Income Taxes |
9 Months Ended |
|---|---|
Apr. 30, 2026 | |
| Income Tax Disclosure [Abstract] | |
| Income Taxes | Income Taxes Our effective tax rate (including discrete tax items) for the three months ended April 30, 2026 was (58.0)%, compared to (5.6)% for the three months ended April 30, 2025. Our effective tax rate (including discrete tax items) for the nine months ended April 30, 2026 and 2025 was (5.5)% and nominal, respectively. In addition to discrete items recorded during each respective period, the change in rates also reflects changes in expected product and geographical mix. For purposes of determining our estimated annual effective tax rate ("AETR") to apply to earnings from continuing operations for fiscal 2026, the change in fair value of warrants and derivatives and CEO transition costs are considered significant, unusual or infrequently occurring discrete tax items and were excluded from the computation of such AETR. During the three and nine months ended April 30, 2026, we recorded net discrete tax expense of $1,084,000 and $841,000, respectively, primarily due to the establishment of a valuation allowance on certain net deferred tax assets associated with our Canadian operations, offset in part by the reversal of tax contingencies no longer required due to the expiration of applicable statute of limitations. During the three and nine months ended April 30, 2025, we recorded net discrete tax benefits of $498,000 and $683,000, respectively, primarily related to proxy solicitation costs and CEO transition costs. At April 30, 2026 and July 31, 2025, total unrecognized tax benefits were $7,935,000 and $8,084,000, respectively, including interest of $273,000 and $240,000, respectively. At April 30, 2026 and July 31, 2025, $1,621,000 and $1,818,000, respectively, of our unrecognized tax benefits were recorded as non-current income taxes payable on our Condensed Consolidated Balance Sheets. The remaining unrecognized tax benefits of $6,314,000 and $6,266,000 at April 30, 2026 and July 31, 2025, respectively, were presented as an offset to the associated deferred tax assets on our Condensed Consolidated Balance Sheets (which are subject to a full valuation allowance). We believe it is reasonably possible that the gross unrecognized tax benefits could decrease by as much as $92,000 in the next 12 months due to the expiration of statute of limitations related to federal, state and foreign tax positions. Our U.S. federal income tax returns for fiscal 2022 through 2025 are subject to Internal Revenue Service ("IRS") audit, including our fiscal 2023 income tax return which was recently selected by the IRS for examination. None of our state and foreign income tax returns prior to fiscal 2021 are subject to audit. Future tax assessments or settlements could have a material adverse effect on our consolidated results of operations and financial condition. In July 2025, the One Big Beautiful Bill Act ("OBBBA") was enacted, resulting in significant changes to U.S. tax law. U.S. GAAP, specifically ASC 740, requires that the effects of an applicable change in tax law be recognized in the period of enactment. Accordingly, our financial statements and footnote disclosures reflect the impact of those provisions of the OBBBA that are currently applicable to us, such as bonus depreciation, changes in the tax treatment of U.S. research and experimental expenditures (and related deductions) and limitations imposed on business interest expense deductions. We continue to assess the potential impact of the OBBBA on U.S. research and experimental expenditures incurred in prior years, as the OBBBA provides optionality as to when these costs may be deducted.
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