Income Taxes

12 Months Ended

Jan. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

14 Income Taxes

The U.S. and foreign components of loss before income taxes for fiscal years 2022, 2021, and 2020 are as follows (in thousands):

	Year Ended January 31,
	2022		2021		2020
United States	$	(306,814)	$	(105,589)	$	(337,156)
Foreign	(204,069)		10,931		(179,983)
Loss before income taxes	$	(510,883)	$	(94,658)	$	(517,139)

The components of the provision for (benefit from) income taxes for fiscal years 2022, 2021, and 2020 are as follows (in thousands):

	Year Ended January 31,
	2022		2021		2020
Provision for (benefit from) income taxes
Current expense
Federal	$	—	$	—	$	—
State	80		47		—
Foreign	20,455		5,275		4,118
Total current expense	20,535		5,322		4,118
Deferred expense (benefit)
Federal	—		—		—
State	—		—		—
Foreign	(5,832)		(7,587)		(1,324)
Total deferred benefit	$	(5,832)	$	(7,587)	$	(1,324)
Total provision for (benefit from) income taxes	$	14,703	$	(2,265)	$	2,794

The following is a reconciliation of the statutory federal income tax rate to our effective tax rate for fiscal years 2022, 2021, and 2020:

	Year Ended January 31,
	2022		2021		2020
Federal statutory income tax rate	21.0	%	21.0	%	21.0	%
Foreign taxes	(3.7)		0.2		(1.6)
Non-deductible expenses	(2.7)		(1.1)		(0.4)
Stock-based compensation	27.1		(14.0)		(4.3)
Valuation allowance	(48.2)		(10.1)		(15.0)
Research and development credits	3.8		6.7		1.0
Other, net	(0.2)		(0.3)		(1.3)
Effective income tax rate	(2.9)	%	2.4	%	(0.6)	%

Significant components of deferred income tax assets and liabilities as of January 31, 2022 and 2021 are as follows (in thousands):

	As of January 31,
	2022		2021 (1)
Deferred tax assets:
Net operating loss carryforwards	$	377,285	$	126,840
Accruals and reserves	9,429		7,304
Stock-based compensation	37,751		6,010
Deferred revenue	4,722		9,337
Research and development	15,372		2,755
Foreign exchange	4,478		—
Excessive borrowing	1,370		—
Other	1,170		807
Total deferred tax assets, gross	451,577		153,053
Less: valuation allowance	(422,262)		(137,766)
Total deferred tax assets, net of valuation allowance	29,315		15,287
Deferred tax liabilities:
Intangible assets	(579)		(2,894)
Depreciation and amortization	(1,446)		(897)
Commissions	(16,695)		(6,054)
Other	(1)		(74)
Total deferred tax liabilities	(18,721)		(9,919)
Net deferred tax asset	$	10,594	$	5,368
Net deferred tax asset	$	10,628	$	8,118
Net deferred tax liability (included in other liabilities, non-current)	(34)		(2,750)
Net deferred tax asset	$	10,594	$	5,368
(1) Prior period amounts have been reclassified to conform to current presentation

We have evaluated the available positive and negative evidence supporting the realization of our U.S. federal and state gross deferred tax assets, including cumulative losses, and the amount and timing of future taxable income, and have determined it is more likely than not that these assets will not be realized. Accordingly, we recorded a full valuation allowance against U.S. federal and state deferred tax assets as of January 31, 2022 and 2021, respectively. We also recorded a full valuation allowance against Romanian and United Kingdom ("U.K.") deferred tax assets as of January 31, 2022 and against Romanian deferred tax assets as of January 31, 2021.

The table below details the changes in deferred tax asset valuation allowances for fiscal years 2022 and 2021 (in thousands):

	Beginning Balance		Valuation Allowance Recorded During the Period		Valuation Allowance Released During the Period		Ending Balance
Year ended January 31, 2022	$	137,766	$	284,496	$	—	$	422,262
Year ended January 31, 2021	$	120,208	$	20,274	$	(2,716)	$	137,766

As of January 31, 2022, we had U.S. federal net operating losses (“NOLs”) of $1,015.4 million available to offset future taxable income, $1,006.1 million of which can be carried forward indefinitely, and $9.3 million of which begin expiring in 2035. As of January 31, 2021 we had U.S. federal NOLs of $288.3 million, $279.0 million of which could be carried forward indefinitely, and $9.3 million of which begin expiring in 2035.

As of January 31, 2022 and 2021, we had state NOLs of $648.5 million and $154.0 million, respectively, which begin expiring in 2024.

As of January 31, 2022 and 2021, we had Romanian NOLs of $531.4 million and $317.0 million, respectively, which begin expiring in 2023. As of January 31, 2022 and 2021, we had Japanese NOLs of $13.5 million and $15.9 million, respectively, which begin expiring in 2027. Additionally, as of January 31, 2022 and 2021, we had NOLs in the U.K. of $139.2 million and $36.6 million, respectively, which may be carried forward indefinitely.

Pursuant to Section 382 of the Internal Revenue Code, 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 taxes on our undistributed earnings of foreign subsidiaries that have not been previously taxed because we intend to invest such undistributed earnings indefinitely outside of the U.S.

As of January 31, 2022, we had gross unrecognized tax benefits totaling $2.5 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 $0.6 million, excluding interest and penalties, which are accounted for as a component of our income tax provision. As of January 31, 2021, we had no unrecognized tax benefits for uncertain tax positions and had no accrued interest or penalties related to uncertain tax positions.

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 Indian subsidiary is currently under audit for 2019-2020 tax year.

We file income tax returns in the U.S. federal jurisdiction, various state jurisdictions, and in various international jurisdictions. Tax years 2017 and forward generally remain open for examination for federal and state tax purposes. Tax years 2015 and forward generally remain open for examination for foreign tax purposes. To the extent utilized in future years’ tax returns, NOLs at January 31, 2022 and 2021 will remain subject to examination until the respective tax year is closed.