v3.25.4
Income Taxes
 12 Months Ended
Jan. 31, 2026
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The Company is subject to taxation in the U.S. and various other state and foreign jurisdictions. The domestic and foreign components of pre-tax income (loss) for fiscal 2026, 2025 and 2024 were as follows:
 Year Ended January 31,
 202620252024
(dollars in millions)
Domestic$211 $28 $(360)
Foreign44 18 23 
Income (loss) before provision for income taxes
$255 $46 $(337)
The components of the provision for income taxes for fiscal 2026, 2025 and 2024 were as follows:
 Year Ended January 31,
 202620252024
(dollars in millions)
Current: 
Federal$(1)$5 $2 
State2 2 3 
Foreign7 9 6 
Total current provision for income taxes8 16 11 
Deferred: 
Foreign12 2 7 
Total deferred provision for income taxes
12 2 7 
Total provision for income taxes
$20 $18 $18 
For fiscal 2026, income tax expense resulted primarily from income tax expense related to profitable foreign tax jurisdictions offset by the favorable tax impact of certain U.S. tax legislation.
For fiscal 2025, income tax expense resulted primarily from profitable foreign jurisdictions, federal and state taxes resulting from limitations on tax attribute utilization, offset by the impact of tax windfalls from stock-based compensation in the United States.
For fiscal 2024, the income tax expense resulted primarily from income tax expense related to profitable foreign jurisdictions, federal and state taxes resulting from limitations on tax attribute utilization, and the tax impact of shortfalls from stock-based compensation in the United Kingdom.
On July 4, 2025, the “One Big Beautiful Bill Act” (the “Act”) was enacted. The Act, among other provisions, maintains the U.S. federal 21% corporate tax rate, makes permanent the immediate expensing of domestic research and development expenditures, allows for 100% bonus depreciation for qualified assets, and modifies the U.S. taxation of profits derived from foreign operations. The provisions of the Act have staggered effective dates beginning in 2025 and continuing through 2027. The Company’s provision for income tax reflects the impact of the enactment of the Act.
The Company does not provide for income taxes on undistributed earnings of subsidiaries that are intended to be indefinitely reinvested. Where the Company does not intend to indefinitely reinvest subsidiary earnings, income and withholding taxes, as applicable, are provided on such undistributed earnings and are insignificant.
A reconciliation of the statutory federal income tax rate to the Company’s effective tax rate for fiscal 2026 is as follows:
 
Year Ended January 31, 2026
(dollars in millions)
%
U.S. Federal Statutory Tax Rate$54 21.0 %
State and Local Income Taxes, Net of Federal (National) Income Tax Effect(1)
1 0.3 
Foreign Tax Effects
Australia
   Share based payment awards
3 1.1 
United Kingdom3 1.3 
Other Foreign Jurisdictions4 1.4 
Effect of Cross-Border Tax Laws
Foreign Derived Intangible Income Deduction(3)(1.3)
Tax Credits
Research and development tax credits(24)(9.4)
Changes in Valuation Allowances(51)(20.0)
Nontaxable or Nondeductible Items
Share base payment awards4 1.8 
Nondeductible Officer Compensation17 6.6 
Other4 1.5 
Changes in Unrecognized Tax Benefits8 3.3 
Other Adjustments— 0.3 
Effective Tax Rate$20 7.9 %
(1) State taxes in NY and NYC made up the majority (greater than 50%) of the tax effect in this category.
The following is a reconciliation of the statutory federal income tax rate to the Company’s effective tax rate for fiscal 2025 and 2024:
 Year Ended January 31,
 20252024
Tax at federal statutory rate21.0 %21.0 %
State income taxes, net of federal benefit3.7 3.8 
Change in valuation allowance27.4 (5.6)
Stock-based compensation14.5 (28.4)
Effect of foreign operations
8.1 (0.7)
Research and development credits(51.7)5.3 
Non-deductible expenses19.2 (1.5)
Provision to return true-up
(7.1)0.2 
Unrecognized tax benefits
7.9 — 
Other, net(4.0)0.6 
Effective tax rate39.0 %(5.3)%
The tax effects of temporary differences and related deferred tax assets and liabilities as of January 31, 2026 and 2025 were as follows:
 As of January 31,
 20262025
(dollars in millions)
Deferred tax assets: 
Net operating loss carryforwards$720 $702 
Capitalized research expenditures241 335 
Stock-based compensation27 41 
Operating lease liabilities28 31 
Other reserves and accruals27 24 
Research and development and other credits176 146 
Total deferred tax assets1,219 1,279 
Valuation allowance(1,089)(1,144)
Total deferred tax assets, net130 135 
Deferred tax liabilities:
Deferred commissions(124)(99)
Other deferred tax liabilities(16)(15)
Operating lease right-of-use assets(18)(20)
Depreciation and amortization— (14)
Total deferred tax liabilities(158)(148)
Net deferred tax liabilities
$(28)$(13)
The Company has determined that it is not more likely than not that it will realize the benefits of its net deferred tax assets in the United States due to negative evidence such as a continued cumulative loss. Therefore, the Company has recorded a valuation allowance to reduce the carrying value of the U.S. deferred tax assets, net of U.S. deferred tax liabilities. The U.S. valuation allowance decreased by $55 million and increased by $57 million during fiscal 2026 and 2025, respectively.
As of January 31, 2026, the Company had approximately $2,781 million of federal and $2,031 million of state net operating loss carryforwards available to offset future taxable income. If not utilized, the federal and state net operating loss carryforwards will begin to expire in 2035 and 2026, respectively. As of January 31, 2026, the Company had approximately $30 million of UK net operating losses and $10 million of Israel net operating losses which do not expire.
As of January 31, 2026, the Company had federal research and development tax credit carryforwards of $158 million and California research and development tax credit carryforwards of $100 million. The federal research and development credits will start to expire in 2038 while the California research and development credits do not expire.
The Company’s ability to utilize the net operating loss and tax credit carryforwards in the future may be subject to substantial restrictions in the event of future ownership changes as defined in Section 382 of the Internal Revenue Code and similar state tax laws.
A reconciliation of beginning and ending amount of unrecognized tax benefit was as follows:
 Year Ended January 31,
 202620252024
(dollars in millions)
Gross amount of unrecognized tax benefits as of the beginning of the year$65 $49 $43 
Additions based on tax positions related to a prior year4 4 — 
Additions based on tax positions related to current year9 12 7 
Reductions based on tax positions taken in a prior year — — (1)
Gross amount of unrecognized tax benefits as of the end of the year$78 $65 $49 
For all periods presented, the Company has an immaterial amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate. The Company’s policy is to include interest and penalties related to unrecognized tax benefits within the provision for income taxes. For all years presented, the Company has not accrued a material amount in interest and penalties related to unrecognized tax benefits.
As the Company has net operating loss carryforwards for the U.S. federal and state jurisdictions, the statute of limitations is open for all years. For material foreign jurisdictions, the tax years open to examination include the tax years 2018 and forward.
Cash paid for income taxes, net of refunds received, by jurisdiction for fiscal 2026 was as follows:
 
Year Ended January 31, 2026
 
(dollars in millions)
Federal Taxes$(3)
State Taxes
New York State2 
Other State Jurisdictions1 
Foreign Taxes
India5 
Israel2 
Japan1 
Other Foreign Jurisdictions2 
Total income taxes paid (net of refunds)
$10 
Cash paid for income taxes, net of refunds received during fiscal 2025 and 2024 was $17 million and $13 million, respectively.