Income Taxes |
3 Months Ended |
|---|---|
Apr. 30, 2026 | |
| Income Tax Disclosure [Abstract] | |
| Income Taxes | Income Taxes The Company computes its year-to-date provision for income taxes by applying the estimated annual effective tax rate to year-to-date pretax income or loss and adjusts the provision for discrete tax items recorded in the period. During the three months ended April 30, 2026 and 2025, the Company recorded an income tax provision of $12.1 million and $6.7 million, respectively.
During the three months ended April 30, 2026, the Company’s effective tax rate differed from the U.S. federal statutory tax rate primarily due to the impact of non-deductible items, state taxes, and foreign tax rate differential on non-U.S. income. During the three months ended April 30, 2026, the Company also recorded discrete income tax expense related to the impact of non-deductible stock-based compensation of $3.8 million, withholding tax of $1.2 million, and changes in uncertain tax positions for certain of the Company’s non-U.S. entities of $2.3 million. During the three months ended April 30, 2025, the Company’s effective tax rate differed from the U.S. federal statutory tax rate primarily due to the impact of non-deductible items, stock-based compensation, and foreign tax rate differential on non-U.S. income. During the three months ended April 30, 2025, the Company also recorded discrete income tax
expense related to impacts of non-deductible stock-based compensation and withholding tax of $3.0 million and $1.6 million, respectively.
The Company monitors the realizability of its deferred tax assets taking into account all relevant factors at each reporting period. As of April 30, 2026, based on the relevant weight of positive and negative evidence, including cumulative taxable income over the past three years, which is objective and verifiable, and consideration of its expected future taxable earnings, the Company concluded that it is more likely than not that its deferred tax assets are realizable.
The IRA was signed into law on August 16, 2022. The bill was meant to address the high inflation rate in the U.S. through various climate, energy, healthcare, and other incentives. These incentives are meant to be paid for by the tax provisions included in the IRA, such as a 15 percent corporate minimum tax, an excise tax on stock buybacks, additional Internal Revenue Service funding to improve taxpayer compliance, and other items. During the three months ended April 30, 2026, the Company paid no excise taxes associated with the Company’s share repurchase programs. As of April 30, 2026, the Company has accrued $0.9 million of excise taxes associated with the 2026 Share Repurchase Program.
On July 4, 2025, the One Big Beautiful Bill Act (the “OBBBA”) was enacted into U.S. law. The OBBBA includes significant changes, such as the permanent extension of certain provisions originally enacted in the 2017 Tax Cuts and Jobs Act that were set to expire on December 31, 2025, modifications to certain international tax provisions, and the restoration of tax treatment for certain business provisions, including 100% bonus depreciation for certain qualified property, domestic research and experimental cost expensing, and the business interest expense limitation. The legislation has multiple effective dates, with certain provisions effective in 2025 and others phased in through 2027. After assessing the impact of the OBBBA, the Company concluded that it did not have a material effect on either the Company’s condensed consolidated financial statements or its annual estimated effective tax rate.
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