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Income Taxes
 3 Months Ended
Apr. 30, 2024
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Our tax provision or benefit from income taxes for interim periods is determined using an estimate of our annual effective tax rate as prescribed under Accounting Standards Codification (“ASC”) 740, “Income Taxes”, adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter, we update our estimate of the annual effective tax rate, and if our estimated tax rate changes, we make a cumulative adjustment, which results in a provision or benefit from income taxes in current or subsequent quarters. There were no material discrete items in the quarter.

Our income tax provision was $2.8 million and $5.1 million for the three months ended April 30, 2024 and 2023, respectively. The change was primarily due to the decrease of the annual effective tax rate driven by the increase of the forecasted annual pretax earnings.While annual pretax earnings are expected to increase, our income tax provision is expected to remain relatively flat as we have net operating losses and research tax credits in the U.S. to offset an increase in our U.S. tax liability.

We review the likelihood that we will realize the benefit of our deferred tax assets and, therefore, the need for valuation allowances, on a quarterly basis. We maintain a valuation allowance against certain deferred tax assets, including all U.S. consolidated group deferred tax assets and certain foreign deferred tax assets as a result of our history of losses in the U.S. and certain foreign jurisdictions, and the variability and uncertainty of our operating results. In the event we determine our deferred tax assets are realizable based on our assessment of relevant factors, an adjustment to the valuation allowance may increase income in the period such determination is made. Given our current earnings and anticipated future earnings, we believe that there is a reasonable possibility that during fiscal year 2025, sufficient positive evidence may become available to allow us to reach a conclusion that some portion of or the entire U.S. valuation allowance will no longer be needed. Release of the valuation allowance would result in the recognition of material U.S. federal and state deferred tax assets and a corresponding decrease to income tax expense estimated to be $750 million to $850 million in the period the release is recorded. The exact timing and amount of the valuation allowance release are subject to change based on the level of sustained U.S. profitability that we are able to actually achieve, as well as the amount of tax deductible stock compensation dependent upon our publicly traded stock price, market acceptance for our products and solutions offerings such as our new IAM platform, and macroeconomic conditions, among other factors.
As of April 30, 2024, our gross unrecognized tax benefits totaled $62.7 million, excluding related accrued interest and penalties, of which $10.8 million would impact the effective tax rate if recognized. Our policy is to account for interest and penalties related to uncertain tax positions as a component of income tax provision. We do not expect material changes to our gross unrecognized tax benefits within the next 12 months.