
	Year Ended January 31,
	2020			2019		2018
			(in thousands)
Current
Federal	$	—		$	—	$	—
State	(104)			(304)		(240)
Foreign	(2,574)			(1,481)		(800)
Total current	(2,678)			(1,785)		(1,040)
Deferred
Federal	362			—		—
State	57			—		—
Foreign	262			418		111
Total deferred	681			418		111
Provision for income taxes	$	(1,997)		$	(1,367)	$	(929)


	Year Ended January 31,
	2020		2019		2018
	(in thousands)
Provision for income taxes at statutory rate	$	29,354	$	29,129	$	44,265
State income taxes, net of federal benefit	(25)		(245)		(162)
Foreign earnings at different rates	(207)		(97)		285
Research and other credits	1,534		3,769		2,621
Stock-based compensation	43,477		(2,414)		(3,738)
Non-deductible expenses	(1,773)		(1,833)		(1,142)
Change in unrecognized tax benefits	2,659		—		—
Impact of U.S. tax reform	—		—		(36,146)
Transition tax	—		—		(521)
Valuation allowance	(77,016)		(29,676)		(6,391)
Provision for income taxes	$	(1,997)	$	(1,367)	$	(929)


	Year Ended January 31,
	2020		2019
	(in thousands)
Deferred tax assets
Net operating loss carryforwards	$	166,083	$	95,619
Research credit carryforwards	15,355		11,102
Intangible assets	78		307
Stock-based compensation	8,716		498
Deferred revenue	21,012		12,245
Accrued expenses	2,555		1,712
Other	950		1,009
Gross deferred assets	214,749		122,492
Less: Valuation allowance	(207,596)		(120,391)
Total deferred tax assets	7,153		2,101
Deferred tax liabilities
Property and equipment, net	(2,534)		(1,890)
Capitalized Commissions	(4,456)		—
Intangible assets	—		(310)
Deferred revenue	—		—
Total deferred tax liabilities	(6,990)		(2,200)
Net deferred tax assets (liabilities)	$	163	$	(99)

At each reporting date, the Company has established a valuation allowance against its U.S. net deferred tax assets due to the uncertainty surrounding the realization of those assets. During the fiscal year ended January 31, 2020, the Company has established a valuation allowance against its net U.K. deferred tax assets due to uncertainty surrounding the realization of those assets. The Company periodically evaluates the recoverability of the deferred tax assets and, when it is determined to be more-likely-than-not that the deferred tax assets are realizable, the valuation allowance is reduced. During the years ended January 31, 2020, January 31, 2019 and January 31, 2018, the valuation allowance increased by $87.2 million, $36.0 million, and $12.2 million, respectively. The increase in the valuation allowance during the years ended January 31, 2020 and January 31, 2019 was primarily driven by losses generated in the United States and the United Kingdom. The increase in the valuation allowance during the year ended January 31, 2018 was also primarily driven by losses generated in the U.S., partially offset by the reduction in its federal corporate tax rate from 35% to 21% as part of the enactment of the Tax Cuts and Jobs Act (the “Tax Act”) as detailed below.

As of January 31, 2020, the Company had aggregate federal and California net operating loss carryforwards of $657.3 million and $94.8 million, respectively, which may be available to offset future taxable income for income tax purposes. The federal and California net operating loss carryforwards begin to expire in fiscal 2031 through fiscal 2039. As of January 31, 2020, net operating loss carryforwards for other states total $352.8 million which begin to expire in fiscal 2023 through fiscal 2039. As of January 31, 2020, net operating loss carryforwards for United Kingdom total $15.3 million which are carried forward indefinitely.

As of January 31, 2020, the Company had federal and California research and development (“R&D”) credit carryforwards of $17.2 million and $4.3 million, respectively. The federal R&D credit carryforwards will begin to expire in fiscal 2031 though fiscal 2039. The California R&D credits are carried forward indefinitely.

Realization of these net operating loss and research and development credit carryforwards depends on future income, and there is a risk that the Company’s existing carryforwards could expire unused and be unavailable to offset future income tax liabilities.

The Internal Revenue Code imposes limitations on a corporation’s ability to utilize net operating loss (“NOLs”) and credit carryovers if it experiences an ownership change as defined in Section 382. In general terms, an ownership change may result from transactions increasing the ownership of certain stockholders in the stock of a corporation by more than 50% over a three-year period. If an ownership change has occurred, or were to occur, utilization of the Company’s NOLs and credit carryovers could be restricted.

Total gross unrecognized tax benefit as of January 31, 2020, January 31, 2019 and January 31, 2018 were $5.5 million, $8.1 million, and $8.1 million, respectively. As of January 31, 2020, the Company had no unrecognized tax benefits, which, if recognized, would affect the Company’s effective tax rate due to full valuation allowance. The Company’s policy is to classify interest and penalties related to unrecognized tax benefits as part of the income tax provision in the consolidated statements of operations. The Company had no accrued interest and penalties related to unrecognized tax benefits as of January 31, 2020, January 31, 2019, or January 31, 2018. In the current year, the uncertain tax benefits balance decreased due to the application of the IRS’ simplified approach for determining research credits. The change was not material. The potential reduction in unrecognized tax benefits during the next 12 months is not expected to be material.


Balance as of February 1, 2017	$	5,060
Increases in current period tax positions	3,068
Balance as of January 31, 2018	8,128
Increases in current period tax positions	—
Balance as of January 31, 2019	8,128
Reductions in prior period tax positions	(2,659)
Balance as of January 31, 2020	$	5,469

The Company files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. As the Company expands its global operations in the normal course of business, the Company could be subject to examination by taxing authorities throughout the world. These audits could include questioning the timing and amount of deductions; the nexus of income among various tax jurisdictions; and compliance with federal, state, local, and foreign tax laws. The Company is not currently under audit by the Internal Revenue Service or other similar state, local, and foreign authorities. All tax years remain subject to examination by U.S. taxing authorities due to the Company’s net operating losses and R&D credit carryforwards.

On December 22, 2017, the U.S. government enacted the Tax Act which makes significant changes to the U.S. tax code. The Tax Act includes several key tax provisions that affect the Company including, but not limited to, lowering the U.S. federal corporate tax rate to 21% for tax years beginning after December 31, 2017, establishing a new provision to currently tax certain global intangible low-taxed income of controlled foreign corporations, and imposing a one-time tax (“Transition Tax”) on the mandatory deemed repatriation of cumulative foreign earnings. The Transition Tax is based upon the post-1986 earnings and profits that were previously deferred from U.S. income taxes.

On December 22, 2017, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (“SAB 118”), which provides guidance on accounting for the Tax Act’s impact and allows registrants to record provisional amounts during a measurement period not to extend beyond one year of the enactment date. The Company has determined that the Tax Act did not have a material impact to the financial statements, thereby impacting exclusively the disclosures in the Company’s year-end financial statements. The Company currently maintains a full valuation allowance against its U.S. deferred tax assets since the Company continues to incur losses in the United States for all fiscal years since inception.

During the year ended January 31, 2019, the Company completed the accounting for the Tax Act within the measurement period. The previously recorded provisional amount recorded for the Transition Tax was adjusted by an immaterial amount but was fully offset by a corresponding adjustment to the valuation allowance resulting in no impact to the provision for income taxes. The Company has also completed the analysis of the impact of the Tax Act on its existing assertion to indefinitely reinvest the earnings of its subsidiaries outside the United States and concluded that no change was necessary.

As a result of the Tax Act, the Company can make an accounting policy election to either treat taxes due on the global intangible low-taxed income inclusion as a current period expense or factor such amounts into the Company’s measurement of deferred taxes. The Company has completed its analysis of the global intangible low-tax income provisions and elected to use the period cost method and therefore no accrual for the deferred tax aspects of this provision was made.