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Income Taxes | 12 Months Ended
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Jan. 31, 2025
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The domestic and foreign components of pre-tax income (loss) were as follows:
| Year Ended January 31,
(in thousands) | 2025 |  | 2024 |  | 2023
U.S. | $ | 179,128 |  |  | $ | 54,551 |  |  | $ | 19,673 |
International | 68,813 |  |  | 39,128 |  |  | (109,554) |
Income (loss) before income taxes | $ | 247,941 |  |  | $ | 93,679 |  |  | $ | (89,881) |
The components of our income tax provision were as follows:
| Year Ended January 31,
(in thousands) | 2025 |  | 2024 |  | 2023
Current |  |  |  |  |
Federal | $ | 4,758 |  |  | $ | 6,390 |  |  | $ | (464) |
State | 7,936 |  |  | 2,018 |  |  | 1,666 |
Foreign | 6,105 |  |  | 4,974 |  |  | 4,674 |
Total current | 18,799 |  |  | 13,382 |  |  | 5,876 |
Deferred |  |  |  |  |
Federal | (747,082) |  |  | 21 |  |  | 21 |
State | (94,945) |  |  | 2 |  |  | (21) |
Foreign | 3,284 |  |  | 6,294 |  |  | 1,697 |
Total deferred | (838,743) |  |  | 6,317 |  |  | 1,697 |
Provision for income taxes | $ | (819,944) |  |  | $ | 19,699 |  |  | $ | 7,573 |
The reconciliation of the statutory federal income tax rate to our effective tax rate was as follows:
| Year Ended January 31,
(in percentage) | 2025 |  | 2024 |  | 2023
U.S. statutory rate | 21.0 | % |  | 21.0 | % |  | 21.0 | %
State taxes | 4.0 |  |  | 2.4 |  |  | (2.4) |
Foreign tax rate differential | 0.5 |  |  | 37.9 |  |  | 16.4 |
Foreign-derived intangible income deduction | (3.8) |  |  | (11.7) |  |  | — |
Stock-based compensation | 7.9 |  |  | 81.8 |  |  | (55.1) |
Change in valuation allowance | (331.7) |  |  | (102.5) |  |  | (35.5) |
Dual Jurisdiction Deferred Taxes | (2.9) |  |  | 36.0 |  |  | 39.2 |
Research and development credits | (17.3) |  |  | (46.0) |  |  | 20.1 |
Other deferred adjustment | (10.7) |  |  | (1.2) |  |  | (10.7) |
Other | 2.3 |  |  | 3.3 |  |  | (1.4) |
Effective tax rate | (330.7) | % |  | 21.0 | % |  | (8.4) | %
The significant components of net deferred tax balances were as follows:
| January 31,
(in thousands) | 2025 |  | 2024
Deferred tax assets |  |  |
Net operating loss carryforwards | $ | 486,505 |  |  | $ | 570,152 |
Accruals and reserves | 16,772 |  |  | 14,895 |
Stock-based compensation | 42,949 |  |  | 39,320 |
Research and development credits | 179,275 |  |  | 147,959 |
Capitalized research and development expenses | 350,729 |  |  | 246,945 |
Other | 54,286 |  |  | 53,140 |
Total deferred tax assets | 1,130,516 |  |  | 1,072,411 |
Less: Valuation allowance | (112,847) |  |  | (934,816) |
Deferred tax assets, net of valuation allowance | 1,017,669 |  |  | 137,595 |
Deferred tax liabilities |  |  |
Deferred contract acquisition costs | (121,678) |  |  | (100,806) |
Fixed Assets and Intangible Assets | (54,137) |  |  | (26,258) |
Other | (21,980) |  |  | (25,242) |
Total deferred tax liabilities | (197,795) |  |  | (152,306) |
Net deferred tax assets / (liabilities) | $ | 819,874 |  |  | $ | (14,711) |
Our income tax benefit was $819.9 million for the year ended January 31, 2025. The benefit was primarily attributable to the release of valuation allowances related to U.S. federal and certain state deferred tax assets of $837.3 million. We regularly assess the need for a valuation allowance on our deferred tax assets. In making this assessment, we consider both positive and negative evidence related to the likelihood of realization of the deferred tax assets to determine, based on the weight of available evidence, whether it is more likely than not that some or all the deferred tax assets will not be realized. As of January 31, 2025, based on all available positive and negative evidence, having demonstrated sustained U.S. profitability, which is objective and verifiable, and taking into account anticipated future earnings, we have concluded it is more likely than not that we will realize our U.S. federal and U.S. states deferred tax assets, with the exception of certain federal deferred tax assets subject to limitation on use and our California deferred tax assets. We continue to maintain a valuation allowance against these deferred tax assets as they have not met the “more likely than not” realization criterion. We intend to invest substantially all of our foreign subsidiary earnings, as well as our capital in our foreign subsidiaries, indefinitely outside of the U.S. in those jurisdictions in which we would incur significant additional costs upon repatriation of such amounts. Recognized tax benefits on total stock-based compensation expense, which are reflected in the "Provision for (benefit from) income taxes" in the consolidated statements of operations and comprehensive income (loss), were $143.0 million, $7.1 million and $3.3 million in the years ended January 31, 2025, 2024 and 2023, respectively. Our tax provision includes $16.0 million of excess tax benefits, $3.8 million tax shortfall and $2.2 million tax shortfall from stock-based compensation for the years ended January 31, 2025, 2024 and 2023, respectively. As of January 31, 2025, we had accumulated net operating loss carryforwards of $1.8 billion for federal and $1.3 billion for state. Of the federal net operating losses, $1.8 billion is carried forward indefinitely, but utilization is limited to 80% of taxable income. The remaining federal and state net operating loss carryforwards will begin to expire in 2027 and 2029, respectively. As of January 31, 2025, we also had total foreign net operating loss carryforwards of $145.4 million, which do not expire under local law. As of January 31, 2025, we had accumulated U.S. research tax credits of $190.5 million for federal and $61.5 million for California. The U.S. federal research tax credits will begin to expire in 2039. The California research tax credits do not expire. A reconciliation of the beginning and ending balance of total unrecognized tax benefits was as follows:
| January 31,
(in thousands) | 2025 |  | 2024 |  | 2023
Unrecognized tax benefits balance at February 1 | $ | 60,744 |  |  | $ | 47,946 |  |  | $ | 46,729 |
Gross increase for tax positions of prior years | — |  |  | 4,368 |  |  | 333 |
Gross decrease for tax positions of prior years | (307) |  |  | (156) |  |  | (1,734) |
Settlements | — |  |  | — |  |  | (2,484) |
Gross increase for tax positions of current year | 15,109 |  |  | 8,586 |  |  | 5,102 |
Unrecognized tax benefits balance at January 31 | $ | 75,546 |  |  | $ | 60,744 |  |  | $ | 47,946 |
As of January 31, 2025, we had $75.5 million of unrecognized tax benefits, of which $60.9 million could affect the Company’s effective tax rate, if recognized. We do not expect our gross unrecognized tax benefit to change significantly within the next 12 months. We recognize interest and penalties related to uncertain tax positions in provision for income taxes. As of January 31, 2025, accrued interest and penalties was $2.2 million. We are subject to taxation in the U.S. and various foreign jurisdictions. Our tax years from inception in 2003 through January 31, 2025 remain subject to examination by U.S. and California taxing authorities, as well as taxing authorities in various other state and foreign jurisdictions. We are not under examination in any material jurisdictions. The following table represents the rollforward of our valuation allowance:
| Year Ended January 31,
(in thousands) | 2025 |  | 2024 |  | 2023
Beginning balance | $ | 934,816 |  |  | $ | 1,032,016 |  |  | $ | 999,191 |
Valuation allowance charged to income tax provision | (821,969) |  |  | (97,200) |  |  | 32,825 |
Ending balance | $ | 112,847 |  |  | $ | 934,816 |  |  | $ | 1,032,016 |

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