v3.25.4
Income Taxes
 12 Months Ended
Jan. 31, 2026
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The Company’s geographical breakdown of its income (loss) before provision for income taxes is as follows (in thousands):
Year Ended January 31,
202620252024
Domestic$(151,441)$66,415 $82,095 
International24,452 (7,851)23,576 
Income (loss) before provision for income taxes$(126,989)$58,564 $105,671 
The provision for income taxes consists of the following (in thousands):
Year Ended January 31,
202620252024
Current
Federal$177 $431 $272 
State1,340 2,493 4,462 
Foreign47,456 78,109 30,885 
Total current48,973 81,033 35,619 
Deferred
Federal59 323 (307)
State187 (204)(343)
Foreign(15,043)(10,022)(2,737)
Total deferred(14,797)(9,903)(3,387)
Provision for income taxes$34,176 $71,130 $32,232 
Upon the adoption of ASU 2023-09, Improvements to Income Tax Disclosures, as described in Note 1, the reconciliation of taxes at the federal statutory rate to the Company’s provision for (benefit from) income taxes for the fiscal year ended January 31, 2026 is as follows (in thousands, except for percentages):
As of January 31, 2026
Amount Percent
U.S. federal statutory tax rate$(26,668)21.0 %
State and local income taxes, net of federal income tax effect(1)
(7,846)6.2 %
Foreign tax effects
Brazil
Withholding tax9,690 (7.6)%
Other498 (0.4)%
Denmark
Stock-based compensation(1,674)1.3 %
Other1,146 (0.9)%
United Kingdom
Stock-based compensation(12,609)9.9 %
Valuation allowance8,593 (6.8)%
Other884 (0.7)%
Israel
Non-deductible intercompany interest expense2,846 (2.2)%
Tax impact of intercompany transactions11,516 (9.1)%
Withholding tax 5,784 (4.6)%
Other1,965 (1.5)%
Spain
Valuation allowance2,993 (2.4)%
Other(202)0.2 %
Other foreign jurisdictions8,215 (6.5)%
Effect of cross-border tax laws
Branch income(68,126)53.6 %
Deductible foreign taxes (4,900)3.9 %
Tax credits
Research and development tax credits(61,175)48.2 %
Changes in valuation allowances236,543 (186.3)%
Nontaxable or nondeductible items
Stock-based compensation(96,077)75.7 %
Meals & entertainment3,669 (2.9)%
Transaction costs1,839 (1.4)%
Other 2,120 (1.7)%
Changes in unrecognized tax benefits15,520 (12.2)%
Other adjustments(368)0.3 %
Provision for income taxes$34,176 (26.9)%
(1)    State taxes in California made up a majority (greater than 50%) of the tax effect in this category.
A reconciliation of the U.S. federal statutory income tax rates to the Company’s effective tax rate for the fiscal years ended January 31, 2025 and January 31, 2024 is as follows (in thousands):
Year Ended January 31,
20252024
Provision for income taxes at statutory rate$12,298 $22,191 
State income taxes, net of federal benefits2,289 4,118 
Effects of foreign operations
10,236 22,425 
Research and other credits(36,669)(21,182)
Stock-based compensation(125,590)(31,852)
Non-deductible expenses6,904 4,604 
Change in valuation allowance151,762 32,146 
Tax impact of foreign transactions49,883 — 
Other 17 (218)
Provision for income taxes$71,130 $32,232 
Cash paid for income taxes, net of refunds received, by jurisdiction pursuant to the disclosure requirements of ASU 2023-09 for the fiscal year ended January 31, 2026 is as follows (in thousands):
As of January 31, 2026
Federal$(2,834)
State467 
Foreign
Australia3,592 
Brazil10,915 
India7,925 
Israel15,512 
Other countries15,887 
Total cash paid for income taxes, net of refunds$51,464 
Cash paid for income taxes, net of refunds, during the fiscal years ended January 31, 2025 and January 31, 2024 was $19.0 million and $22.6 million, respectively.
The Company recognized income tax expense of $34.2 million, $71.1 million, and $32.2 million for the fiscal years January 31, 2026, January 31, 2025 and January 31, 2024, respectively. The tax expense for the fiscal years ended January 31, 2026 and January 31, 2025 was primarily attributable to pre-tax foreign earnings and withholding taxes in certain foreign jurisdictions, intercompany sales of intellectual property from acquisitions, 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 year ended January 31, 2024 was primarily attributable to pre-tax foreign earnings and withholding taxes in certain foreign jurisdictions.
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, 2026 and January 31, 2025 are as follows (in thousands):
As of January 31,
20262025
Deferred tax assets
Net operating loss carryforwards$675,515 $400,277 
Research and other credit carryforwards210,753 144,068 
Intangible assets104,051 117,620 
Stock-based compensation85,705 71,140 
Deferred revenue271,640 209,357 
Accrued expenses39,562 29,833 
Operating lease liabilities26,460 17,418 
Capitalized research and development463,335 473,889 
Other, net12,176 13,898 
Gross deferred assets1,889,197 1,477,500 
Less: Valuation allowance(1,523,498)(1,203,216)
Total deferred tax assets365,699 274,284 
Deferred tax liabilities
Property and equipment, net(104,395)(64,576)
Capitalized commissions(201,954)(171,349)
Operating right-of-use assets(25,230)(16,853)
Intangible assets(4,963)(6,921)
Other, net(242)— 
Total deferred tax liabilities(336,784)(259,699)
Net deferred tax assets$28,915 $14,585 
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, the Company 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, 2026, January 31, 2025, and January 31, 2024, the valuation allowance increased by $320.3 million, $233.6 million, and $52.0 million, respectively. The increases in the valuation allowance during the fiscal years ended January 31, 2026 and January 31, 2025 were primarily driven by U.S. operations. As of January 31, 2026, January 31, 2025, and January 31, 2024 the valuation allowance for deferred taxes was $1.5 billion, $1.2 billion, and $1.0 billion, respectively.
As of January 31, 2026, the Company had aggregate U.S federal and California net operating loss carryforwards of $2.6 billion and $417.4 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 2046. As of January 31, 2026, net operating loss carryforwards for other states totaled $998.3 million, which begin to expire in fiscal 2027 through fiscal 2046. As of January 31, 2026, net operating loss carryforwards for the U.K. totaled $84.2 million, which are carried forward indefinitely, and net operating loss carryforwards totaled immaterial amounts in certain foreign jurisdictions.
As of January 31, 2026, the Company had federal and California research and development (“R&D”) credit carryforwards of $227.0 million and $59.8 million, respectively. The federal R&D credit carryforwards begin to expire in fiscal 2037 through fiscal 2046. The California R&D credits are carried forward indefinitely. Realization of these net operating losses and R&D 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, which could adversely affect the Company’s results of operations.
On July 4, 2025, tax reform legislation included in the One Big Beautiful Bill Act (the “OBBBA”) was enacted in the United States. The OBBBA includes significant corporate tax reforms, including (i) the permanent reinstatement of deducting domestic R&D expenditures as incurred beginning in fiscal 2026 (under prior law such expenditures were capitalized and amortized over five years); (ii) the option to claim 100% accelerated depreciation deductions on qualified property; and (iii) international tax provisions modifying global intangible low-taxed income (“GILTI”), foreign-derived intangible income (“FDII”), and base erosion and anti-abuse tax (“BEAT”). The change in U.S. tax law resulted in an immaterial favorable effect on the income tax provision due to the Company’s valuation allowance and was accounted for in the second quarter of fiscal year 2026.
Total gross unrecognized tax benefits as of January 31, 2026, January 31, 2025, and January 31, 2024 were $137.8 million, $117.5 million, and $58.9 million, respectively. As of January 31, 2026, the Company had $41.0 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 $6.6 million of interest and penalties related to unrecognized tax benefits as of January 31, 2026, and $3.0 million and $1.4 million related to unrecognized tax benefits as of January 31, 2025 and January 31, 2024, respectively. During the fiscal year ended January 31, 2026, the net increase in unrecognized tax benefits was a result of increase in R&D credits, partially offset by reduction in prior year reserves based on our view of a recent position taken by a tax authority. 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, the net increase in unrecognized tax benefits was a result of R&D credits.
The following is a rollforward of the total gross unrecognized tax benefits for the fiscal years ended January 31, 2026, January 31, 2025, and January 31, 2024 (in thousands):
Balance as of February 1, 2023$36,901 
Increases in prior period tax positions
4,757 
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, 2025117,540 
Increases in current period tax positions31,538 
Increases in prior period tax positions4,317 
Decreases in prior period tax positions(21,359)
Settlements with taxing authorities(598)
Statute of limitations expirations(593)
Impact from currency fluctuations6,963 
Balance as of January 31, 2026$137,808 
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.