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Income Taxes | 6 Months Ended
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Jul. 31, 2023
Income Tax Disclosure [Abstract] |
Income Taxes | 12. Income Taxes The following table provides details of income taxes for the periods indicated:
|  | Three Months Ended July 31, |  |  | Six Months Ended July 31, |
|  | 2023 |  |  | 2022 |  |  | 2023 |  |  | 2022 |
|  | (in thousands) |
Loss before income taxes |  | $ | (34,602 | ) |  | $ | (20,214 | ) |  | $ | (68,858 | ) |  | $ | (30,626 | )
Provision (benefit) for income taxes |  |  | (3,404 | ) |  |  | 3,436 |  |  |  | (1,758 | ) |  |  | 3,846 |
Effective tax rate |  | 9.8% |  |  | (17.0)% |  |  | 2.6% |  |  | (12.6)% |
The Company recorded a benefit for income taxes of $3.4 million and $1.8 million for the three and six months ended July 31, 2023, respectively. For the three and six months ended July 31, 2022, the Company recorded a provision for income taxes of $3.4 million and $3.8 million, respectively. The decreases in income tax expense for the three and six months ended July 31, 2023, as compared to the same periods in the prior fiscal year, were primarily due to the tax benefit from the release of $3.6 million of valuation allowance on the deferred tax assets of Oculii Corp, or Oculii, during the second quarter of fiscal year 2024, and recording a tax benefit of $3.1 million for Oculii’s losses in fiscal year 2024. The decrease in income tax expense for the six months ended July 31, 2023 was partially offset by an increase in the proportion of profits generated in higher tax jurisdictions. The Company periodically evaluates the realizability of its net deferred tax assets based on all available evidence, using a “more likely than not” standard. The realizability of the Company’s net deferred tax assets is dependent on its ability to generate sufficient future taxable income during periods prior to the expiration of tax attributes to fully utilize these assets. During the second quarter of fiscal year 2024, based on all available positive and negative evidence, the Company determined it was appropriate to release the valuation allowance on Oculii’s US federal deferred tax assets. The Company recognized a $3.6 million tax benefit during the three and six months ended July 31, 2023 as a result of the valuation allowance release. The Company files federal and state income tax returns in the United States and in various foreign jurisdictions. The Company’s fiscal years 2020 through 2023 are generally open and subject to potential examination by U.S. federal tax authorities. The Company’s fiscal years 2019 through 2023 are generally open and subject to potential examination by state tax authorities. The Company’s fiscal years 2016 to 2023 remain open to examination by foreign tax authorities. Fiscal years outside of the normal statute of limitations remain open to audit by tax authorities due to tax attributes generated in those earlier years, which have been carried forward and may be audited in subsequent years when utilized. The Company regularly assesses the likelihood of adverse outcomes resulting from potential tax examinations to determine the adequacy of its provision for income taxes. These assessments can require considerable estimates and judgments. As of July 31, 2023, the gross amount of unrecognized tax benefits was approximately $22.1 million. If the estimates of income tax liabilities prove to be less than the ultimate assessment, then a further charge to expense could be required. If events occur, and the payment of these amounts ultimately proves to be unnecessary, the reversal of the liabilities could result in tax benefits being recognized in the period in which the Company determines the liabilities are no longer necessary. The Company does not anticipate significant changes to its uncertain tax positions during the next twelve months.

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