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Income Taxes | 12 Months Ended
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Jan. 31, 2021
Income Tax Disclosure [Abstract] |
Income Taxes | Note 12. Income Taxes The components of loss before provision for income taxes were as follows (in thousands):
|  | Year Ended January 31, |
|  | 2021 |  |  | 2020 |  |  | 2019 |
United States |  | $ | (38,928 | ) |  | $ | (104,362 | ) |  | $ | (90,408 | )
Foreign |  |  | (3,298 | ) |  |  | (38,576 | ) |  |  | (42,806 | )
Total |  | $ | (42,226 | ) |  | $ | (142,938 | ) |  | $ | (133,214 | )
The components of the provision for income taxes were as follows (in thousands):
|  | Year Ended January 31, |
|  | 2021 |  |  | 2020 |  |  | 2019 |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | — |  |  | $ | — |  |  | $ | — |
State |  |  | 205 |  |  |  | 196 |  |  |  | 162 |
Foreign |  |  | 1,351 |  |  |  | 1,485 |  |  |  | 1,885 |
Total |  | $ | 1,556 |  |  | $ | 1,681 |  |  | $ | 2,047 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 83 |  |  | $ | — |  |  | $ | — |
State |  |  | 4 |  |  |  | 32 |  |  |  | 18 |
Foreign |  |  | (436 | ) |  |  | (303 | ) |  |  | (667 | )
Total |  | $ | (349 | ) |  | $ | (271 | ) |  | $ | (649 | )
Provision for income taxes |  | $ | 1,207 |  |  | $ | 1,410 |  |  | $ | 1,398 |
The following is a reconciliation of the difference between the effective income tax rate and the federal statutory rate of 21% (in thousands):
|  | Year Ended January 31, |
|  | 2021 |  |  | 2020 |  |  | 2019 |
Tax benefit at federal statutory rate |  | $ | (8,867 | ) |  | $ | (30,017 | ) |  | $ | (27,975 | )
State taxes, net of federal benefit |  |  | 6,798 |  |  |  | (3,122 | ) |  |  | (2,672 | )
Foreign rate difference |  |  | 1,676 |  |  |  | (305 | ) |  |  | 1,798 |
Nondeductible expenses |  |  | 675 |  |  |  | 2,313 |  |  |  | 535 |
Research and development credit |  |  | (6,487 | ) |  |  | (6,670 | ) |  |  | (5,536 | )
Stock-based compensation |  |  | 4,942 |  |  |  | 6,325 |  |  |  | (6,541 | )
Change in reserve for unrecognized tax benefits |  |  | 6,487 |  |  |  | 6,670 |  |  |  | 5,507 |
Change in valuation allowance, including the effect of tax rate change |  |  | 2,301 |  |  |  | 26,462 |  |  |  | 35,061 |
Effect of tax rate change on deferred tax assets |  |  | (6,524 | ) |  |  | — |  |  |  | 1,028 |
Other |  |  | 206 |  |  |  | (246 | ) |  |  | 193 |
Total provision for income taxes |  | $ | 1,207 |  |  | $ | 1,410 |  |  | $ | 1,398 |
During the fiscal year ended January 31, 2021, the United Kingdom (UK) passed the Finance Act 2020, which maintains the Corporate Income Tax (CIT) rate of 19% instead of the originally planned CIT rate reduction to 17% in April 2020. As a result, we re-measured our UK deferred tax assets using 19% and recorded a benefit of $6.5 million, which was fully offset by a valuation allowance. The significant components of our deferred tax assets and liabilities were as follows (in thousands):
|  | January 31, |
|  | 2021 |  |  | 2020 |
Deferred tax assets: |  |  |  |  |  |  |  |
Net operating loss carryover |  | $ | 243,820 |  |  | $ | 253,561 |
Accruals and reserves |  |  | 7,822 |  |  |  | 10,187 |
Stock-based compensation |  |  | 11,465 |  |  |  | 15,930 |
Section 59(e) capitalized research and development |  |  | 19,485 |  |  |  | — |
Depreciation and amortization |  |  | 6,618 |  |  |  | 6,288 |
Operating lease liabilities |  |  | 59,455 |  |  |  | 62,698 |
Tax credit carryover |  |  | 4,325 |  |  |  | 4,325 |
Deferred business interest expense |  |  | — |  |  |  | 1,061 |
Other |  |  | 1,213 |  |  |  | 1,904 |
Total deferred tax assets |  |  | 354,203 |  |  |  | 355,954 |
Valuation allowance |  |  | (286,659 | ) |  |  | (301,757 | )
Total deferred tax assets, net of valuation allowance |  |  | 67,544 |  |  |  | 54,197 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Operating lease right-of-use assets, net |  |  | (47,949 | ) |  |  | (49,966 | )
Convertible debt |  |  | (17,322 | ) |  |  | — |
Deferred commissions |  |  | — |  |  |  | (2,433 | )
Goodwill with indefinite life amortization |  |  | (525 | ) |  |  | (424 | )
Other |  |  | — |  |  |  | (28 | )
Total deferred tax liabilities |  |  | (65,796 | ) |  |  | (52,851 | )
Net deferred tax assets |  | $ | 1,748 |  |  | $ | 1,346 |
In assessing the realizability of deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. As a result, we have established a full valuation allowance against our U.S. and United Kingdom net deferred tax assets based on our history of losses. The valuation allowance decreased by $15.1 million and increased by $26.5 million, respectively, during the years ended January 31, 2021 and 2020. As of January 31, 2021, we had federal, state and foreign net operating loss carryforwards of $697.1 million, $561.7 million and $318.4 million, respectively, available to offset future taxable income. The federal net operating loss carryforwards generated prior to fiscal year 2019 will expire at various dates beginning in 2025, if not utilized. We have federal net operating loss carryforwards of $75.3 million, which can be carried forward indefinitely. The state net operating loss carryforwards will expire at various dates beginning in 2022, if not utilized. The foreign net operating loss carryforwards do not expire. In addition, as of January 31, 2021, we had federal and state research and development tax credit carryforwards of $39.1 million and $41.2 million, respectively. The federal research and development tax credit carryforwards will expire beginning in 2025 if not utilized. The state research and development tax credit carryforwards do not expire. Utilization of the federal and state net operating loss may be subject to substantial annual limitation due to the ownership change limitations provided by Section 382 of the Internal Revenue Code of 1986, as amended, and similar state provisions. The annual limitation may result in the expiration of net operating losses and credits before utilization. In the current year, the Company completed a Section 382 ownership change analysis covering the fiscal year 2015 to fiscal year 2021 tax periods, which concluded that the Company's net operating losses are not permanently limited. Subsequent ownership changes may further affect the limitation in future years. We evaluate tax positions for recognition using a more-likely-than-not recognition threshold, and those tax positions eligible for recognition are measured as the largest amount of tax benefit that is greater than 50% likely of being realized upon the effective settlement with a taxing authority that has full knowledge of all relevant information. We believe that we have provided adequate reserves for our income tax uncertainties in all open tax years. A reconciliation of the gross unrecognized tax benefits is as follows (in thousands):
|  | Year Ended January 31, |
|  | 2021 |  |  | 2020 |  |  | 2019 |
Unrecognized tax benefits—beginning of period |  | $ | 63,560 |  |  | $ | 49,883 |  |  | $ | 36,194 |
Reductions for tax positions related to prior year |  |  | (57 | ) |  |  | (10 | ) |  |  | — |
Reductions to unrecognized tax benefits as a result of a lapse of the applicable statute of limitations |  |  | — |  |  |  | — |  |  |  | (20 | )
Additions for tax positions related to prior year |  |  | 48 |  |  |  | — |  |  |  | 2,140 |
Additions for tax positions related to current year |  |  | 13,876 |  |  |  | 13,687 |  |  |  | 11,569 |
Unrecognized tax benefits—end of period |  | $ | 77,427 |  |  | $ | 63,560 |  |  | $ | 49,883 |
The gross unrecognized tax benefits, if recognized, would not materially affect the effective tax rate as of January 31, 2021, 2020 and 2019. We do not expect our gross unrecognized tax benefits to change significantly over the next 12 months. Our policy is to classify interest and penalties associated with uncertain tax positions, if any, as a component of our income tax provision. Interest and penalties were not significant during the years ended January 31, 2021, 2020 and 2019. We file tax returns in the U.S. for federal, California, and other states. All tax years remain open to examination for both federal and state purposes as a result of our net operating loss and credit carryforwards. We began to file foreign tax returns in the United Kingdom starting with the year ended January 31, 2013, in France, Germany, and Japan starting with the year ended January 31, 2014, in Canada starting with the year ended January 31, 2015 and in Australia, Sweden, and Netherlands starting with the year ended January 31, 2016. Certain tax years remain open to examination.

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