Gitlab Inc. 10-K

ITEM 9A. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures Our Chief Executive Officer (“CEO”) and Chief Financial Officer (”CFO”) (“certifying officers”) have conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)) as of January 31, 2023 . Our certifying officers concluded that, as a result of the material weaknesses in internal control over financial reporting as described below, our disclosure controls and procedures were not effective as of January 31, 2023 . Management’s Report on Internal Control Over Financial Reporting Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act). The Company’s management, with participation of the CEO and CFO, under the oversight of our Board of Directors, evaluated the effectiveness of the Company’s internal control over financial reporting as of January 31, 2023 using the framework in Internal Control - Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that evaluation, management concluded that the Company’s internal control over financial reporting was not effective as of January 31, 2023 due to the material weaknesses in internal control over financial reporting, described below. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. As of January 31, 2023 , management determined that material weaknesses exist due to a lack of policies and procedures related to the operation of control activities and inadequate communication of information to control owners and operators related to the objectives and responsibilities for internal control in a manner which supports the internal control environment at the Company. As a result, the following material weaknesses exist: • We did not design and maintain effective controls over certain information technology (“IT”) general controls for information systems that are relevant to the preparation of our consolidated financial statements. In particular, we did not design and maintain effective (i) program change management controls to ensure that IT programs, data changes and migrations affecting financial IT applications and underlying records are identified, tested, authorized and implemented appropriately and (ii) user access controls to ensure appropriate segregation of duties, restricted user and privileged access to our financial applications, data and programs to the appropriate personnel. The ineffective design and operation of IT general controls resulted in the ineffective operation of automated controls and manual controls using reports and information from the impacted information systems used in financial reporting processes, • We did not retain sufficient contemporaneous documentation to demonstrate the operation of controls over manual journal entries, • We did not retain sufficient contemporaneous documentation to demonstrate the operation of review controls over stock-based compensation at a sufficient level of precision and such controls relied on reports and information adversely impacted by the IT general control deficiencies, and • As previously reported, we did not design and maintain effective and timely review procedures over the accounting for and disclosure of non-routine transactions. This material weakness has not been remediated, as the new controls designed rely on reports and information adversely impacted by the IT general control deficiencies. 128 Table of Contents The aforementioned material weaknesses did not result in a material misstatement to our annual or interim financial statements, however, the deficiencies, when aggregated, could result in misstatements potentially impacting all financial statement accounts and disclosures that would not be prevented or detected. Therefore, we concluded that the deficiencies represent material weaknesses in the Company’s internal control over financial reporting and our internal control over financial reporting was not effective as of January 31, 2023 . Our independent registered public accounting firm, KPMG LLP, who audited the consolidated financial statements included in this Annual Report on Form 10-K, issued an adverse opinion on the effectiveness of the Company’s internal control over financial reporting. KPMG LLP’s report appears in Item 8 of this Annual Report on Form 10-K. Remediation Plan for Material Weaknesses During the year ended January 31, 2023, we commenced implementing of the following steps intended to remediate our material weaknesses: • Strengthening IT governance and designing IT general controls including program change management, restricting user access to our internal systems used for financial reporting and enhancing the retention of contemporaneous documentation of reviews over IT general controls, • Enhancing the review of manual journal entries, including outlining policies and procedures to strengthen retention of contemporaneous documentation and supervisory reviews by management, • Enhancing the precision of controls around the review of equity transactions, including the review of underlying source data and outlining policies and procedures to strengthen the retention of contemporaneous documentation of control reviews, • Enhancing the review process around non-standard contracts and expanding our internal disclosure review processes to provide greater representation across various functions to ensure timely identification and review of non-routine transactions, and • Developing and deploying training programs regarding the operation and importance of internal controls. We believe the actions described above, once fully implemented and tested, will be sufficient to remediate the identified material weaknesses and strengthen our internal controls. However, our efforts to remediate these material weaknesses may not be effective or prevent any future material weakness or significant deficiency in our internal control over financial reporting. These material weaknesses will not be considered remediated until the applicable remedial controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. Changes in Internal Control over Financial Reporting There were no changes to our internal control over financial reporting identified in connection with the evaluation required by rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended January 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Limitations on Effectiveness of Controls and Procedures Our disclosure controls and procedures and internal controls over financial reporting are designed to provide reasonable assurance of achieving their desired objectives. Management does not expect, however, that our disclosure controls and procedures or our internal controls over financial reporting will prevent or detect all errors and fraud. Any control system, no matter how well designed and operated, is based upon certain assumptions and can provide only reasonable, not absolute, assurance that its objectives will be met. Further, no evaluation of controls can provide absolute assurance that 129 Table of Contents misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the company have been detected. ITEM 9B. OTHER INFORMATION None. ITEM 9C. DISCLOSURES REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS Not applicable. 130 Table of Contents PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE The information required by this item will be set forth in our definitive proxy statement to be filed with the Securities and Exchange Commission not later than 120 days after the end of our fiscal year ended January 31, 2023 in connection with our 2023 annual meeting of shareholders, or the Proxy Statement, and is incorporated herein by reference. ITEM 11. EXECUTIVE COMPENSATION The information required by this item will be set forth in the Proxy Statement and is incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNER AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The information required by this item will be set forth in the Proxy Statement and is incorporated herein by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE The information required by this item will be set forth in the Proxy Statement and is incorporated herein by reference. ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES The information required by this item will be set forth in the Proxy Statement and is incorporated herein by reference. 131 Table of Contents PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENTS SCHEDULES (1) All Financial Statements See Index to Consolidated Financial Statements in Item 8 herein. (2) Financial Statements Schedules The following additional financial statement schedules should be considered in conjunction with our consolidated financial statements. All other financial statement schedules have been omitted because the required information is not present in amounts sufficient to require submission of the schedule, not applicable, or because the required information is included in the consolidated financial statements or notes thereto. Schedule II: Valuation and Qualifying Accounts The table below details the activity of the deferred tax valuation allowance for the fiscal years ended January 31, 2023, 2022 , and 2021: Balance at Beginning of Year Additions Write-offs or Deductions Balance at End of Year (in thousands) Year ended January 31, 2023 Deferred tax valuation allowance $ 115,839 $ 43,631 $ — $ 159,470 Year ended January 31, 2022 Deferred tax valuation allowance $ 74,870 $ 40,969 $ — $ 115,839 Year ended January 31, 2021 Deferred tax valuation allowance $ 37,847 $ 37,023 $ — $ 74,870 (3) Exhibits Incorporated by Reference Filed or Furnished Herewith Exhibit Number Description Form File Number Exhibit Filing Date 3.1 Restated Certificate of Incorporation 2021 of GitLab Inc. 10-Q 001-40895 3.2 12/7/2021 3.2 Amended and Restated Bylaws of GitLab Inc. 8-K 001-40895 3.1 12/15/2022 4.1 Form of Class A Common Stock Certificate of GitLab Inc. S-1/A 333-259602 4.1 10/12/2021 4.2 Form of Class B Common Stock Warrant S-1/A 333-259602 4.3 10/4/2021 4.3 Description of Registrant’s Securities 10-K 001-40895 4.4 4/8/2022 10.1† Form of Indemnification Agreement between GitLab Inc. and each of directors and executive officers S-1 333-259602 10.1 9/17/2021 10.2† GitLab Inc. 2015 Equity Incentive Plan and related form agreements S-1 333-259602 10.2 9/17/2021 10.3† GitLab Inc. 2021 Equity Incentive Plan and related form agreements S-1/A 333.259602 10.3 10/4/2021 132 Table of Contents 10.4† GitLab Inc. 2021 Employee Stock Purchase Plan 10-Q 001-40895 10.4 6/7/2022 10.5† Form of Offer Letter between GitLab Inc. and each of its named executive officers S-1/A 333-259602 10.5 10/4/2021 10.6†‡ Form of Global Performance Stock Unit Award Agreement 10-Q 001-40895 10.6 9/7/2022 10.7† Service Continuation Agreement between the Registrant and Eric Johnson 10-Q 001-40895 10.7 12/6/2022 21.1 List of Subsidiaries X 23.1 Consent of KPMG LLP, independent registered public accounting firm X 31.1 Certification of Principal Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. X 31.2 Certification of Principal Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. X 32.1* Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. X 32.2* Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. X 101.INS XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. X 101.SCH Inline XBRL Taxonomy Extension Schema Document. X 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document. X 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document. X 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document. X 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document. X 104 Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101). X † Indicates management contract or compensatory plan. ‡ Registrant has omitted schedules and exhibits pursuant to Item 601(a)(5) of Regulation S-K. The Registrant agrees to furnish supplementally a copy of the omitted schedules and exhibits to the SEC upon request. * The certifications furnished in Exhibits 32.1 and 32.2 hereto are deemed to accompany this Annual Report on Form 10-K and are not deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, nor shall they be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act, irrespective of any general incorporation language contained in such filing. 133 Table of Contents ITEM 16. FORM 10-K SUMMARY None. 134 Table of Contents SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the re gistrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. GITLAB INC. Date: March 30, 2023 By: /s/ Sytse Sijbrandij Name: Sytse Sijbrandij Title: Chief Executive Officer Date: March 30, 2023 By: /s/ Brian Robins Name: Brian Robins Title: Chief Financial Officer Date: March 30, 2023 By: /s/ Dale Brown Name: Dale Brown Title: Principal Accounting Officer POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Brian Robins and Robin Schulman, and each or any one of them, his or her true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any an d all capacities, to sign any and all amendments to this report, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-facts and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Report has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated. Name Title Date /s/ Sytse Sijbrandij Director and Chief Executive Officer March 30, 2023 Sytse Sijbrandij (principal executive officer) /s/ Brian Robins Chief Financial Officer March 30, 2023 Brian Robins (principal financial officer) /s/ Dale Brown Principal Accounting Officer March 30, 2023 Dale Brown (principal accounting officer) /s/ Sundeep Bedi Director March 30, 2023 Sundeep Bedi /s/ Karen Blasing Director March 30, 2023 Karen Blasing /s/ Sue Bostrom Director March 30, 2023 Sue Bostrom /s/ Matthew Jacobson Director March 30, 2023 Matthew Jacobson 135 Table of Contents /s/ Mark Porter Director March 30, 2023 Mark Porter /s/ Merline Saintil Director March 30, 2023 Merline Saintil /s/ Godfrey Sullivan Director March 30, 2023 Godfrey Sullivan 136