Income Taxes |
6 Months Ended |
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Jul. 31, 2021 | |
| 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 July 31, 2021 and 2020, the Company recorded an income tax expense of $2.5 million and $0.4 million, respectively, and income tax expense of $4.3 million and $1.8 million in the six months ended July 31, 2021 and 2020, respectively.
The Company's effective tax rate generally differs from the U.S. federal statutory tax rate primarily due to a full valuation allowance related to the Company's U.S. deferred tax assets, partially offset by state taxes and the foreign tax rate differential on non-U.S. income.
The Company regularly evaluates the realizability of its deferred tax assets and establishes a valuation allowance if it is more likely than not that some or all the deferred tax assets will not be realized. In making such a determination, the Company considers all available positive and negative evidence. As of July 31, 2021, the Company continues to maintain a full valuation allowance against the deferred tax assets for the U.S. and certain international entities.
Unrecognized Tax Benefits
The Company has income tax audits in progress in India for the 2016-17 and 2017-18 fiscal years. Based on the preliminary audit findings, primarily related to transfer pricing, the Company has recorded a reserve of $0.4 million, including interest, as of July 31, 2021. The Company intends to vigorously pursue rejection or reduction of any assessment raised. During the quarter ending July 31, 2021, the Company reassessed its transfer pricing tax position in India and recorded a $0.7 million reserve related to several open fiscal years that are not under audit.
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