year was primarily due to an increase in deferred tax assets arising from net operating loss.
As of April 30, 2021 and 2020, the Company had net operating loss carryforwards for federal income tax purposes of approximately $308.3 million and $168.6 million, respectively. The federal net operating loss carryforwards will expire, if not utilized, beginning in year 2029. Federal research and development tax credit carryforwards of approximately $5.4 million, will expire beginning in 2032 if not utilized. Federal charitable contribution carryforwards of approximately $14.3 million will expire beginning in 2022 if not utilized. Federal capital loss carryforwards of approximately $1.0 million will begin to expire in 2026 if not utilized.
In addition, as of April 30, 2021 and 2020, the Company had net operating loss carryforwards for state income tax purposes of approximately $139.7 million and $73.2 million, respectively. The state net operating loss carryforwards will expire, if not utilized, beginning in the year 2032. The Company had state research and development tax credit carryforwards of approximately $5.3 million. The state research and development tax credits do not expire. State capitol loss carryforwards of approximately $0.4 million will begin to expire in 2026 if not utilized.
The Tax Reform Act of 1986 and similar California legislation impose substantial restrictions on the utilization of net operating losses and tax credit carryforwards if there is a change in ownership as provided by Section 382 of the Internal Revenue Code and similar state provisions. Such a limitation could result in the expiration of the net operating loss carryforwards and tax credits before utilization.
A reconciliation of the beginning and ending amount of the Company’s total gross unrecognized tax benefits was as follows (in thousands):
As of April 30,
20212020
Balance as of May 1$4,048 $3,037 
Increases for tax positions related to the current year1,285 1,011 
Balance as of April 30$5,333 $4,048 
As of April 30, 2021, no amount of unrecognized tax benefits, if recognized, would impact the Company’s effective income tax rate, given the Company’s full valuation allowance position. The Company does not expect any unrecognized tax benefits to be recognized within the next 12 months.
The Company recognizes interest and penalties related to unrecognized tax benefits as a component of income tax expense. As of April 30, 2021 and 2020, the Company has no cumulative interest and penalties related to unrecognized tax benefits. The Company does not anticipate a significant change in the unrecognized tax benefits over the next 12 months.
The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted by the United States on March 27, 2020. The CARES Act did not have a material impact on the Company’s provision for income taxes for the fiscal year ended April 30, 2021.
The American Rescue Plan Act of 2021 (“ARPA”) was signed by President Biden on March 11, 2021. The legislation revised IRC Section 162(m) which will go into effect beginning with tax years that begin after December 31, 2026. It expanded the definition of “covered employees” to include an additional five highest-compensated employees which do not remain as covered employees indefinitely. The Company has assessed the relevant provisions and concludes the tax provisions of the ARPA did not have a material impact on the Company’s consolidated financial statements for the fiscal year ended April 30, 2021.