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Item 8. Financial Statements and Supplementary Data

2024-03-26 compared with 2023-03-30 · 347 added, 301 removed, 946 unchanged (41% of the section changed)

1 unchanged sentence

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Reports of Independent Registered Public Accounting Firm ( KPMG LLP , Pittsburgh, PA , Auditor Firm ID:

Consolidated Balance Sheets as of January 31, 2023 and January 31, 2022

Consolidated Statements of Operations for the years ended 202 3 , 202 2 and 202 1

Consolidated Statements of Comprehensive Loss for the years ended 202 3 , 202 2 and 202 1

Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit) for the years ended 202 3 , 202 2 and 202 1

Consolidated Statements of Cash Flows for the years ended 202 3 , 202 2 and 202 1

Reports of Independent Regist ered Public Accounting Firm ( KPMG LLP , Pittsburgh, PA , Auditor Firm ID:

Consolidated Balance Sheets

Consolidated Statements of Operations

Consolidated Statements of Comprehensive Loss

Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equit y (Deficit)

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

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The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Impact of ineffective control environment

As disclosed in management’s report on internal control over financial reporting, the Company identified a material weakness as of January 31, 2023 associated with ineffective information technology general

controls (ITGCs) in the areas of user access and change-management over information technology (IT) systems that support the Company’s financial reporting processes.

Automated and manual business process controls dependent on ITGCs were also deemed ineffective, because they could have been adversely impacted by the ineffective ITGCs.

This material weakness affects substantially all financial statement accounts.

We identified the evaluation of the sufficiency of audit evidence in response to the material weakness as a critical audit matter.

Evaluating the sufficiency of the audit evidence obtained required significant auditor judgment because of the pervasive nature of the material weakness identified above.

The following are the primary procedures we performed to address this critical audit matter.

• We applied significant auditor judgment to determine the timing, nature and extent of procedures to be performed over processes impacted by the material weakness.

• We reflected the effect of the material weakness in our assessment of risk and performed the procedures closer to the balance sheet date.

• These procedures included lowering testing thresholds, increasing sample sizes and manually testing the completeness and accuracy of system generated reports.

• We evaluated the overall sufficiency of audit evidence obtained by assessing the results of the procedures performed.

Evaluation of standalone selling prices (SSPs) for self-managed subscription and self-managed license performance obligations

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The following are the primary procedures we performed to address this critical audit matter.

• We evaluated the overall methodology used to determine the estimate of SSPs based on the expected cost plus a margin approach.

• We evaluated the overall methodology used to determine the estimate of SSPs based on the expected cost plus margin approach

• We performed sensitivity analyses over the Company’s assumptions used to determine the SSPs to identify the costs to develop the paid features as the key assumption and to assess the impact of changes in the assumption on the Company’s SSPs

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• We tested the mathematical accuracy of management’s calculations of estimated selling prices.

Evaluation of Unrecognized Tax Positions

As discussed in Note 13 to the consolidated financial statements, the Company is involved in bilateral advance pricing agreement (BAPA) negotiations between the United States Internal Revenue Service (IRS) and the Dutch Tax Authority (DTA) relating to the Company’s transfer pricing arrangements between the United States and the Netherlands.

The proposed agreements between the Company, the IRS, and the DTA related to these transfer pricing arrangements have not been finalized.

As of January 31, 2024, the Company recorded net tax expense of $254.9 million, which represented the unrecognized tax benefit related to the BAPA and the Company’s best estimate of the tax expense associated with the proposed agreements and their related effects.

We identified the evaluation of the Company’s unrecognized tax benefit related to the BAPA as a critical audit matter.

Complex auditor judgment and specialized skills and knowledge were required to evaluate the Company’s interpretation of the applicable tax laws and regulations and its analysis of the recognition and measurement of its tax position related to transfer pricing.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s unrecognized tax benefits process, including controls related to 1) interpreting tax law, 2) evaluating which tax positions are more likely than not to be sustained when the BAPA negotiations are finalized, and 3) the measurement of the potential benefit to be realized.

We involved tax professionals with specialized skill and knowledge, who assisted in evaluating:

• the Company’s communication with the relevant tax authorities to gain an understanding of the relevant facts

• the Company’s interpretation of applicable tax laws and judgments about the administrative practices of the relevant tax authorities, and the potential impact on the unrecognized tax benefit related to the BAPA

• the measurement of the potential benefit to be realized and related interest and penalties.

We have served as the Company’s auditor since 2019.

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and subsidiaries' (the Company) internal control over financial reporting as of January 31, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, because of the effect of the material weaknesses, described below, on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of January 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, because of the effect of the material weakness, described below, on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of January 31, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of January 31, 2024 and January 31, 2023, the related consolidated statements of operations, comprehensive loss, convertible preferred stock and stockholders’ equity (deficit), and cash flows for each of the years in the three-year period ended January 31, 2024, and the related notes and financial statement schedule II - valuation and qualifying accounts (collectively, the consolidated financial statements), and our report dated March 25, 2024 expressed an unqualified opinion on those consolidated financial statements.

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 the company’s annual or interim financial statements will not be prevented or detected on a timely basis.

Material weaknesses related to the following have been identified and included in management’s assessment:

The Company had 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 Company had ineffective information technology general controls in the areas of user access and change-management over information technology systems that are relevant to the Company’s preparation of their consolidated financial statements;

and ineffective process level controls that use information that cannot be relied on from the affected systems, including those related to stock-based compensation and non-routine transactions.

In addition, the Company had ineffective process level controls over manual journal entries and over stock-based compensation resulting from insufficient documentation maintained to support the operation of controls including the level of precision at which controls are executed.

The material weaknesses were considered in determining the nature, timing, and extent of audit tests applied in our audit of the 2023 consolidated financial statements, and this report does not affect our report on those consolidated financial statements.

A material weakness was identified and included in management's assessment related to the ineffective design and maintenance of effective controls over certain information technology ("IT") general controls for information systems related to the revenue process.

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 the financial reporting processes related to revenue.

The material weakness was considered in determining the nature, timing, and extent of audit tests applied in our audit of the 2024 consolidated financial statements, and this report does not affect our report on those consolidated financial statements.

Basis for Opinion

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Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of

internal control based on the assessed risk.

Our audit also included performing such other procedures as we considered necessary in the circumstances.

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Operating lease right-of-use assets 405 998

Equity method investment 12,682 —

Equity method investment, net of impairment of $ 8,858 and $ 0 as of January 31, 2024 and January 31, 2023, respectively

Goodwill 8,145 8,145

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Deferred contract acquisition costs, non-current 19,317 15,628

Other long-term assets 4,087 7,151

Other non-current assets 4,390 4,087

TOTAL ASSETS $ 1,317,861 $ 1,169,200

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(1) As of January 31, 2024 and January 31, 2023, the consolidated balance sheet includes assets of the consolidated variable interest entity, GitLab Information Technology (Hubei) Co., LTD (“JiHu”), of $ 47.6 million and $ 62.8 million, respectively, and liabilities of $ 6.1 million and $ 8.9 million , respectively.

The assets of JiHu can be used only to settle obligations of JiHu and creditors of JiHu do not have recourse against the general credit of the Company.

The assets of JiHu can be used only to settle obligations of JiHu and creditors of JiHu do not have recourse against the genera l credit of the Company.

Refer to “Note 12.

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Loss before income taxes and loss from equity method investment

( 160,152 ) ( 175,330 ) ( 159,071 )

Loss from equity method investment, net of tax ( 3,824 ) ( 2,468 ) —

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Foreign currency translation adjustments ( 4,122 ) ( 5,874 ) 27,639

Net change in unrealized losses on available-for-sale securities ( 4,855 ) — $ —

Net change in unrealized gains (losses) on available-for-sale securities 5,000 ( 4,855 ) —

Comprehensive loss including noncontrolling interest $ ( 427,155 ) $ ( 191,425 ) $ ( 129,921 )

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(in thousands)

Twelve Months Ended January 31, 2023

Convertible Preferred Stock Class A Common Stock Class B Common Stock Additional Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive (Loss) Income Noncontrolling Interests Total Stockholders’ Equity

Shares Amount Shares Amount Shares Amount

Balance at January 31, 2021 79,551 $ 424,904 1,151 $ — 52,468 $ — $ 186,892 $ ( 398,199 ) $ ( 19,915 ) $ — $ ( 231,222 )

Repurchase of common stock — — — — ( 20 ) — ( 820 ) — — — ( 820 )

Issuance of common stock upon conversion of preferred stock ( 408 ) ( 242 ) — — 408 — 242 — — — 242

Issuance of common stock related to vested exercised stock options — — — — 1,876 — 5,618 — — — 5,618

Issuance of common stock related to early exercised stock options, net of repurchases — — — — 866 — — — — — —

Vesting of early exercised stock options — — — — — — 2,838 — — — 2,838

Stock-based compensation expense — — — — — — 111,846 — — — 111,846

Foreign currency translation adjustments — — — — — — — — ( 24,005 ) — ( 24,005 )

Net loss — — — — — — — ( 192,194 ) — — ( 192,194 )

Balance at January 31, 2021 79,551 $ 424,904 1,151 $ — 52,468 $ — $ 186,892 $ ( 398,199 ) $ ( 19,915 ) $ — $ ( 231,222 )

Conversion of convertible preferred stock to Class B common stock upon initial public offering ( 79,551 ) ( 424,904 ) — — 79,551 — 424,904 — — — 424,904

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Stock-based compensation expense — — — — — — 30,009 — — — 30,009

Foreign currency translation adjustments — — — — — — — — 27,639 375 28,014

Capital contributions from noncontrolling interest holders — — — — — — — — — 26,450 26,450

Foreign currency translation adjustments — — — — — — — — 27,639 375 28,014

Net loss — — — — — — — ( 155,138 ) — ( 2,422 ) ( 157,560 )

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Stock-based compensation expense — — — — — — 114,811 — — 7,756 122,567

Change in noncontrolling interest ownership — — — — — — 18,153 — — 43,573 61,726

Deconsolidation of Arch, formerly Meltano — — — — — — — — — ( 11,342 ) ( 11,342 )

Other comprehensive loss — — — — — — — — ( 8,429 ) ( 2,300 ) ( 10,729 )

Change in noncontrolling interest ownership due to capital contributions from noncontrolling interest holders, net of issuance costs — — — — — — 18,153 — — 43,573 61,726

Deconsolidation of Meltano Inc.

— — — — — — — — — ( 11,342 ) ( 11,342 )

Net loss — — — — — — — ( 172,311 ) — ( 8,385 ) ( 180,696 )

Balances at January 31, 2023 — $ — 94,655 $ — 56,489 $ — $ 1,497,373 $ ( 725,648 ) $ ( 705 ) $ 53,705 $ 824,725

Conversion of Class B common stock to Class A common stock — — 16,995 — ( 16,995 ) — — — — — —

Issuance of common stock related to vested exercised stock options — — — — 3,406 — 32,448 — — — 32,448

Issuance of common stock under employee stock purchase plan — — 417 — — — 12,933 — — — 12,933

Repurchases, net of early exercised stock options — — — — ( 13 ) — — — — — —

Issuance of common stock related to RSUs vested, net of tax withholdings — — 2,372 — — — — — — — —

Charitable donation of common stock — — 231 — — — 10,700 — — — 10,700

Vesting of early exercised stock options — — — — — — 1,234 — — — 1,234

Stock-based compensation expense — — — — — — 164,515 — — ( 1,466 ) 163,049

Change in noncontrolling interest ownership — — — — — — ( 542 ) — — 542 —

Other comprehensive income (loss) — — — — — — — — 3,040 ( 2,162 ) 878

Net loss — — — — — — — ( 424,174 ) — ( 3,859 ) ( 428,033 )

Balances at January 31, 2024

— $ — 114,670 $ — 42,887 $ — $ 1,718,661 $ ( 1,149,822 ) $ 2,335 $ 46,760 $ 617,934

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Net loss, including amounts attributable to noncontrolling interest $ ( 428,033 ) $ ( 180,696 ) $ ( 157,560 )

Adjustments to reconcile net loss to net cash used in operating activities:

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Stock-based compensation expense 163,049 122,567 30,009

Operating lease non-cash expense 562 — —

Gain from the fair value change of acquisition related contingent consideration — ( 1,722 ) —

Charitable donation of common stock 10,700 — —

Amortization of intangible assets 2,167 2,362 665

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Amortization of deferred contract acquisition costs 43,463 44,958 33,368

Gain from deconsolidation of Meltano Inc.

( 17,798 ) — —

Gain from deconsolidation of Arch, formerly Meltano — ( 17,798 ) —

Loss from equity method investment 3,824 3,189 —

Impairment of equity method investment 8,858 — —

Net amortization of premiums or discounts on short-term investments ( 20,349 ) ( 6,077 ) —

Unrealized foreign exchange (gain) loss ( 3,727 ) 20,389 ( 24,322 )

Unrealized foreign exchange loss (gain), net 4,648 ( 3,727 ) 20,389

Other non-cash expense, net 1,330 1,156 197

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Deferred contract acquisition costs ( 53,100 ) ( 48,555 ) ( 42,575 )

Other long-term assets 3,012 ( 3,374 ) 252

Other non-current assets ( 309 ) 3,012 ( 3,374 )

Accounts payable ( 3,443 ) 287 1,877

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Deferred revenue 79,347 73,003 79,074

Other long-term liabilities ( 2,446 ) 307 659

Net cash used in operating activities ( 77,408 ) ( 49,814 ) ( 73,580 )

Other non-current liabilities 5,249 ( 2,446 ) 307

Net cash provided by (used in) operating activities 35,040 ( 77,408 ) ( 49,814 )

CASH FLOWS FROM INVESTING ACTIVITIES:

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Purchases of property and equipment ( 1,598 ) ( 6,070 ) ( 3,541 )

Deconsolidation of Meltano Inc.

( 9,620 ) — —

Deconsolidation of Arch, formerly Meltano — ( 9,620 ) —

Escrow payment related to business combination, after acquisition date ( 2,500 ) — —

Payments for business combination, net of cash acquired and consideration withheld in an escrow — — ( 323 )

Payments for asset acquisitions — — ( 933 )

Other investing activities ( 450 ) — —

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Unpaid deferred offering costs $ — $ — $ 40

Reconciliation of cash, cash equivalents and restricted cash within the consolidated balance sheets to the amounts shown in the consolidated statements of cash flows above:

Reconciliation of cash, cash equivalents and restricted cash within the consolidated balance sheets to the amounts shown in the statements of cash flows above:

Cash and cash equivalents $ 287,996 $ 295,402 $ 884,672

Restricted cash, included in prepaid expenses and other current assets — 2,500 —

Restricted cash, included in other long-term assets — 2,500 —

Restricted cash, included in other non-current assets — — 2,500

Total cash, cash equivalents and restricted cash $ 287,996 $ 297,902 $ 887,172

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(the “Company”) began as an open source project in 2011 and was incorporated in Delaware on September 12, 2014.

While the Company is headquartered in San Francisco, California, it operates on an all-remote model.

The Company operates on an all-remote model.

The Company is a technology company and its primary offering is “GitLab”, a complete DevSecOps platform delivered as a single application.

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GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period.

Such estimates include, but are not limited to, allocation of revenue to the license element in the Company's self-managed subscriptions, estimating the amortization period for capitalized costs to obtain a contract, allowance for doubtful accounts, stock-based compensa tion expense, fair value of contingent consideration, fair valuation of retained interest in an investee on loss of control, valuation allowance for deferred income taxes, valuation of intangibles assets and impairment of goodwill and equity method investments.

Such estimates include, but are not limited to, allocation of revenue to the license element in the Company's self-managed subscriptions, estimating the amortization period for capitalized costs to obtain a contract, allowance for doubtful accounts, stock-based compensa tion expense, fair value of contingent consideration, fair valuation of retained interest in an investee on loss of control, valuation allowance for deferred income taxes, reserves for unrecognized income tax benefits, valuation of acquired intangibles assets and impairment of goodwill and equity method investments.

The Company bases these estimates on historical and anticipated results, trends, and various other assumptions that it believes are reasonable under the circumstances, including assumptions as to future events.

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Principles of Consolidation

The consolidated financial statements include 100% of the accounts of wholly owned and majority owned subsidiaries as well as a variable interest entity for which our Company is the primary beneficiary.

The consolidated financial statements include 100% of the accounts of wholly owned and majority owned subsidiaries as well as a variable interest entity for which the Company is the primary beneficiary.

The ownership interest of other investors is recorded as noncontrolling interest.

All intercompany accounts and transactions have been eliminated in consolidation.

On December 3, 2021, the Company completed the acquisition of Opstrace, Inc., a technology company based in San Francisco, California.

Our consolidated financial statements include the operating results of the acquired entity beginning from the date of acquisition.

Foreign Currency

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dollar, the Company uses the period-end exchange rates to translate assets and liabilities, the average monthly exchange rates to translate revenue and expenses, and historical exchange rates to translate stockholders’ equity (deficit) into U.S.

The Company records translation gains and losses in accumulated other c omprehensive income (loss) as a component of stockholders’ equity (deficit) in the consolidated balance sheets.

The Company records translation gains and losses in accumulated other comprehensive income (loss) as a component of stockholders’ equity (deficit) in the consolidated balance sheets.

For the years ended January 31, 2024, 2023 and 2022, the Company recognized foreign translation adjustments of $( 4.1 ) million, $( 5.9 ) million and $ 27.6 million, respectively.

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The Company considers all highly-liquid investments purchased with an original or remaining maturity of three months or less at the date of purchase to be cash equivalents.

Restricted cash as of January 31, 2023 and 2022, consists of a $ 2.5 million acquisition related security deposit withheld in an escrow for any potential post-closing indemnification claims.

Restricted cash as of January 31, 2023, consists of a $ 2.5 million acquisition related security deposit withheld in an escrow for any potential post-closing indemnification claims.

The Company fully paid this acquisition-related holdback during the year ended January 31, 2024.

Refer to “Note 7.

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The Company classifies its marketable securities with stated maturities of three months and greater at the date of purchase as short-term investments due to its ability to use these securities to support the Company’s current operations.

As of January 31, 2023, a ll short-term investments are classified as available-for-sale and are reported at fair value, which is based on quoted market prices for such securities, if available, or based on quoted market prices of financial instruments with similar characteristics.

As of January 31, 2024 and 2023 , a ll short-term investments are classified as available-for-sale and are reported at fair value, which is based on quoted market prices for such securities, if available, or based on quoted market prices of financial instruments with similar characteristics.

If the fair value of a security falls below its amortized cost, the carrying value is reduced to its fair value if management intends to sell or it is more likely than not that it will be required to sell before recovery of the amortized cost basis.

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Impairment losses not attributable to credit losses are reported as a separate component of other comprehensive loss, net of tax.

As of January 31, 2022, short-term investments comprised of certificates of deposit with a bank with an original maturity of greater than three months at the date of purchase.

Such investments were carried at amortized cost, which approximated their fair value.

The cost of securities sold is based on the specific-identification method and realized gains and losses on available-for-sale securities are recognized upon sale and are included in other income (expense), net in the consolidated statements of operations.

The cost of securities sold is based on the specific-identification method.

Unrealized gains and losses are reported as a separate component of accumulated other comprehensive income (loss).

Realized gains and losses on available-for-sale securities are recognized upon sale and are included in other income (expense), net in the consolidated statements of operations.

Interest on securities classified as available-for-sale is included within interest income on our consolidated statements of operations.

Available-for-sale securities are recorded at fair value each reporting period and are adjusted for the amortization of premiums and accretion of discounts to maturity.

Such amortization and accretion are included in interest income of the consolidated statements of operations.

Accounts Receivable and Allowance for Doubtful Accounts

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The Company uses various distribution channels.

As of January 31, 2023, one of these channel partners represented 12 % of the accounts receivable balance, while as of January 31, 2022 another channel partner represented 14 % of the accounts receivable balance.

There were no individual customers whose balance represented more than 10% of accounts receivable as of January 31, 2023 and 2022, respectively.

There were no customers whose revenue represented more than 10% of total revenue during the years ended January 31, 2023, 2022 and 2021.

As of January 31, 2024, two of these channel partners represented 12 % and 13 % of the accounts receivable balance, respectively, while as of January 31, 2023, one of these channel partners represented 12 % of the accounts receivable balance.

There were no individual customers whose balance represented more than 10% of accounts receivable as of January 31, 2024 and 2023.

There were no individual customers whose revenue represented more than 10% of total revenue during the years ended January 31, 2024, 2023 and 2022.

Fair Value of Financial Instruments

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The Company measures assets and liabilities at fair value at each reporting period using a fair value hierarchy which requires it to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

GAAP describes a fair value hierarchy based on

three levels of inputs, of which the first two are considered observable and the last unobservable, to measure the fair value:

GAAP describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, to measure the fair value:

Level 1 – Inputs are unadjusted quoted prices in active markets for identical assets or liabilities.

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Some of our customers have the option to purchase additional licenses or renew at a stated price.

These options are evaluated on a case-by-case basis but generally do not provide a material right as they are either at the same price as the existing licenses or are within our range of standalone selling price (“SSP”) and, as such, would not result in a separate performance obligation.

These options are evaluated on a case-by-case basis but generally do not provide a material right as they

are either at the same price as the existing licenses or are within our range of standalone selling price (“SSP”) and, as such, would not result in a separate performance obligation.

Where material rights are identified in our contracts, they are treated as separate performance obligations.

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We determine transaction price based on the consideration to which we expect to be entitled in exchange for transferring products and services to the customer.

Variable consideration is included in the transaction price only to the extent it is probable that a significant future reversal of cumulative revenue under the contract will not occur when the uncertainty associated with the variable consideration is resolved.

If the consideration to which we expect to be entitled includes variable consideration, the amount of variable consideration included in the transaction price is estimated.

In the event that some portion of the estimated variable consideration is uncertain, such estimates are constrained.

Variable consideration is therefore included in the transaction price only to the extent it is probable that a significant future reversal of cumulative revenue under the contract will not occur when the uncertainty associated with the variable consideration is resolved.

Our contracts are non-refundable and non-cancellable.

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5) Revenue is recognized when or as we satisfy a performance obligation .

Revenue is recognized at the time the related performance obligation is satisfied by transferring the promised products

and services to a customer.

We recognize revenue when we transfer control of the products and services to our customers for an amount that reflects the consideration that we expect to receive in exchange for those products and services.

Revenue is recognized at the time the related performance obligation is satisfied by transferring the promised products and services to a customer.

We recognize revenue when we transfer control of the products and services to our customers for an amount that reflects the consideration that we expect to receive

in exchange for those products and services.

All revenue is generated from contracts with customers.

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This model uses observable data points to develop the main inputs and assumptions which include the estimated historical costs to develop the paid features in the software license and the estimated future costs to provide post-contract customer support.

Based on this model, the Company allocated between 1 to 23 % of the entire transaction price to the right to use the underlying software (License revenue - Self managed) and allocated the remaining value of the transaction to the right to receive post-contract customer support (Subscription revenue - Self managed) during the period covered by these consolidated financial statements.

Based on this model, the Company allocated between 1 to 23 %, with the majority being less than 14 %, of the entire transaction price to the right to use the underlying software (License revenue - Self managed) and allocated the remaining value of the transaction to the right to receive post-contract customer support (Subscription revenue - Self managed) during the period covered by these consolidated financial statements.

The typical term of a subscription contract for self-managed offering is one to three years .

As of January 2021, Starter tier is no longer offered to new customers but remains available for a limited transitory period to our existing customers.

Since January 2021, Starter paid tier is no longer offered to new customers but remains available for a limited transitory period to our existing customers.

We also offer two tiers of paid SaaS subscriptions:

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The typical term of a subscription contract for SaaS offering is one to three years .

As of January 2021, Starter tier is no longer offered to new customers but remains available for a limited transitory period to our existing customers.

Since January 2021, Starter paid tier is no longer offered to new customers but remains available for a limited transitory period to our existing customers.

License - self-managed and other

The license component of our self-managed subscriptions reflects the revenue recognized by providing customers with rights to use proprietary software features.

The Company allocates between 1 to 23 % of the transaction value to License revenue, which is recognized upfront when the software license is made available to our customers.

Other revenue consists of professional services revenue which is derived from fixed fee and time and materials offerings, subject to customer acceptance.

Given the Company’s limited history of providing professional services, uncertainty exists about customer acceptance and therefore, control is presumed to transfer upon confirmation from the customer, as defined in each professional services contract.

The Company allocates between 1 to 23 %, with the majority being less than 14 %, of the entire transaction value to License revenue, which is recognized upfront when the software license is made available to our customers.

Other revenue consists of professional services revenue which is derived from fixed fee and time and materials offerings, subject to customer acceptance for fixed fee offerings.

Uncertainty exists about customer acceptance and therefore, control is presumed to transfer upon confirmation from the customer,

as defined in each professional services contract.

Accordingly, revenue is recognized upon satisfaction of all requirements per the applicable contract.

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For multi-year license subscriptions, we generally invoice customers annually at the beginning of each annual coverage period and the license revenue for the full multi-year term is recognized upfront on delivery from deferred revenue.

Where the value of revenue recognized exceeds the value of amounts invoiced for a contract at the end of a reporting period, it is reclassed from deferred revenue to contract assets until invoiced.

Where the value of revenue recognized exceeds the value of amounts invoiced for a contract at the end of a reporting period, the excess is reclassified from deferred revenue to contract assets until invoiced.

Contract assets are included in prepaid expenses and other current assets on the consolidated balance sheets.

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As of January 31, 2024 and 2023, the aggregate amount of the transaction price allocated to billed and unbilled remaining performance obligations for which revenue has not yet been recognized was approximately $ 673.8 million and $ 435.9 million, respectively.

As of January 31, 2023, the Company expected to recognize approximately 71 % of the transaction price as product or services revenue over the next 12 months and 92 % over the next 24 months.

As of January 31, 2024, the Company expects to recognize approximately 64 % of the transaction price as product or services revenue over the next 12 months and 87 % over the next 24 months.

Deferred Contract Acquisition Costs

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The deferred commission and bonus amounts are recoverable through the future revenue streams from our customer contracts all of which are non-cancelable.

Commissions and bonuses paid upon the acquisition of an initial contract are amortized over an estimated period of benefit which has been determined generally to be three years based on historical

analysis of average customer life and useful life of our product offerings.

Commissions and bonuses paid upon the acquisition of an initial contract are amortized over an estimated period of benefit which has been determined generally to be three years based on historical analysis of average customer life and useful life of our product offerings.

Commissions paid for subsequent renewals are amortized over the renewal term.

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The Company did not recognize any impairment of deferred contract acquisition costs during the periods presented.

The following table presents the change in deferred contract acquisition costs (in thousands):

2023 2022 2021

Beginning balance $ 39,106 $ 30,476 $ 14,375

Added during the year 47,985 41,998 34,570

Amortized during the year ( 44,958 ) ( 33,368 ) ( 18,469 )

Ending balance $ 42,133 $ 39,106 $ 30,476

Cost of Revenue

6 unchanged sentences

These costs consist primarily of compensation paid to the Company's research and development personnel, including contractors.

and allocated overhead associated with developing new features or enhancing existing features.

The Company’s internal customer software development process follows an iterative process that results in more frequent software releases than do traditional sequential or waterfall development methodologies and also results in internal validation of the software releases very shortly before they are made available to customers.

15 unchanged sentences

The Company is subject to income taxes in the United States and several foreign jurisdictions.

The Company records a provision for income taxes for the anticipated tax consequences of the reported results of operations using the asset and liability method.

The Company records a provision for income taxes for the anticipated tax consequences of the reported

results of operations using the asset and liability method.

Under this method, the Company recognizes deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial reporting and the tax basis of assets and liabilities, as well as for operating losses and tax credit carryforwards.

13 unchanged sentences

Comprehensive Loss and Accumulated Other Comprehensive Income (Loss)

Comprehensive loss includes net loss and changes in stockholders’ equity (deficit) that are excluded from net loss due to changes in the Company’s cumulative foreign currency translation account and unrealized gains or losses on short-term investments.

Comprehensive loss includes net loss and changes in stockholders’ equity that are excluded from net loss due to changes in the Company’s cumulative foreign currency translation account and unrealized gains or losses on short-term investments.

Net Loss per Share Attributable to Common Stockholders

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The Company has elected to use the Black-Scholes option pricing model to determine the fair value of stock options.

The Company records incremental stock-based compensation expense when certain affiliated stockholders or new investors purchase shares from team members and founders of the Company in excess of the fair value of such shares as part of secondary stock purchase transactions.

The Company recognized any such excess value as stock-based compensation expense in the consolidated statements of operations.

In May 2021, the Company granted 3 million shares of restricted stock units (“RSUs”) tied to our Class B common stock to Mr.

6 unchanged sentences

In September 2021, our board of directors and our stockholders approved the 2021 Employee Stock Purchase Plan (“ESPP”) to enable eligible team members to purchase shares of our Class A common stock with accumulated payroll deductions.

We recognize stock-based expenses related to the shares to be issued under the ESPP on a straight-line basis over the offering period, using the Black-Scholes option-pricing model, and determine volatility over an expected term based on the historical volatility of the Company’s peer group, until we establish a sufficient public trading history of our own stock price.

We recognize stock-based expenses related to the shares to be issued under the ESPP on a straight-line basis over the offering period, using the Black-Scholes option-pricing model.

We have been determining the volatility input based on the historical volatility of our peer group until such time as we established a 2-year public trading history of our own stock price.

For the new offering period starting December 2023, we transitioned to using an average blend of historical volatility of our peer group and volatility of our own stock price when determining the volatility input.

In June 2022, the Company granted 0.4 million performance stock units (“PSUs”) to senior members of its management team subject to a revenue performance condition and service conditions.

10 unchanged sentences

Our chief operating decision maker, who is the Co-founder and Chief Executive Officer, reviews financial information presented on a consolidated basis for the purposes of making operating decisions, allocating resources and evaluating financial performance.

Accordingly, we operate our business as one operating segment and one reporting unit.

Accordingly, we operate our business as one operating

segment and one reporting unit.

The Company presents financial information about geographical mix of revenue in “Note 3.

16 unchanged sentences

The Company accounts for lease components and non-lease components separately.

We do not recognize operating lease right-of-use assets and operating lease liabilities that arise from short-term leases (i.e., leases with a term of 12 months or less).

The Company does not recognize operating lease right-of-use assets and operating lease liabilities that arise from short-term leases (i.e., leases with a term of 12 months or less).

The lease liability is initially measured as the present value of the remaining lease payments over the lease term.

19 unchanged sentences

The Company assesses investments for impairment whenever events or changes in circumstances indicate that the carrying value of an investment may not be recoverable.

Recently Adopted Accounting Standards

In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12, Income Taxes ( Topic 740 ):

Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which simplifies the accounting for income taxes by eliminating some exceptions to the general approach in ASC 740, Income Taxes in order to reduce cost and complexity of its application.

The Company adopted ASU 2019-12 as of February 1, 2022 with no material impact.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (“Topic 842”).

Topic 842 supersedes the lease requirements in ASC Topic 840, Leases .

Under Topic 842, lessees are required to recognize assets and liabilities on the consolidated balance sheet for most leases and provide enhanced disclosures.

The Company has adopted the Topic 842 effective February 1, 2022 by utilizing the modified retrospective transition method through a cumulative-effect adjustment to the operating lease right-of-use assets and operating lease liabilities on our consolidated balance sheet as on February 1, 2022 in the amount of $ 0.7 million and $ 0.8 million, respectively.

The adoption of Topic 842 did not have an impact on accumulated deficit as of February 1, 2022.

The Company determined there was an impairment during the year ended January 31, 2024.

Refer to “Note 12.

Joint Venture and Equity Method Investment” for more information.

In June 2016, the FASB issued ASU No.

2016-13, Financial Instruments-Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost.

ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses.

These expected credit losses for financial assets held at the reporting date are to be based on historical experience, current conditions, and reasonable and supportable forecasts.

This ASU requires enhanced disclosures relating to significant estimates and judgments used in estimating credit losses, as well as the credit quality.

As an erstwhile emerging growth company (EGC), the Company had previously elected to adopt ASU 2016-13 for its fiscal year beginning February 1, 2023.

However, due to the loss of EGC status as on January 31, 2023, the Company has adopted ASU 2016-13 for fiscal year 2023.

The adoption of this ASU did not have a material impact on the consolidated financial statements.

Recently Adopted Accounting Standards

There were no recently adopted accounting standards during the year ended January 31, 2024 that had a material impact on the Company’s consolidated financial statements.

Recently Issued Accounting Standards Not Yet Adopted

There are no recently issued accounting pronouncements that we believe will have a material impact on our financial position, results of operations or cash flows.

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting ("Topic 280"):

Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which requires enhanced disclosures on an annual and interim basis for significant segment expenses.

In addition, it provides new segment disclosure requirements for entities with a single reportable segment.

For public business entities the amendments are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

The Company has not early adopted ASU 2023-07 and is currently evaluating the impact on the consolidated financial disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes ("Topic 740"):

Improvements to Income Tax Disclosures (“ASU 2023-09”), which requires enhancements to current disclosures in order to enhance the transparency and decision usefulness of income tax disclosures.

For public business entities, the amendments in this update are effective for annual periods beginning after December 15, 2024 and early adoption is permitted.

The Company has not early adopted ASU 2023-09 and is currently evaluating the impact on the consolidated financial disclosures.

Disaggregation of Revenue

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No other individual country exceeded 10% of total revenue for any of the periods presented.

The Company operates its business as a single reportable segment.

The Company operates its business as a single operating segment.

Cash, Cash Equivalents and Short-Term Investments

5 unchanged sentences

Money market funds 187,175 — — 187,175

Treasury securities 15,909 — ( 2 ) 15,907

Commercial paper 3,962 — ( 1 ) 3,961

Total cash and cash equivalents $ 287,999 $ — $ ( 3 ) $ 287,996

Short-term investments:

Commercial paper 23,229 14 ( 1 ) 23,242

Corporate debt securities 231,219 740 ( 250 ) 231,709

Agency securities 56,324 29 ( 136 ) 56,217

Treasury securities 437,369 141 ( 389 ) 437,121

Total short-term investments $ 748,141 $ 924 $ ( 776 ) $ 748,289

As of January 31, 2023

Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value

Cash and cash equivalents:

Cash $ 232,332 $ — $ — $ 232,332

Money market funds 60,073 — — 60,073

Agency securities 2,997 — — 2,997

Total cash and cash equivalents $ 295,402 $ — $ — $ 295,402

7 unchanged sentences

Total short-term investments $ 646,104 $ 53 $ ( 4,908 ) $ 641,249

As of January 31, 2022, the Company had $ 884.7 million of cash and cash equivalents, and $ 50.0 million of short-term investments, comprised of certificates of deposit with a bank with an original maturity of greater than three months at the date of purchase.

Such investments were carried at amortized cost, which approximated their fair value and matured during the year ended January 31, 2023.

The Company uses the specific-identification method to determine an y realized gains or losses from the sale of our short-term investments classified as available-for-sale.

The Company uses the specific-identification method to determine an y realized gains or losses from the sale of the Company’s short-term investments classified as available-for-sale.

For the periods presented, the Company did not have any material realized gains or losses as a result of maturities or sale of short-term investments.

During the year ended January 31, 2023, the Company recorded $ 14.5 million of interest income on cash equivalents and short-term investments which includes $ 6.1 million of net amortization of premiums or discounts on short-term investments during the year ended January 31, 2023.

During the year ended January 31, 2022 and 2021, the Company recorded $ 0.7 million and $ 1.1 million of interest income on cash equivalents and short-term investments, respectively.

The Company did no t record any amortization of premiums or discounts during the year ended January 31, 2022 and 2021.

As of January 31, 2023, the Company does not have any cash equivalents and short-term investments that have been in a continuous unrealized gain or loss position for more than 12 months as of the periods presented.

The following table summarizes unrealized losses on our cash equivalents and short-term investments by category that have been in a continuous unrealized loss position for less than 12 months as of the periods presented (in thousands):

Carrying Value Gross Unrealized Losses

During the years ended January 31, 2024 and 2023, the Company recorded $ 39.1 million and $ 14.5 million of interest income on cash equivalents and short-term investments, respectively, which includes $ 20.3 million and $ 6.1 million of net amortization of premiums or disco unts on short-term investments during the years ended January 31, 2024 and 2023, respectively .

During the year ended January 31, 2022, the Company recorded $ 0.7 million of interest income on cash equivalents and short-term investments.

The following table summarizes unrealized losses on the Company’s cash equivalents and short-term investments aggregated by category and the length of time such aggregated investments have been in a continuous unrealized loss position as of the periods presented (in thousands):

Less Than 12 Months 12 Months or Greater Total

Carrying Value Gross Unrealized Losses Carrying Value Gross Unrealized Losses Fair Value Gross Unrealized Losses

January 31, 2024

2 unchanged sentences

Corporate debt securities 85,998 ( 192 ) 15,485 ( 58 ) 101,483 ( 250 )

Treasury securities 139,567 ( 192 ) 41,193 ( 199 ) 180,760 ( 391 )

Total cash equivalents and short-term investments $ 277,006 $ ( 439 ) $ 68,064 $ ( 340 ) $ 345,070 $ ( 779 )

Less Than 12 Months 12 Months or Greater Total

Carrying Value Gross Unrealized Losses Carrying Value Gross Unrealized Losses Fair Value Gross Unrealized Losses

January 31, 2023

Agency securities $ 73,724 $ ( 435 ) $ — $ — $ 73,724 $ ( 435 )

Commercial paper 45,015 ( 112 ) — — 45,015 ( 112 )

Corporate debt securities 75,203 ( 572 ) — — 75,203 ( 572 )

Municipal bonds 1,970 ( 19 ) — — 1,970 ( 19 )

28 unchanged sentences

Money market funds $ 187,175 $ — $ — $ 187,175

Treasury securities — 15,907 — 15,907

Commercial paper — 3,961 — 3,961

Short-term investments:

Commercial paper — 23,242 — 23,242

Corporate debt securities — 231,709 — 231,709

Agency securities — 56,217 — 56,217

Treasury securities — 437,121 — 437,121

Total $ 187,175 $ 768,157 $ — $ 955,332

(1) Excludes $ 81.0 million in cash on the consolidated balance sheet as of January 31, 2024.

Level 1 Level 2 Level 3 Fair Value

January 31, 2023 (1)

Cash equivalents:

Money market funds $ 60,073 $ — $ — $ 60,073

Agency securities — 2,997 — 2,997

Short-term investments:

6 unchanged sentences

Total $ 60,073 $ 644,246 $ — $ 704,319

(1) Exclu des $ 232.3 million in cash held in the Company’s bank accounts as of January 31, 2023.

The Company had $ 3.4 million and $ 7.9 million of Level 3 contingent consideration as of January 31, 2023 and 2022, respectively.

(1) Exclu des $ 232.3 million in cash on the consolidated balance sheet as of January 31, 2023.

The Company h ad $ 3.6 million and $ 3.4 million of Level 3 contingent consideration as of January 31, 2024 and January 31, 2023, respec tively.

Refer to “Note 6.

5 unchanged sentences

Prepaid software subscriptions $ 12,835 $ 7,771

Prepaid insurance 3,199 4,309

Prepaid expenses for the Company’s events 9,245 1,885

Prepaid taxes 1,431 592

Prepaid insurance 2,718 3,199

Prepaid advertising costs 1,621 367

2 unchanged sentences

Interest receivable 4,159 2,310

Income tax receivable related to BAPA 6,460 —

Vendor receivable 2,000 —

Revenue contract asset 1,910 1,532

1 unchanged sentence

Other current assets 1,075 1,746

Total prepaid expense and other current assets $ 24,327 $ 15,544

Total prepaid expenses and other current assets $ 45,601 $ 24,327

(1) Refer to “Note 7.

10 unchanged sentences

(1) The amounts in the table above include cumulative foreign currency translation adjustments, reflecting movement in the currencies of the underlying property and equipment.

Depreciation expense of property and equipment was $ 3.2 million, $ 0.5 million and zero for the years ended January 31, 2023, 2022 and 2021, respectively.

Other Long-Term Assets

Other long-term assets consisted of the following (in thousands):

During the year ended January 31, 2024 , the Company also wrote off $ 1.1 million of fully depreciated assets as they were no longer in use.

Depreciation expense of property and equipm ent was $ 4.4 million , $ 3.2 million and $ 0.5 million for th e years ended January 31, 2024, 2023 and 2022, respectively.

Other Non-Current Assets

Other non-current assets consisted of the following (in thousands):

January 31, 2024 January 31, 2023

Security and other deposits $ 3,495 $ 3,172

Restricted cash (1)

Deferred software implementation costs 336 594

Other long-term assets 321 850

Total other long-term assets $ 4,087 $ 7,151

(1) Refer to “Note 7.

Business Combination”.

Other non-current assets 559 321

Total other non-current assets $ 4,390 $ 4,087

Accrued Expenses and Other Current Liabilities

1 unchanged sentence

January 31, 2024 January 31, 2023

Income tax liability related to BAPA (1)

$ 258,675 $ —

Accrued expenses 11,499 10,949

Income taxes payable 2,212 859

Indirect taxes payable 3,928 4,498

Customer refunds 3,465 2,017

Acquisition related contingent cash consideration 3,608 —

Customer refunds payable 3,019 3,465

ESPP employee contributions 2,827 2,967

Operating lease liabilities, current 410 716

Acquisition related consideration withheld in escrow (2)

Income taxes payable 859 319

Operating lease liabilities - current portion 716 —

Acquisition related contingent cash consideration (1)

Other current liabilities 263 —

Total accrued expenses and other current liabilities $ 286,178 $ 25,954

(1) Refer to “Note 13.

Income Taxes” for a discussion on the unrecognized tax benefits related to the BAPA.

(2) Refer to “Note 7.

Business Combination”.

4 unchanged sentences

Payroll taxes payable 9,306 3,013

Restructuring accrual and related charges (1)

Other accrued team member related payables 13,581 9,251

Total accrued compensation and benefits $ 35,809 $ 20,776

Other Long-Term Liabilities

Other long-term liabilities consisted of the following (in thousands):

(1) Refer to “Note 11.

Restructuring and Other Related Charges”.

Other Non-Current Liabilities

Other non-current liabilities consisted of the following (in thousands):

January 31, 2024 January 31, 2023

Acquisition related contingent cash consideration (1)

$ 3,443 $ 4,929

Deferred tax liabilities, net $ 10,560 $ 849

Provision towards labor matters (1)

Early exercised options liability 1,800 6,837

Deferred tax liabilities 849 379

Long term taxes payable 771 647

Operating lease liabilities - long-term portion 413 —

Acquisition related consideration withheld in escrow (1)

Other long-term liabilities 168 —

Total other long-term liabilities $ 9,824 $ 18,002

(1) Refer to “Note 7.

Business Combination”.

Early exercised options liability 420 1,800

Acquisition related contingent cash consideration (2)

Operating lease liabilities, non-current — 413

Other non-current liabilities 112 168

Total other non-current liabilities $ 14,060 $ 9,824

(1) Refer to “Note 15.

Commitments and Contingencies ”.

Other Inc ome (Expense), Ne t

(2) Refer to “Note 7.

Business Combination”.

Other Inc ome (Expense), Net

Other income (expense), net consisted of the following (in thousands):

1 unchanged sentence

2024 2023 2022

Gain from deconsolidation of Meltano Inc.

Gain from deconsolidation of Arch, formerly Meltano (1)

$ — $ 17,798 $ —

Impairment loss equity method investment in Arch, formerly Meltano (1)

( 8,858 ) — —

Foreign exchange gains (losses), net ( 3,157 ) 4,364 ( 29,140 )

Other expense, net ( 577 ) ( 1,710 ) 29

Other income (expense), net 189 ( 577 ) ( 1,710 )

Total other income (expense), net $ ( 11,826 ) $ 21,585 $ ( 30,850 )

4 unchanged sentences

The transaction was accounted for as a business combination.

The acquisition date fair value of the consideration transferred consisted of the following (in thousands):

Cash consideration $ 2,970

Fair value of common stock issued on closing 959

Contingent common stock consideration (classified under additional paid-in capital) 1,754

Contingent cash consideration

Contingent cash consideration (classified under other long-term liabilities)

Total consideration $ 13,583

Cash consideration includes $ 2.5 million held back as partial security for post-closing indemnification claims made within 18 months of the closing da te recorded in a ccrued expenses and other current

liabilities on the consolidated balance sheet as of January 31, 2023 and in other long-term liabilities as of January 31, 2022.

As a result of acquisition, the fair value of the consideration transferred included contingent cash considerations of $ 7.9 million in aggregate.

These contingent cash considerations are determined based upon the satisfaction of certain defined operational milestones and are remeasured at fair value at each reporting period through earnings.

As the fair value is based on unobservable inputs, the liabilities are included in Level 3 of the fair value measurement hierarchy.

In September 2022, one of the operational milestones was achieved and the Company paid $ 4.2 million of contingent cash consideration, part of which was previously recorded in accrued expenses and other current liabilities.

The difference of $ 1.1 million between the amount accrued and the amount paid was attributable to the change in fair value of the original measurement and was recorded as a loss in general and administrative expenses during the year ended January 31, 2023.

We reassessed the fair value of outstanding operational milestones and recorded the fair value gain of $ 1.7 million in general and administrative expenses for the year ended January 31, 2023.

Accretion expense was $ 0.3 million for the year ended January 31, 2023.

There was no accretion expense for the years ended January 31, 2022 and 2021.

Results of operations of the business acquired have been included in our consolidated financial statements subsequent to the date of acquisition.

The revenue and net loss earned by the business acquired following the acquisition are not material to our consolidated results of operations.

The acquisition date fair value of the consideration transferred was $ 13.5 million, which included contingent cash consideration.

As of January 31, 2023, t he Company held $ 2.5 million in an escrow as partial security for post-closing indemnification claims made within 18 months of the closing da te.

The Company fully paid this acquisition-related holdback during the year ended January 31, 2024.

In September 2022, one of the operational milestones was achieved and the Company paid $ 4.2 million of contingent cash consideration.

The remaining contingent cash consideration is determined based upon the satisfaction of certain defined operational milestones and remeasured at fair value at each reporting period through earnings.

We reassessed the fair value of outstanding operational milestones and recorded the fair value gain of $ 1.7 million in general and administrative expenses for the year ended January 31, 2023 and there has been no change for the year ended January 31, 2024.

As the fair value is based on unobservable inputs, the liability is included in Level 3 of the fair value measurement hierarchy.

As of January 31, 2024 and January 31, 2023, the Company had recorded $ 3.6 million and $ 3.4 million of remaining contingent cash consideration which is included in other current liabilities and other long term liabilities on the respective consolidated balance sheets, respectively.

Interest accretion expense on contingent cash consideration was $ 0.2 million, $ 0.3 million and zero for the years ended January 31, 2024, 2023 and 2022, respectively.

Goodwill and Intangible Assets, Net

5 unchanged sentences

Intangible assets, net consisted of the following (in thousands):

January 31, 2023 Gross Carrying Amount Accumulated Amortization Net Book Value Weighted average remaining amortization period (years)

January 31, 2024

Gross Carrying Amount Accumulated Amortization Net Book Value Weighted average remaining amortization period (years)

Developed technology from business combination $ 6,200 $ ( 4,467 ) $ 1,733 0.8

2 unchanged sentences

Total $ 7,114 $ ( 5,381 ) $ 1,733

January 31, 2022 Gross Carrying Amount Accumulated Amortization Net Book Value Weighted average remaining amortization period (years)

January 31, 2023

Gross Carrying Amount Accumulated Amortization Net Book Value Weighted average remaining amortization period (years)

Developed technology from business combination $ 6,200 $ ( 2,401 ) $ 3,799 1.8

3 unchanged sentences

(1) The amounts in the tables above include cumulative foreign currency translation adjustments, reflecting movement in the currencies of the underlying intangibles.

Amortization expense was $ 2.4 million, $ 0.7 million and $ 0.2 million for the years ended January 31, 2023, 2022 and 2021, respectively.

As of January 31, 2023, future a mortization expense related to the intangibles assets is expected to be as follows (in thousands):

Total future amortization $ 3,901

(2) During the year ended January 31, 2024 , t he Company wrote o ff $ 0.4 million of fully amortized intangible assets as the technology had become obsolete.

Amortization expense w a s $ 2.2 million, $ 2.4 million and $ 0.7 million for t he years ended January 31, 2024, 2023 and 2022 , respectively.

As of January 31, 2024, future a mortization expense related to the intangibles assets is expected to be $ 1.7 million for the year ended January 31, 2025.

Team Member Benefit Plans

The Company contributes to defined c ontribution plans in a number of countries including a 401(k) savings plan for U.S.-based team members and defined contribution arrangements in the United Kingdom, Australia, New Zealand and select other countries based on the legislative and tax requirements of the respective countries.

Total contributions to these plans were $ 3.9 million, $ 2.8 million and $ 1.9 million for the years ended January 31, 2023, 2022 and 2021, respectively.

In connection with our initial public offering (the “IPO”), on October 18, 2021, the Company filed a restated certificate of incorporation that authorized the issuance of 1,500,000,000 shares of Class A common stock, 250,000,000 shares of Class B common stock, and 50,000,000 shares of preferred stock at $ 0.0000025 par value for each class of shares.

Common stockholders are entitled to dividends when and if declared by the board of directors.

The Company contributes to defined c ontribution plans in a number of countries including a 401(k) savings plan for U.S.

based team members and defined contribution arrangements in the United Kingdom, Australia, New Zealand and select other countries based on the legislative and tax requirements of the respective countries.

Total contributions to these plans were $ 5.1 million, $ 3.9 million and $ 2.8 million for t he years ended January 31, 2024, 2023 and 2022 , respectively.

In connection with the Company’s initial public offering (the “IPO”), on October 18, 2021, the Company filed a restated certificate of incorporation that authorized the issuance of 1,500,000,000 shares of Class A common stock, 250,000,000 shares of Class B common stock, and 50,000,000 shares of preferred stock at $ 0.0000025 par value for each class of shares.

Common stockholders are entitled to

dividends when and if declared by the board of directors.

No dividends have been declared to date.

11 unchanged sentences

Certain stock option holders have the right to exercise unvested options, subject to a repurchase right held by the Company at the original exercise price, in the event of voluntary or involuntary termination of employment of the holder.

As of January 31, 2023 and January 31, 2022 , there were 194,304 and 713,967 shares, respectively, of unvested options that had been early exercised and were subject to repurchase for a total liability of $ 1.8 million and $ 6.8 million, respectively.

The liability as sociated with early exercised options is included in other long-term liabilities in the consolidated balance sheets.

As of January 31, 2024 and January 31, 2023 , there were 22,278 and 194,304 shares, respectively, of unvested options that had been early exercised and were subject to repurchase for a total liability of $ 0.4 million an d $ 1.8 million, respectively.

The liability as sociated with early exercised options is included in other non-current liabilities in the consolidated balance sheets.

For accounting purposes, issuance of shares will be recognized only on vesting.

9 unchanged sentences

In September 2021, in connection with the IPO, the board of directors and stockholders approved the 2021 Equity Incentive Plan (the “2021 Plan”) as a successor to the Company’s 2015 Plan (together the “Plans”).

The 2021 Plan authorizes the award of both stock options, which are intended to qualify for tax

treatment under Section 422 of the Internal Revenue Code, and nonqualified stock options, as well for the award of restricted stock awards (“RSAs”), stock appreciation rights (“SARs”), restricted stock units (“RSUs”), performance stock units (“PSUs”) and stock bonus awards.

The 2021 Plan authorizes the award of both stock options, which are intended to qualify for tax treatment under Section 422 of the Internal Revenue Code, and nonqualified stock options, as well for the award of restricted stock awards (“RSAs”), stock appreciation rights (“SARs”), restricted stock units (“RSUs”), performance stock units (“PSUs”) and stock bonus awards.

Pursuant to the 2021 Plan, incentive stock options may be granted only to the Company’s team members.

The Company may grant all other types of awards to its team members, directors, and consultants.

The Company initially reserved 13,032,289 shares of its Class A common stock, plus any reserved shares of Class B common stock not issued or subject to outstanding grants under the 2015 Plan on the effective date of the 2021 Plan, for issuance as Class A common stock pursuant to awards granted under the 2021 Plan.

The Company initially reserved 13,032,289 shares of its Class A common stock, plus any reserved shares of Class B common stock not

issued or subject to outstanding grants under the 2015 Plan on the effective date of the 2021 Plan, for issuance as Class A common stock pursuant to awards granted under the 2021 Plan.

The number of shares reserved for issuance under the 2021 Plan increases automatically on February 1 of each of the years from 2022 through 2031.

2 unchanged sentences

Available at beginning of period

21,483 18,248

Awards authorized 7,557 7,673

Options granted — ( 7,936 )

RSUs and PSUs granted ( 6,258 ) ( 6,651 )

11 unchanged sentences

Balances at January 31, 2021 16,043 $ 6.33 8.39 $ 166.6

16,253 $ 4.56 9.03 $ 70.6

Options granted 7,936 18.68 8.50

18 unchanged sentences

8,503 $ 13.03 5.85 $ 499.2

No options were granted during the year ended January 31, 2023 and the aggregate grant-date fair value of options vested during the years ended January 31, 2023, 2022 and 2021 was $ 31.0 million, $ 10.8 million and $ 8.2 million, respectively.

The weighted-average grant-date fair value per share of options granted was $ 10.81 and $ 3.55 for the years ended January 31, 2022 and 2021, respectively.

No options were granted during the years ended January 31, 2024 and 2023 and the aggregate grant-date fair value of options that vested during the years ended January 31, 2024, 2023 and 2022 was $ 17.9 million, $ 31.0 million and $ 10.8 million, respectively.

The weighted-average grant-date fair value per share of options granted was $ 10.81 for the year ended January 31, 2022.

The aggregate intrinsic value of options exercised during the years ended January 31, 2024, 2023 and 2022 was $ 128.8 million, $ 123.4 million and $ 280.5 million, respectively.

The aggregate intrinsic value represents the difference between the exercise price and the fair value of the underlying common stock on the date of exercise.

As of January 31, 2023 and January 31, 2022, approximately $ 46.2 million and $ 80.3 million, respectively, of total unrecognized compensation cost was related to stock options granted, that is expected to be recognized over a weighted-average period of 2.1 years and 2.7 years, respectively.

During the years ended January 31, 2024, 2023 and 2022, the Company recorded $ 17.6 million, $ 23.2 million and $ 22.6 million stock-based compensation expenses related to options, respectively.

As of January 31, 2024, approximately $ 21.9 million of total unrecognized compensation cost was related to stock options granted, that is expected to be recognized over a weighted-average period of 1.5 years.

The expected stock compensation expense remaining to be recognized reflects only outstanding stock awards as of the periods presented, and assumes no forfeitures.

The fair value of each stock option grant was estimated on the date of grant, using a Black-Scholes option-pricing model, with the following weighted-average assumptions:

Fiscal Year Ended January 31,

Risk-free interest rate 1.10 % 0.50 %

Weighted-average volatility 43.50 % 31.90 %

Weighted-average expected term (in years) 6.10 6.02

Dividend yield — % — %

No options were granted during the year ended January 31, 2023.

Prior to the IPO, the Company estimated the volatility of common stock on the date of grant based on the average historical stock price volatility of comparable publicly-traded companies in the Company's industry group.

After the IPO, the Company will continue to use the historical volatility of comparable publicly-traded companies until we establish a sufficient public trading history.

The expected term is based on the simplified method for grants to employees and on the contractual term for non-employees.

The simplified method is used given the lack of historical exercise behavior data in the Company.

The risk-free interest rate is based on the U.S.

Treasury yield curve in effect at the time of grant.

The expected dividend yield is zero percent as the Company has not paid and does not anticipate paying dividends on common stock.

The following table summarizes the Company’s RSU activity (in thousands):

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Balances at January 31, 2023 5,046 $ 53.33

Granted 6,258 43.42

Vested ( 2,372 ) 48.47

Canceled/forfeited ( 1,203 ) 50.47

Balances at January 31, 2024

7,729 $ 47.20

(1) The table above does not include 3 million RSUs issued to the Company’s founder and the CEO described below.

(1) The table above does not include 3 million RSUs granted to the Company’s founder and the Chief Executive Officer (“CEO”) described below.

These RSUs are grants of shares of the Company’s common stock, the vesting of which is based on the requisite service requirement.

Generally, the Company’s RSUs are subject to forfeiture and are expected to vest over two to four years ratably on a combination of bi-annual and quarterly basis.

As of January 31, 2023 and January 31, 2022, approximately $ 254.8 million and $ 21.5 million, respectively, of total unrecognized compensation cost was related to restricted stock units granted to

team members other than the CEO, that is expected to be recognized over a weighted-average period of 3.2 years and 3.9 years, respectively.

During the years ended January 31, 2024, 2023 and 2022, the Company recorded $ 117.6 million, $ 61.6 million and $ 0.7 million stock-based compensation expenses related to RSUs, respectively.

As of January 31, 2024, approximately $ 347.8 million of total unrecognized compensation cost was related to RSUs granted to team members other than the CEO, that is expected to be recognized over a weighted-average period of 3.0 years.

The expected stock compensation expense remaining to be recognized reflects only outstanding stock awards as of the periods presented, and assumes no forfeitures.

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under the terms of the awards, the recipient may earn between 0 % and 200 % of the original grant.

The performance condition is set to be achieved in fiscal 2025 and the service condition in the calendar year 2025.

The Company recorded $ 1.6 million of stock-based compensation expense related to PSUs during the year ended January 31, 2023.

The performance c ondition is set to be achieved in fiscal 2025 and the service condition in the calendar year 2025.

The Company recorded $ 1.3 million and $ 1.6 million of stock-based compensation expense related to PSUs during the years ended January 31, 2024 and 2023, respectively.

As of January 31, 2024, unrecognized stock-based compensation expense related to these PSUs was $ 2.6 million to be recognized over a period of 1.9 years.

CEO Performance Award

In May 2021, the Company granted 3 million RSUs tied to its Class B common stock to Mr.

Sijbrandij, the Company’s co-founder and CEO, with an estimated aggregate grant date fair value of $ 8.8 million.

The Company recorded $ 1.7 million and $ 1.2 million of stock-based compensation expense related to the CEO RSUs during the years ended January 31, 2023 and 2022, respectively.

As of January 31, 2023, unrecognized stock-based compensation expense related to these RSUs was $ 5.9 million which will be recognized over the remaining derived service period of the respective tranches which ranges from 2 to 7 years.

2021 Employee Stock Purchase Plan

In September 2021, the Company’s board of directors and its stockholders approved the ESPP to enable eligible team members to purchase shares of the Company’s Class A common stock with accumulated payroll deductions and provides a 15 % purchase price discount of the fair market value of the Company’s Class A common stock on the IPO date or purchase date, whichever is lower.

The ESPP also provides up to a 27-month look-back period with four purchase dates in May and November of each year, and the first purchase occurred in May 2022.

If the closing price of the Company’s Class A common stock on the first day of the current offering period is higher than the price on the last day of any applicable purchase period, the ESPP requires the price to be reset based on the lower fair market value and the offering period to be rolled over for a new period of 24 months.

During fiscal 2023, this reset and rollover was triggered only on the May 31, 2022 purchase date.

The original offering period commencing on the IPO date through November 30, 2023 was modified to a new offering period commencing June 1, 2022 through May 31, 2024 and the ESPP price was reset based on the closing price of the Company’s Class A common stock on May 31, 2022.

In accordance with ASC 718, Stock-Based Compensation , the modification in respect of the reset of the ESPP price and rollover resulted in an incremental charge of stock-based compensation expense of $ 2.8 million during the year ended January 31, 2023.

The remaining modification charge of $ 6.2 million will be recognized over the remainder of the new offering period.

In May 2021, the Company granted 3 million RSUs tied to its Class B common stock to Sytse Sijbrandij, the Company’s co-founder and CEO, with an estimated aggregate grant date fair value of $ 8.8 million.

During the years ended January 31, 2024, 2023 and 2022, the Company recorded $ 1.7 million, $ 1.7 million and $ 1.2 million of stock-based compensation expense related to the CEO RSUs, respectively.

As measured from the grant date, the derived service period of the respective tranches ranges from 2 to 7 years.

As of January 31, 2024, unrecognized stock-based compensation expense related to these RSUs was $ 4.3 million which will be recognized over 4.8 years.

2021 Employee Stock Purchase Plan (“ESPP”)

In September 2021, the Company’s board of directors and its stockholders approved the ESPP and participation of eligible team members.

During the quarter ended July 31, 2023, the Company’s stock price on the purchase date, May 31, 2023, was lower than the Company’s stock price on the previously applicable offering date.

As a result, the offering in effect was reset with the lower stock price becoming the new offering price and rolled over to a new 24-month offering period.

The reset was treated as a modification resulting in incremental expense totaling $ 9.4 million, whi ch is being recognized over the remaining requisite service period as of the date of reset.

During the quarter ended July 31, 2022, the Company’s stock price on the purchase date, May 31, 2022, was lower than the Company’s stock price on the previously applicable offering date.

As a result, the offering in effect was reset with the lower stock price becoming the new offering price and rolled over to a new 24-month offering period.

The reset was treated as a modification resulting in incremental expense totaling $ 9.9 million , which is being recognized over the remaining requisite service period as of the date of reset.

The following table summarizes assumptions used in estimating the fair value of the ESPP for the offering period in effect using the Black-Scholes option-pricing model:

Fiscal Year Ended January 31, Fiscal Year Ended January 31,

Fiscal Year Ended January 31,

2024 2023 2022

Risk-free interest rate 4.22 % - 5.30 %

1.62 % - 4.55 %

0.07 % - 0.17 %

Volatility 40.95 % - 65.56 %

44.95 % - 55.19 %

38.47 % - 41.75 %

Expected term (in years) 0.50 - 2.00

Dividend yield — % — % — %

The Company record ed $ 25.7 million and $ 5.1 million of stock-based compensation expense related to the ESPP during the years ended January 31, 2023 and 2022 , respectively.

The Company recorded $ 19.0 million, $ 25.7 million and $ 5.1 million of stock-based compensation expense related to the ESPP during the years ended January 31, 2024, 2023 and 2022, respectively.

As of January 31, 2024, approximately $ 13.5 million of total unrecognized compensation cost was related to the ESPP that is expected to be recognized over 1.8 years.

As of January 31, 2023 , the Company issued 0.4 million shares of Class A common stock to team members through the ESPP.

Stock-Based Compensation Expense

Stock-Based Compensat ion Expense

The Company recognized stock-based compensation expense as follows (in thousands):

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Cost of revenue $ 6,400 $ 5,078 $ 1,300

Research and development 36,325 8,305 31,519

Sales and marketing 68,766 48,001 10,550

Research and development 50,804 36,325 8,305

General and administrative 37,079 33,163 9,854

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Joint Venture and Equity Method Investment” for further discussion.

(2) The table above includes stock-based compensation related to the tender offers.

The Company recognized $ 0.3 million and $ 103.3 million of incremental stock-based compensation expense related to the tender offers for fiscal 2022 and 2021 , respectively .

The corporate income tax benefit recognized in the consolidated statements of operations for stock-based compensation expense was $ 7.7 million and $ 7.0 million for the years ended January 31, 2023 and 2022, respectively, and no t material for the year ended January 31, 2021.

The corporate income tax benefit recognized in the consolidated statements of operations for stock-based compensation expense was zero , $ 7.7 million and $ 7.0 million for the years ended January 31, 2024 , 2023 and 2022, respectively.

Charitable Donation of Common Stock

In September 2021, the Company’s board of directors approved the reservation of up to 1,635,545 shares of Class A common stock for issuance to charitable organizations.

In March 2023, the Company’s

board of directors approved the donation of $ 10.7 million aggregate principal amount of shares of Class A common stock to the GitLab Foundation (the “Foundation”), a California nonprofit public benefit corporation.

The Foundation is also a related party as certain of the Company’s officers serve as directors of the Foundation.

This donation shall occur in equal quarterly distributions throughout fiscal 2024.

During the year ended January 31, 2024, the Company donated 231,408 shares of Class A common stock at fair value to the Foundation.

The fair value of the common stock was determined based on the quoted market price on the grant date.

The donation expense of $ 10.7 million was recorded in general and administrative expense in the consolidated statements of operations for the year ended January 31, 2024.

Restructuring and Other Related Charges

In February 2023, the Company reduced its total global headcount by approximately 7 % .

As a result, the Company recognized total restructuring charges of approximately $ 9.3 million during the year ended January 31, 2024, which consisted primarily of one-time severance and other termination benefit costs of $ 8.0 million, as well as accelerated stock-based compensation of $ 1.3 million.

The Company recognized one-time severance and other termination benefit costs as follows (in thousands):

Fiscal Year Ended January 31,

Cost of revenue $ 463

Research and development 2,119

Sales and marketing 3,811

General and administrative 1,634

(1) Excludes stock-based compensation of $ 1.3 million.

The changes in liabilities resulting from the restructuring charges and related accruals were as follows (in thousands) :

Balance as of January 31, 2023

Cash payments ( 7,839 )

Balance as of January 31, 2024 (2)

(1) Excludes stock-based compensation of $ 1.3 million.

(2) Balance is included in accrued compensation and benefits on the consolidated balance sheet as of January 31, 2024.

Joint Venture and Equity Method Investment

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The Company accounted for JiHu as a variable interest entity and consolidated the entity in accordance with ASC Topic 810, Consolidation .

On March 29, 2022, JiHu closed its Series A-1 round of common stock financing where investors contributed $ 27.7 million, net of issuance costs.

On July 1, 2022, JiHu closed its Series A-2 round of common stock financing where investors contributed $ 22.8 million, net of issuance costs.

On September 7, 2022, JiHu closed its Series A-3 round of financing with an external investor who contributed $ 4.1 million, net of issuance costs.

The Company accounted for these funding events as equity transactions with the carrying amount of the non-controlling interest adjusted to reflect the change in the ownership interest in JiHu, and the difference was recognized in the Company’s additional paid-in capital.

Subsequent to the closing of the rounds, the Company retains control over JiHu with its equity stake reduced from 72 % to 55 %.

During fiscal year 2023, JiHu closed its Series A-1 through A-3 rounds of common stock financings where investors contributed a total of $ 54.6 million, net of issuance costs.

In March 2022, one of the potential investors who could not participate in the Series A-1 financing round provided a $ 2.9 million loan to JiHu as an advance pending a capital contribution.

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JiHu received an equity contribution from this investor during the Series A-2 round and repaid the loan in full in July 2022.

During the year ended January 31, 2023, the board of directors of JiHu approved an employee stock option plan (“JiHu ESOP”) for its employees.

During the year ended January 31, 2023, the Company recognized $ 7.8 million of stock-based compensation expense related to JiHu ESOP, respectively.

As of January 31, 2023, approximately $ 14.5 million of total unrecognized compensation cost was related to the JiHu ESOP that is expected to be recognized over 3.2 years.

Subsequent to the closing of the financing rounds d uring fiscal year 2023 , the Company retained control over JiHu with its equity stake reduced from 72 % to 55 %.

As of January 31, 2024, the Company still retains control over JiHu with its equity stake at approximately 54 %.

In April 2022, the board of directors of JiHu approved an employee stock option plan (“JiHu ESOP”) for its employees.

As a result of forfeitures triggered by the departure of certain executives during the year ended January 31, 2024, the Company reversed stock-based compensation previously recorded for such executives.

The Company recorded a $ 1.5 million gain and $ 7.8 million loss for the years ended January 31, 2024 and 2023, respectively.

As of January 31, 2024, approximately $ 3.6 million of total unrecognized compensation cost was related to the JiHu ESOP that is expected to be recognized over 3.9 y ears.

The Company considers the RSAs and stock option awards granted pursuant to the JiHu ESOP as potentially dilutive equity instruments that will result in dilution of the Company’s stake in JiHu upon vesting of such award (or, in the case of option awards granted pursuant to the JiHu ESOP, upon vesting and subsequent exercise into shares of JiHu common stock).

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Operating Leases

The Company recognized $ 0.6 million, $ 0.2 million and zero of operating lease expense during the year ended January 31, 2023, 2022 and 2021 , respectively.

The Company has non-cancelable operating leases maturing over the next two years with total lease payments of $ 1.2 million and total present value of lease liabilities of $ 1.1 million .

The table below presents supplemental information related to operating leases for the year ended January 31, 2023 (in thousands, except weighted-average information):

The Company reco gnized $ 0.6 million, $ 0.6 million and $ 0.2 million of operating lease expense during the years ended January 31, 2024, 2023 and 2022, respectively.

JiHu has non-cancelable operating leases maturing during the year ended January 31, 2025 with total lease payments of $ 0.4 million and total present value of lease liabilities of $ 0.4 million.

Lease expense for the one short-term lease was immaterial during the years ended January 31, 2024, 2023 and 2022.

The table below presents supplemental information related to operating leases for the years ended January 31, 2024 (in thousands, except weighted-average information):

Weighted-average remaining lease term (in years) 0.56

Weighted-average discount rate 3.7 %

Right-of-use assets obtained in exchange for new operating lease liabilities $ 515

Cash paid for amounts included in the measurement of lease liabilities

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Fiscal Year Ended January 31,

2024 2023 2022

Revenue $ 6,451 $ 4,743 $ 1,237

Cost of revenue 2,414 1,731 945

Gross profit (loss) 3,012 292

Gross profit 4,037 3,012 292

Operating expenses:

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Net loss before income taxes ( 8,598 ) ( 19,699 ) ( 8,729 )

Benefit from income taxes ( 16 ) — —

Net loss $ ( 8,614 ) $ ( 19,699 ) $ ( 8,729 )

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In April 2021, the Company reorganized Meltano Inc.

(“Meltano”), which started as an internal project within the Company in July 2018, into a separate legal entity.

(“Meltano”), now operating as Arch Data, Inc.

(“Arch”), which started as an internal project within the Company in July 2018, into a separate legal entity.

The entity was funded by the Company’s contribution of intellectual property with the fair value of approximately $ 0.4 million and a preferred stock financing from third parties of $ 4.2 million, representing 12 % ownership on a fully diluted basis.

On April 4, 2022, Meltano closed its Series Seed-2 round of preferred stock financing and raised $ 7.2 million.

Pursuant to this transaction, the board composition of Meltano changed and the Company no longer has the power to appoint the majority of the board of directors of Meltano.

Consequently, despite having majority voting rights at the stockholder level, the Company no longer has control over Meltano.

The loss of control of a majority owned subsidiary resulted in the deconsolidation of net assets of $ 9.4 million and non-controlling interest of Meltano of $ 11.3 million, recognition of retained interest at fair value of $ 15.9 million , and a gain of $ 17.8 million recorded in other income (expense), net during the year

ended January 31, 2023 .

The fair value of retained interest was determined using Option Pricing Model (“OPM”) Backsolve approach based on the most recent funding round of preferred stock.

As of the date of the loss of control, the basis difference between the fair value of investment in Meltano and the Company’s share in the net assets of Meltano was attributed to equity method goodwill.

Effective April 4, 2022, the Company accounts for this investment under the equity method and has recorded $ 12.7 million in “equity method investment” on its consolidated balance sheet as of January 31, 2023.

During the year ended January 31, 2023, the Company recognized a loss from equity method investment of $ 2.5 million, net of tax on the consolidated statements of operations.

As of January 31, 2023, the Company owns 96 % of the common stock in Meltano.

As of January 31, 2023, Meltano has 3.5 million employee stock options and 3.1 million shares of preferred stock outstanding that are potentially dilutive equity instruments and will result in dilution to 46 % in the Company’s stake in Meltano once all these instruments get converted into common stock of Meltano.

The components of total income (loss) from continuing operations before income taxes are as follows (in thousands):

On April 4, 2022, Arch closed its Series Seed-2 round of preferred stock financing and raised $ 7.2 million.

Pursuant to this transaction, the board composition of Arch changed and the Company no longer has the power to appoint the majority of the board of directors of Arch.

Consequently, despite having majority voting rights at the stockholder level, the Company no longer has control over Arch.

The loss of control of a majority owned subsidiary resulted in the deconsolidation of net assets of $ 9.4 million and non-controlling interest of Arch of $ 11.3 million, recognition of retained interest at fair value of $ 15.9 million , and a gain of $ 17.8 million recorded in other income (expense), net in April 2022 .

The fair value of retained interest was determined using the Option Pricing Model (“OPM”) Backsolve approach based on the most recent funding round of preferred stock.

As of the date of the loss of control, the basis difference between the fair value of investment in Arch and the Company’s share in the net assets of Arch was attributed to equity method goodwill.

Effective April 4, 2022, the Company accounts for this investment under the equity method.

The Company reviews for impairment whenever factors indicate that the carrying value of the equity method investment may not be recoverable.

In Accordance with ASC 820, Fair Value Measurement , the Company calculated that the estimated undiscounted cash flows related to its equity method investment were less than the carrying amount of the equity method investment.

As a result, the Company recorded an impairment charge of $ 8.9 million in other income (expense), net in the consolidated statement of operations during the year ended January 31, 2024 which reduced the investment value to zero a s of January 31, 2024 .

During the years ended January 31, 2024 and 2023, the Company recorded a loss from equity method investment of $ 3.8 million and $ 2.5 million, net of tax on the consolidated statements of operations, respectively.

The components of total loss from continuing operations before income taxes are as follows (in thousands):

Fiscal Year Ended January 31,

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Accruals and other assets 6,237 3,590

Capitalized R&D 70,921 —

Intangibles 110,160 8,278

Interest expense limitation 35,085 —

Stock-based compensation 6,679 5,040

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Fixed assets ( 191 ) ( 499 )

Unrealized foreign exchange adjustments ( 10,024 ) —

Other ( 23 ) ( 189 )

Net deferred tax liabilities $ ( 10,369 ) $ ( 849 )

Under the provisions of ASC 740, Income Taxes , the determination of the Company’s ability to recognize its deferred tax asset requires an assessment of both negative and positive evidence when determining the Company’s ability to recognize its deferred tax assets.

The Company determined that it was not more likely than not that the Company could recognize certain deferred tax assets.

The evidence evaluated by the Company included operating results during the most recent three-year period and future

projections, with more weight given to historical results than expectations of future profitability, which are inherently uncertain.

Under the provisions of ASC 740, Income Taxes , the determination of the Company’s ability to recognize its deferred tax asset requires an assessment of both negative and positive evidence when

determining the Company’s ability to recognize its deferred tax assets.

As in prior years, the Company maintained that it was not more likely than not that the Company could recognize deferred tax assets in certain jurisdictions.

The evidence evaluated by the Company included operating results during the most recent three-year period and future projections.

More weight was given to historical results than to expectations of future profitability, which are inherently uncertain.

Certain entities’ net losses in recent periods represented sufficient negative evidence to require a valuation allowance against its net deferred tax assets.

This valuation allowance will be evaluated periodically and could be reversed partially or totally if business results have sufficiently improved to support realization of deferred tax assets.

The increase of $ 43.6 million in the valuation allowance for the year ended January 31, 2023 is primarily due to net operating losses generated during the year.

As of January 31, 2023, the Company recorded $ 0.8 million of deferr ed tax liabilities, net.

The increase of $ 168.9 million in the valuation allowance for the year ended January 31, 2024 is primarily due to the addition of certain deferred tax assets from the estimated result of the settlement with the Internal Revenue Service and Dutch tax authorities.

As of January 31, 2024, the Company recorded $ 10.4 million of net deferred tax liabilities.

The Company has not recorded a provision for deferred U.S.

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As of January 31, 2024, the Company had federal net operating loss carryforwards of approximately $ 285.6 million, state net operating loss carryforwards of approximately $ 336.7 million and foreign net operating loss carryforwards of approximately $ 31.7 million.

All of the federal net operating loss carryforwards are carried over from an entity acquired in the previous fiscal year.

The federal net operating loss carryforwards do not expire as they were generated post Tax Cuts and Jobs Act, where net operating losses generated after December 31, 2017 do not expire.

The federal net operating loss carryforwards do not expire as they were generated after the enactment of the Tax Cuts and Jobs Act, where net operating losses generated after December 31, 2017 do not expire.

state net operating loss carryforwards, if not utilized, will begin to expire on various dates beginning in 2025.

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Internal Revenue Code, the net operating loss and R&E credit could be subject to limitation should the Company experience an owner shift of greater than 50 percent over a 3 year period.

however at this time, the effect of this limitation is immaterial.

Uncertain Tax Positions

At January 31, 2023, the Company’s U.S.

The Company has been in BAPA negotiations between the IRS and the DTA relating to the Company’s transfer pricing arrangements between the United States and the Netherlands.

In the year ended January 31, 2024, the Company for the first time discussed with the IRS and DTA a framework to finalize its transfer pricing arrangements for the proposed BAPA period consisting of tax years ending December 31, 2018 through January 31, 2027.

The proposed agreements between the Company, the IRS and the DTA are not yet final;

in anticipation of the agreements, $ 254.9 million of net tax expense was recorded in the year ended January 31, 2024.

This amount represents the unrecognized tax benefit relating to the BAPA.

The unrecognized tax benefit represents the Company’s best estimate of the tax expense associated with the proposed agreements and their related effects.

As of January 31, 2024, the Company’s U.S.

federal 2018 through 2022 tax years were open and subject to potential examination in one or more jurisdictions.

In addition, in the United States, any net operating losses or credits that were generated in prior years but not yet fully utilized in a year that is closed under the statute of limitations may also be subject to examination.

The Company is currently under examination in the Netherlands for tax years 2015 and 2016.

The Company is currently unable to estimate the financial outcome of this examination due to its preliminary status.

The Company regularly assesses the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of its provision for income taxes.

The Company is currently under examination in the Netherlands for the tax years ended December 31, 2015 and 2016.

The Company expects negotiations to continue to the middle of fiscal 2025.

The Company believes that it has adequately reserved for the outcome of this audit.

The Company regularly assesses the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of its provision for

income taxes.

The Company continues to monitor the progress of ongoing discussions with tax authorities and the effect, if any, of the expected expiration of the statute of limitations in various taxing jurisdictions.

As of January 31, 2023, unrecognized tax benefits approxim ated $ 7.5 million, of which $ 0.5 million would affect the effective tax rate if recognized.

As of January 31, 2024, unrecognized tax benefits approximated $ 396.8 million, of which $ 207.8 million would affect the effective tax rate if recognized.

The Company anticipates an immaterial amount of unrecognized tax benefits to reverse in the next 12 months.

We have classified approximately $ 207.3 million of the unrecognized tax benefit as a current tax liability due to the anticipated timing of the settlement with the IRS and DTA and their associated payments, which are expected to be made within the next 12 months.

As of January 31, 2023, unrecognized tax benefits approximated $ 7.5 million, of which $ 0.5 million would affect the effective tax rate if recognized.

The reconciliation of the Company's unrecognized tax benefits is as follows (in thousands):

Beginning balance $ 7,460 $ 5,557

Gross increases and decreases due to tax positions taken in prior periods 685 4,076

Gross increases and decreases due to tax position taken in current period 1,369 1,481

Gross increases and decreases due to settlements with taxing authorities — —

Gross increases and decreases due to lapses in applicable statutes of limitations ( 151 ) —

Gross increases due to tax positions taken in prior periods 324,364 685

Gross increases due to tax position taken in current period 65,001 1,369

Gross decreases due to lapses in applicable statutes of limitations ( 1 ) ( 151 )

Ending balance $ 396,824 $ 7,460

The Company believes that it is reasonably possible that $ 389.0 million of the unrecognized tax benefit will be realized in the coming year due to the settlement of the BAPA.

It is the Company’s policy to classify accrued interest and penalties related to unrecognized tax benefits in the provision for income taxes.

For the years ended January 31, 2023, 2022 and 2021, the Company recognized interest and penalties of $ 0.2 million, $ 0.1 million and zero , respectively.

For the years ended January 31, 2024, 2023 and 2022, the Company recognized interest and penalties of $ 52.1 million, $ 0.2 million and $ 0.1 million, respe ctively.

Net Loss per Share

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Shares subject to the ESPP 63 81 256

Convertible preferred stock (on an if-converted basis) — — 79,551

Warrants — — 73

21,305 21,396 97,177

Total 19,521 21,305 21,396

Commitments and Contingencies

Contractual Obligations and Commitments

The Company’s contractual commitments relate mainly to third-party non-cancelable hosting infrastructure agreements and subscription arrangements used in the ordinary course of business.

The Company’s purchase oblig ations represent third-party non-cancelable hosting infrastructure agreements, subscription arrangements and other commitments used in the ordinary course of business to meet operational requirements.

Future minimum payments under the Company’s non-cancelable purchase commitments as of January 31, 2024 were as follows (in thousands):

Total Less than 1 Year 1-3 Years

Total Less than 1 Year 1-3 Years 4-5 Years Thereafter

Purchase commitments (1)

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Accordingly, the Company has recorded an estimated liability related to certain labor matters regarding its use o f contractors in certain foreign countries.

As of January 31, 2023 and January 31, 2022 , the estimated liability relating to these matters w as $ 2.5 million and $ 2.6 million, respectively.

As of January 31, 2024 and January 31, 2023 , the estimated liability relating to these matters w as $ 2.2 million and $ 2.5 million recorded in other non-current liabilities on the consolidated balance sheets, respectively.

Warranties and Indemnifications

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In connection with the service level agreements, the Company has not incurred any significant costs and has not accrued any liabilities in the consolidated financial statements.

In the ordinary course of business, the Company enters into contractual arrangements under which the Company agrees to provide indemnification of varying scope and terms to business partners and

other parties with respect to certain matters, including, but not limited to, losses arising out of the breach of such agreements, intellectual property infringement claims made by third parties, and other liabilities relating to or arising from the Company’s platform or the Company’s acts or omissions.

In the ordinary course of business, the Company enters into contractual arrangements under which the Company agrees to provide indemnification of varying scope and terms to business partners and other parties with respect to certain matters, including, but not limited to, losses arising out of the breach of such agreements, intellectual property infringement claims made by third parties, and other liabilities relating to or arising from the Company’s platform or the Company’s acts or omissions.

In these circumstances, payment may be conditional on the other party making a claim pursuant to the procedures specified in the particular contract.

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The results of any current or future litigation cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources and other factors.

Subsequent Events

Reduction in Force (“RIF”)

In the first quarter of fiscal year 2024, the Company announced a plan to reduce its global headcount by approximately 7 % of the total headcount, following a review of the Company’s business structure and after taking other cost-cutting measures to reduce expenses.

As a result of the above plan, the Company recognized total restructuring charges of approximately $ 9.0 million in the first quarter of fiscal year 2024, which consisted primarily of one-time severance and other termination benefit costs of $ 7.5 million, as well as accelerated stock-based compensation directly related to this reduction in force of $ 1.5 million.

Subsequent Event

On March 20, 2024, the Company acquired all of the outstanding equity, vested employee stock options and other rights to acquire share capital of Oxeye Security Limited (“Oxeye”) in exchange for approximately $ 26.0 million in cash, subject to a one-time payment to the Israel Innovation Authority and certain customary purchase price adjustments, inclusive of amounts escrowed as partial security for Oxeye indemnification obligations and certain contingent consideration withheld at closing from certain Oxeye stockholders who became Company team members following the transaction.

As part of the transaction, the Company will also offer RSUs as a substitution for unvested employee stock options held by the continuing employees of Oxeye.

Oxeye has developed application security testing solutions and the Company believes this acquisition will allow the Company to strengthen its product offerings.

Oxeye has negligible revenues as of the date of acquisition.

The Company is currently in the process of finalizing the accounting for this transaction and expects to complete the preliminary allocation of the purchase consideration to the assets acquired and liabilities assumed by the end of the first quarter of fiscal 2025.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data