Entity information:
Income Taxes
The domestic and international components of the Company's loss from operations before income taxes are as follows:
 
Fiscal year ended January 31,
(in thousands)
2018
 
2017
 
2016
Domestic
$
(58,875
)
 
$
(41,621
)
 
$
(24,546
)
International
(7,528
)
 
(1,461
)
 
(2,004
)
Loss from operations before income taxes
$
(66,403
)
 
$
(43,082
)
 
$
(26,550
)

The Company's (provision for) benefit from income taxes is comprised of the following:
 
Fiscal year ended January 31,
(in thousands)
2018
 
2017
 
2016
Current:
 
 
 
 
 
   Federal
$
—

 
$
—

 
$
—

   State
—

 
—

 
—

   International
(291
)
 
(37
)
 
(1,002
)
   Total current
(291
)
 
(37
)
 
(1,002
)
Deferred:
 
 
 
 
 
   Federal
100

 
—

 
—

   State
—

 
—

 
—

   International
29

 
(31
)
 
1,057

   Total deferred
129

 
(31
)
 
1,057

Total (provision for) benefit from income taxes
$
(162
)
 
$
(68
)
 
$
55


The Company reconciled its income taxes at the federal statutory income tax rate to the (provision for) benefit from income taxes included within its consolidated statements of operations and comprehensive loss. The reconciliation is as follows:
 
Fiscal year ended January 31,
(in thousands)
2018
 
2017
 
2016
U.S. federal tax benefit at statutory rate
$
21,849

 
$
14,648

 
$
9,027

State taxes, net of federal benefit
1,766

 
990

 
493

Foreign tax rate differential
(637
)
 
(253
)
 
(249
)
Non-deductible expenses
(3,503
)
 
(1,549
)
 
(2,004
)
Changes in valuation allowance
1,599

 
(13,805
)
 
(6,317
)
Rate change
(21,580
)
 
(52
)
 
(694
)
Other, net
344

 
(47
)
 
(201
)
Total (provision for) benefit from income taxes
$
(162
)
 
$
(68
)
 
$
55


On December 22, 2017, the Tax Reform Act was enacted. The Tax Reform Act significantly revised the U.S. corporate income tax laws, including, but not limited to, lowering the top bracket of the federal statutory corporate tax rate from 35% to a flat rate of 21%, and allowing net operating losses generated after December 31, 2017, to be carried forward indefinitely. The Tax Reform Act also imposed a one-time transition tax on accumulated earnings of foreign subsidiaries, eliminated certain deductions, introduced new tax regimes, and changed how foreign earnings are subject to U.S. tax, among other provisions. In accordance with Section 15 of the Internal Revenue Code, the Company utilized a blended rate of 32.9% for its fiscal 2018 tax year, consisting of a 34% statutory tax rate based on its tax bracket from February 1, 2017 to December 31, 2017, and a flat 21% statutory tax rate effective January 1, 2018. The Company's (provision for) benefit from income taxes included a benefit of $21.6 million as a result of remeasuring the Company's deferred taxes based on the new enacted tax rate of 21%.
Deferred Income Taxes
Deferred income taxes reflect the net tax effects of (a) temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, and (b) operating loss carryforwards. In conjunction with the enactment of the Tax Reform Act in December 2017, the Company remeasured its deferred tax assets and liabilities based on the new enacted tax rate of 21%. The components of the Company's deferred income taxes were as follows:
 
Fiscal year ended January 31,
(in thousands)
2018
 
2017
Deferred tax assets:
 
 
 
  Net operating loss carryforwards
$
39,653

 
$
42,421

  Stock-based compensation
4,937

 
3,794

  Allowance for doubtful accounts
58

 
74

  Deferred rent
1,066

 
1,948

  Accrued expenses
233

 
312

  Intangible assets
330

 
149

  Deferred revenue
62

 
62

  Other
57

 
58

  Total deferred tax assets
46,396

 
48,818

  Less: valuation allowance
(43,071
)
 
(44,549
)
  Deferred tax assets, net of valuation allowance
3,325

 
4,269

Deferred tax liabilities:
 
 
 
  Prepaid expenses
(86
)
 
(40
)
  Property and equipment
(406
)
 
(1,319
)
  Deferred commissions
(2,763
)
 
(2,952
)
  Intangible assets
(103
)
 
(126
)
  Other
(12
)
 
—

  Total deferred tax liabilities
(3,370
)
 
(4,437
)
Net deferred tax liability
$
(45
)
 
$
(168
)

As of January 31, 2018, for federal income tax purposes, the Company had $187.0 million of gross U.S. federal NOL carryforwards. This amount includes $30.2 million of excess tax benefits not reflected in deferred tax assets, as amounts associated with vesting or settlement of stock-based awards are recorded directly to additional paid‑in‑capital and deferred tax assets only when such benefits are realized. The Company's U.S. federal NOL carryforwards expire starting in fiscal 2028 through fiscal 2037 for NOL carryforwards established on or prior to December 31, 2017. In conjunction with the enactment of the Tax Reform Act, U.S. federal NOL carryforwards generated by the Company in tax years beginning after January 31, 2017 can be carried forward indefinitely.
As of January 31, 2018, for state income tax purposes, the Company had $7.3 million of post‑apportioned, tax‑effected NOL carryforwards, which expire in fiscal 2025 through fiscal 2037. As of January 31, 2018, the Company had $1.9 million of tax‑effected foreign NOL carryforwards, of which $1.7 million expire in fiscal 2023 through fiscal 2026; the remaining do not expire.
Utilization of the Company’s NOL carryforwards in the future will be dependent upon its ability to generate taxable income and could be limited due to ownership changes, as defined under the provisions of Section 382 of the Code and similar state provisions. Utilization of the Company’s foreign NOL carryforwards in the future will be dependent upon the local tax law and regulation.
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, including future reversals of existing taxable temporary differences, projected future taxable income, loss carryback and tax-planning strategies. Generally, more weight is given to objectively verifiable evidence, such as the cumulative loss in recent years, as a significant piece of negative evidence to overcome. During the fiscal year ended January 31, 2018, the valuation allowance decreased $1.5 million from approximately $44.5 million to $43.1 million, primarily due to the impact of the remeasurement of the NOL carryforwards and other U.S. deferred tax assets in conjunction with the Tax Reform Act, largely offset by NOL carryforwards established this period and other increases in U.S. deferred tax assets. During the fiscal year ended January 31, 2017, the valuation allowance increased $13.8 million from approximately $30.7 million to $44.5 million, primarily due to increases in NOL carryforwards and other U.S. deferred tax assets. The Company will continue to assess the realizability of the deferred tax assets in each applicable jurisdiction going forward.
Other Considerations
The Company has not recorded deferred income taxes and withholding taxes with respect to the undistributed earnings of its foreign subsidiaries as such earnings are determined to be reinvested indefinitely. Upon distribution of those earnings in the form of dividends or otherwise, the Company may be subject to U.S. state income taxes and withholding taxes, the determination of which is not practical as it is dependent on the amount of U.S. tax losses or other tax attributes available at the time of repatriation. The Company's aggregate undistributed earnings of its foreign subsidiaries is in a loss position. As of January 31, 2018 and 2017, gross undistributed earnings of the Company’s foreign subsidiaries amounted to $0.5 million and $0.1 million, respectively. The Company did not record any amounts due to the effect of the one-time transition tax under the Tax Reform Act based on reasonable estimates.
The Company continues to evaluate the impacts of the Tax Reform Act and considers the amounts recorded to be provisional and based on reasonable estimates, except for the remeasurement of its deferred taxes based on the new enacted rate, for which the accounting is complete. The Company continues to evaluate other elements of the Tax Reform Act, including the one-time transition tax, and the Global Intangible Low-Tax Income ("GILTI") provision, for which the Company has not yet elected an accounting policy. As the Company continues to assess its (provision for) benefit from income taxes, any adjustments to the provisional amounts arising from continued analysis of the Tax Reform Act or upon completion of its U.S. income tax return, will be recognized in accordance with SAB 118 measurement period guidance.
For the fiscal years ended January 31, 2018 and 2017, the Company did not take any uncertain tax positions, and recognized less than $0.1 million in each of the periods presented for interest and penalties related to accrued unrecognized tax benefits. As of January 31, 2018 and 2017, $0.2 million of accrued unrecognized tax benefits, associated with an uncertain tax position taken on an intercompany transfer of certain intangible assets in the fiscal year ended January 31, 2016, were included within other long term liabilities on the consolidated balance sheets. The Company does not expect any significant change in its unrecognized tax benefits during the next twelve months.
The Company is subject to taxation in the United States and various state and foreign jurisdictions. The Company’s most significant operations are in the United States and the earliest open tax year subject to potential examination in the United States is 2008.