Income taxes |
9 Months Ended |
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Oct. 31, 2023 | |
| Income Tax Disclosure [Abstract] | |
| Income taxes | Income taxes The Company follows ASC 740-270, Income Taxes - Interim Reporting, for the computation and presentation of its interim period tax provision. Accordingly, management estimated the effective annual tax rate and applied this rate to pre-tax income through the end of the latest fiscal quarter to determine the interim income tax provision. For the three and nine months ended October 31, 2023, the Company recorded an income tax provision of $6.4 million and $16.0 million, respectively. This resulted in an effective income tax provision rate of 30.4% and 35.2% for the three and nine months ended October 31, 2023, respectively, compared with an effective income tax benefit rate of 73.4% and 31.9% for the three and nine months ended October 31, 2022, respectively. For the three and nine months ended October 31, 2023, discrete tax items impacting the effective tax rate were primarily due to return-to-provision adjustments on research and development tax credits, an increase in unrecognized tax benefits, adjustments from settlement of an Internal Revenue Service ("IRS") examination, and differences in tax deductible stock-based compensation compared to GAAP stock-based compensation expense. For the three and nine months ended October 31, 2022, discrete tax items impacting the effective tax rate were primarily due to a decrease in unrecognized tax benefits and differences in tax deductible stock-based compensation compared to GAAP stock-based compensation expense. As of October 31, 2023 and January 31, 2023, the Company’s total gross unrecognized tax benefit was $13.8 million and $8.7 million, respectively. If recognized, $10.3 million of the total gross unrecognized tax benefits would affect the Company's effective tax rate as of October 31, 2023. The Company files income tax returns with U.S. federal and state taxing jurisdictions and is currently under examination by the state of Texas. The Texas examination may lead to ordinary course adjustments or proposed adjustments to the Company's taxes, net operating losses, and/or tax credit carryforwards. An IRS examination was effectively settled during the three months ended October 31, 2023; adjustments recorded as a result of the examination were not material. As a result of the Company's net operating loss carryforwards and tax credit carryforwards, the Company remains subject to examination by one or more jurisdictions for tax years after 2006.
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