v3.25.0.1
Income Taxes
 12 Months Ended
Jan. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The Company’s geographical breakdown of its income (loss) before provision for income taxes for the fiscal years ended January 31, 2025, January 31, 2024, and January 31, 2023 is as follows (in thousands):
Year Ended January 31,
202520242023
Domestic$62,385 $99,241 $(195,042)
International(7,851)23,576 35,159 
Income (loss) before provision for income taxes$54,534 $122,817 $(159,883)
The components of the provision for income taxes during the fiscal years ended January 31, 2025, January 31, 2024, and January 31, 2023 are as follows (in thousands):
Year Ended January 31,
202520242023
Current
Federal$431 $272 $— 
State2,493 4,462 855 
Foreign78,109 30,885 20,241 
Total current81,033 35,619 21,096 
Deferred
Federal323 (307)135 
State(204)(343)89 
Foreign(10,022)(2,737)1,082 
Total deferred(9,903)(3,387)1,306 
Provision for income taxes$71,130 $32,232 $22,402 
The following table provides a reconciliation between income taxes computed at the federal statutory rate and the provision for income taxes during the fiscal years ended January 31, 2025, January 31, 2024, and January 31, 2023 (in thousands):
As of January 31,
202520242023
Provision for income taxes at statutory rate$11,452 $25,527 $(33,777)
State income taxes, net of federal benefits2,289 4,118 944 
Effects of foreign operations
10,236 22,425 11,003 
Research and other credits(36,669)(21,182)(19,465)
Stock-based compensation(125,590)(31,852)(47,335)
Non-deductible expenses6,904 4,604 2,800 
Change in valuation allowance152,608 28,810 102,892 
Tax impact of foreign transactions49,883 — 5,340 
Other 17 (218)— 
Provision for income taxes$71,130 $32,232 $22,402 
The Company recognized income tax expense of $71.1 million, $32.2 million, and $22.4 million for the fiscal years January 31, 2025, January 31, 2024 and January 31, 2023, respectively. The tax expense for the fiscal year ended January 31, 2025 was primarily attributable to pre-tax foreign earnings, withholding taxes related to customer payments in certain foreign jurisdictions, intercompany sale of intellectual property from acquired entities and change in the realizability of deferred tax assets in certain foreign jurisdictions. The Company transferred acquired intellectual property from foreign subsidiaries to the U.S. Although the transfer of the intellectual property between consolidated entities did not result in any gain in the consolidated statement of operations, such transactions were taxable for tax purposes. The tax expense for the fiscal years ended January 31, 2024 and January 31, 2023 was primarily attributable to pre-tax foreign earnings and withholding taxes related to customer payments in certain foreign jurisdictions and intercompany sales of intellectual property from acquisitions.
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.
Significant components of the Company’s deferred tax assets and liabilities as of January 31, 2025 and January 31, 2024 are as follows (in thousands):
As of January 31,
20252024
Deferred tax assets
Net operating loss carryforwards$400,277 $420,803 
Research and other credit carryforwards144,068 100,002 
Intangible assets117,620 81,551 
Stock-based compensation60,290 33,885 
Deferred revenue209,357 169,777 
Accrued expenses29,833 23,956 
Operating lease liabilities17,418 20,613 
Capitalized research and development473,889 320,708 
Other, net13,898 — 
Gross deferred assets1,466,650 1,171,295 
Less: Valuation allowance(1,192,366)(957,710)
Total deferred tax assets274,284 213,585 
Deferred tax liabilities
Property and equipment, net(64,576)(51,335)
Capitalized commissions(171,349)(128,302)
Intangible assets(6,921)(6,489)
Operating right-of-use assets(16,853)(19,956)
Other, net— (277)
Total deferred tax liabilities(259,699)(206,359)
Net deferred tax assets$14,585 $7,226 
The Company maintains a full valuation allowance on U.S. federal and state and certain foreign deferred tax assets, including net operating loss carryforwards and tax credits, which the Company has determined are not realizable on a more-likely-than-not basis. In completing the assessment of the continued need for valuation allowance, we analyzed various factors including, but not limited to, cumulative pre-tax losses, excess tax benefits related to stock-based compensation, future reversal of existing temporary differences and tax planning strategies that are prudent and feasible. During the fiscal years ended January 31, 2025, January 31, 2024, and January 31, 2023, the valuation allowance increased by $234.7 million, $47.6 million, and $139.2 million, respectively. The increases in the valuation allowance during the fiscal years ended January 31, 2025 and January 31, 2024 were primarily driven by U.S. operations. As of January 31, 2025, January 31, 2024, and January 31, 2023 the valuation allowance for deferred taxes was $1.2 billion, $957.7 million, and $910.1 million, respectively.
As of January 31, 2025, the Company had aggregate federal and California net operating loss carryforwards of $1.4 billion and $307.9 million, respectively, which may be available to offset future taxable income for income tax purposes. The federal net operating losses are carried forward indefinitely, and California net operating loss carryforwards begin to expire in fiscal 2034 through fiscal 2045. As of January 31, 2025, net operating loss carryforwards for other states totaled $716.0 million, which begin to expire in fiscal 2026 through fiscal 2045. As of January 31, 2025, net operating loss carryforwards for the U.K. totaled $78.0 million, which are carried forward indefinitely, and net operating loss carryforwards totaled immaterial amounts in certain foreign jurisdictions.
As of January 31, 2025, the Company had federal and California research and development (“R&D”) credit carryforwards of $165.1 million and $39.6 million, respectively. The federal R&D credit carryforwards begin to expire in fiscal 2037 though fiscal 2045. The California R&D credits are carried forward indefinitely.
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. The Company’s net operating losses and credit carryovers are not currently subject to a limitation due to an ownership change.
Total gross unrecognized tax benefits as of January 31, 2025, January 31, 2024, and January 31, 2023 were $117.5 million, $58.9 million, and $36.9 million, respectively. As of January 31, 2025, the Company had $54.8 million of unrecognized tax benefits, which, if recognized, would affect the Company’s effective tax rate due to the 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. Cumulatively, the Company had incurred $3.0 million of interest and penalties related to unrecognized tax benefits as of January 31, 2025, and $1.4 million and an insignificant amount of interest and penalties related to unrecognized tax benefits as of January 31, 2024, and January 31, 2023, respectively. During the fiscal year ended January 31, 2025, the net increase in unrecognized tax benefits was a result of certain taxable foreign transactions and R&D credits. During the fiscal year ended January 31, 2024, and January 31, 2023 the net increase in unrecognized tax benefits was a result of R&D credits. The potential change in unrecognized tax benefits during the next 12 months is not expected to be material.
The following is a rollforward of the total gross unrecognized tax benefits for the fiscal years ended January 31, 2025, January 31, 2024, and January 31, 2023 (in thousands):
Balance as of February 1, 2022$26,324 
Decreases in prior period tax positions
(2,122)
Increases in current period tax positions12,699 
Balance as of January 31, 202336,901 
Increases in prior period tax positions4,757 
Decreases in prior period tax positions(1,321)
Increases in current period tax positions18,538 
Balance as of January 31, 202458,875 
Increases in current period tax positions66,354 
Increases in prior period tax positions890 
Decreases in prior period tax positions(5,285)
Settlements with taxing authorities(2,882)
Statute of limitations expirations(151)
Impact from currency fluctuations(261)
Balance as of January 31, 2025$117,540 
The Company files income tax returns in the U.S. federal, foreign, and various state jurisdictions. Tax years 2011 and onwards remain subject to examination by taxing authorities.
The Company does not provide for federal and state income taxes on the undistributed earnings of its foreign subsidiaries as such earnings are to be reinvested offshore indefinitely. If the Company repatriated these earnings, the tax impact of future distributions of foreign earnings would generally be limited to withholding tax from foreign jurisdictions, and the resulting income tax liability would be insignificant.