XML 39 R19.htm IDEA: XBRL DOCUMENT v3.25.0.1
Income Taxes
 6 Months Ended
Jan. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Our effective tax rate for the three months ended January 31, 2025 was 1.9%, which includes a net discrete tax benefit of $76,000. Our effective tax rate for the six months ended January 31, 2025 was (0.6)%, which includes a net discrete tax benefit of $184,000 primarily related to proxy solicitation and CEO transition costs.

Our effective tax rate for the three months ended January 31, 2024 was (230.6)%, which includes a net discrete tax benefit of $286,000 primarily related to the PST Divestiture. Our effective tax rate for the six months ended January 31, 2024 was (100.8)%, which includes a net discrete tax expense of $1,762,000 primarily related to the anticipated timing of the settlement of contingent consideration related to the PST Divestiture.

Excluding discrete items, our effective tax rate for the three and six months ended January 31, 2025 and 2024 was (1.7)% and (52.0)%, respectively. For purposes of determining our estimated annual effective tax rate for fiscal 2025, the impairment of long-lived assets, including goodwill, the change in fair value of warrants and derivatives, proxy solicitation costs and CEO transition costs are considered significant, unusual or infrequently occurring discrete tax items and are excluded from the computation of our effective tax rate. The change in rate from (52.0)% to (1.7)% is primarily due to changes in expected product and geographic mix and not providing for tax benefits on U.S. deferred tax assets.

At January 31, 2025 and July 31, 2024, total unrecognized tax benefits were $8,742,000 and $8,605,000, respectively, including interest of $303,000 and $224,000, respectively. Unrecognized tax benefits result from income tax positions taken or expected to be taken on our income tax returns for which a tax benefit has not been recorded in our condensed consolidated financial statements. We believe it is reasonably possible that the gross unrecognized tax benefits could decrease by as much as $512,000 in the next twelve months due to the expiration of a statute of limitations related to federal, state and foreign tax positions.
Our U.S. federal income tax returns for fiscal 2021 through 2023 are subject to potential future Internal Revenue Service ("IRS") audit. None of our state income tax returns prior to fiscal 2020 are subject to audit. Future tax assessments or settlements could have a material adverse effect on our consolidated results of operations and financial condition.