Item 9A. Controls and Procedures
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our Chief Executive Officer (“CEO”) and Chief Financial Officer (”CFO”) (“certifying officers”) have conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)) as of January 31, 2024 . Our certifying officers concluded that, as a result of the material weakness in internal control over financial reporting as described below, our disclosure controls and procedures were not effective as of January 31, 2024 .
Management’s Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act). The Company’s management, with participation of the CEO and CFO, under the oversight of our board of directors, evaluated the effectiveness of the Company’s internal control over financial reporting as of January 31, 2024 using the framework in Internal Control - Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that evaluation, management concluded that the Company’s internal control over financial reporting was not effective as of January 31, 2024 due to the material weakness in internal control over financial reporting, described below.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. As of January 31, 2024 , management determined that a material weakness exists due to a lack of policies and procedures related to the operation of control activities and inadequate communication of information to control owners and operators related to the objectives and responsibilities for internal control in a manner which supports the internal control environment at the Company. As a result, the following material weakness exists:
• We did not design and maintain effective controls over certain information technology (“IT”) general controls for information systems used in the financial reporting processes related to revenue. In particular, we did not design and maintain effective (i) program change management controls to ensure that IT programs, data changes and migrations affecting financial IT applications and underlying records are identified, tested, authorized and implemented appropriately and (ii) user access controls to ensure appropriate segregation of duties, restricted user and privileged access to our financial applications, data and programs to the appropriate personnel. The ineffective design and operation of IT general controls resulted in the ineffective operation of automated controls and manual controls using reports and information from the impacted information systems used in the financial reporting processes related to revenue.
The aforementioned material weakness did not result in a material misstatement to our annual or interim financial statements, however the deficiency could result in misstatements potentially impacting the financial reporting processes related to revenue and related disclosures that would not be prevented or detected. Therefore, we concluded that the deficiency represents a material weakness in the Company’s internal control over financial reporting and our internal control over financial reporting was not effective as of January 31, 2024 .
Our independent registered public accounting firm, KPMG LLP, who audited the consolidated financial statements included in this Annual Report on Form 10-K, issued an adverse opinion on the effectiveness of the Company’s internal control over financial reporting. KPMG LLP’s report appears in Item 8 of this Annual Report on Form 10-K.
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Remediation Plan for Un-Remediated Material Weakness
During the year ended January 31, 2024, we commenced implementing the following steps intended to remediate our material weakness:
• Strengthening IT governance and designing IT general controls related to certain revenue systems, including program change management, restricting user access to our internal systems used for financial reporting and enhancing the retention of contemporaneous documentation of reviews over IT general controls, and
• Developing and deploying training programs regarding the operation and importance of internal controls.
We believe the actions described above, once fully implemented and tested, will be sufficient to remediate the identified material weakness and strengthen our internal controls. However, our efforts to remediate this material weakness may not be effective or prevent any future material weakness or significant deficiency in our internal control over financial reporting. This material weakness will not be considered remediated until the applicable remedial controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.
Remediation of Previously Disclosed Material Weaknesses
As previously disclosed, in connection with the audit of our consolidated financial statements as of and for the fiscal year ended January 31, 2023, we identified the following material weaknesses in our internal control over financial reporting:
• We did not retain sufficient contemporaneous documentation to demonstrate the operation of controls over manual journal entries,
• We did not retain sufficient contemporaneous documentation to demonstrate the operation of review controls over stock-based compensation at a sufficient level of precision and such controls relied on reports and information adversely impacted by IT general control deficiencies, and
• We did not design and maintain effective and timely review procedures over the accounting for and disclosure of non-routine transactions.
During the fiscal year ended January 31, 2024, management, under the oversight of the board of directors, implemented measures designed to remediate the January 31, 2023 material weaknesses described above. The remediation actions included:
• Enhancing the review of manual journal entries, including outlining policies and procedures to strengthen retention of contemporaneous documentation and supervisory reviews by management,
• Enhancing the precision of controls around the review of equity transactions, including the review of underlying source data and outlining policies and procedures to strengthen the retention of contemporaneous documentation of control reviews,
• Enhancing the review process around non-standard contracts and expanding our internal disclosure review processes to provide greater representation across various functions to ensure timely identification and review of non-routine transactions, and
• Developing and deploying training programs regarding the operation and importance of internal controls.
We have tested and evaluated the implementation of these new and revised processes and internal controls to ascertain whether they are designed and operating effectively to provide reasonable
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assurance that they will prevent or detect a material error in our consolidated financial statements and have concluded that these material weaknesses have been remediated as of January 31, 2024.
Additionally, during the fiscal year ended January 31, 2023 , we identified and disclosed the following material weakness in our internal control over financial reporting:
• We did not design and maintain effective controls over certain information technology (“IT”) general controls for information systems that are relevant to the preparation of our consolidated financial statements. In particular, we did not design and maintain effective (i) program change management controls to ensure that IT programs, data changes and migrations affecting financial IT applications and underlying records are identified, tested, authorized and implemented appropriately and (ii) user access controls to ensure appropriate segregation of duties, restricted user and privileged access to our financial applications, data and programs to the appropriate personnel. The ineffective design and operation of IT general controls resulted in the ineffective operation of automated controls and manual controls using reports and information from the impacted information systems used in financial reporting processes.
During the fiscal year ended January 31, 2024 , management, under the oversight of the board of directors, implemented additional measures designed to remediate the January 31, 2023 material weakness described above, including strengthening IT governance and designing IT general controls generally, and enhancing the retention of contemporaneous documentation of reviews over IT general controls. Through the implementation of these additional IT controls, the pervasive IT general controls weakness described above has been narrowed to the general controls for information systems used in the financial reporting processes related to revenue.
Changes in Internal Control over Financial Reporting
Other than the material weaknesses and remediation efforts described above, there were no changes to our internal control over financial reporting identified in connection with the evaluation required by rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended January 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Limitations on Effectiveness of Controls and Procedures
Our disclosure controls and procedures and internal controls over financial reporting are designed to provide reasonable assurance of achieving their desired objectives. Management does not expect, however, that our disclosure controls and procedures or our internal controls over financial reporting will prevent or detect all errors and fraud. Any control system, no matter how well designed and operated, is based upon certain assumptions and can provide only reasonable, not absolute, assurance that its objectives will be met. Further, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the company have been detected.
ITEM 9B. OTHER INFORMATION
Rule 10b5-1 Trading Plans
Sytse Sijbrandij 10b5-1 Plan
On December 26, 2023 , Sytse Sijbrandij , Co-Founder, Chair of the board of directors, and Chief Executive Officer , entered into, through Mr. Sibrandij’s revocable trust, a new pre-arranged written stock sale plan in accordance with Rule 10b5-1 (the “Sijbrandij Rule 10b5-1 Plan”) under the Exchange Act for the sale of shares of the Company’s Class A common stock (resulting from the conversion of the Company’s Class B common stock). The Sijbrandij Rule 10b5-1 Plan was entered into during an open trading window in accordance with the Company’s policies regarding transactions in the Company’s
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securities and is intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Exchange Act. The Sijbrandij Rule 10b5-1 Plan provides for the potential sale of approximately 1,008,000 shares, which reflects the aggregate number of shares of the Company’s Class A common stock resulting from the conversion of the Company’s Class B common stock, so long as the market price of the Company’s Class A common stock is higher than certain minimum threshold prices specified in the Sijbrandij Rule 10b5-1 Plan, between April 15, 2024 and March 19, 2025.
The Sijbrandij Rule 10b5-1 Plan includes a representation from Mr. Sijbrandij to the broker administering the plan that he was not in possession of any material nonpublic information regarding the Company or the securities subject to the Sijbrandij Rule 10b5-1 Plan at the time it was entered into. A similar representation was made to the Company in connection with the adoption of the Sijbrandij Rule 10b5-1 Plan under the Company’s policies regarding transactions in the Company’s securities. Those representations were made as of the date of adoption of the Sijbrandij Rule 10b5-1 Plan, and speak only as of such date. In making those representations, there is no assurance with respect to any material nonpublic information of which Mr. Sijbrandij was unaware, or with respect to any material nonpublic information acquired by Mr. Sijbrandij or the Company after the date of the representation.
Brian Robins 10b5-1 Plan
On December 27, 2023 , Brian Robins , the Company’s Chief Financial Officer , entered into a new pre-arranged written stock sale plan in accordance with Rule 10b5-1 (the “Robins Rule 10b5-1 Plan”) under the Exchange Act for the sale of shares of the Company’s Class A common stock resulting from the exercise of vested stock options for shares of the Company’s Class B common stock and subsequent conversion to Class A common stock prior to consummating any sale in connection with the exercise of vested stock options. The Robins Rule 10b5-1 Plan was entered into during an open trading window in accordance with the Company’s policies regarding transactions in the Company’s securities and is intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Exchange Act. The aggregate number of shares of Class A common stock that will be available for sale under the Robins Rule 10b5-1 Plan is not yet determinable because the shares available will be net of shares sold to satisfy tax withholding obligations that arise in connection with the exercise and settlement of option awards. As such, for purposes of this disclosure, the aggregate number of shares of the Company’s Class A common stock available for sale is approximately 240,000 shares, which reflects shares of the Company’s Class A common stock resulting from the exercise of vested stock options for shares of the Company’s Class B common stock and subsequent conversion to Class A common stock prior to consummating any sale in connection with the exercise of vested stock options, so long as the market price of the Company’s Class A common stock is higher than certain minimum threshold prices specified in the Robins Rule 10b5-1 Plan between March 27, 2024 and February 28, 2025.
The Robins Rule 10b5-1 Plan includes a representation from Mr. Robins to the broker administering the plan that he was not in possession of any material nonpublic information regarding the Company or the securities subject to the Robins Rule 10b5-1 Plan at the time it was entered into. A similar representation was made to the Company in connection with the adoption of the Robins Rule 10b5-1 Plan under the Company’s policies regarding transactions in the Company’s securities. Those representations were made as of the date of adoption of the Robins Rule 10b5-1 Plan, and speak only as of such date. In making those representations, there is no assurance with respect to any material nonpublic information of which Mr. Robins was unaware, or with respect to any material nonpublic information acquired by Mr. Robins or the Company after the date of the representation.
Once executed, transactions under each of the Sijbrandij Rule 10b5-1 Plan and the Robins Rule 10b5-1 Plan will be disclosed publicly through Form 4 and/or Form 144 filings with the Securities and Exchange Commission in accordance with applicable securities laws, rules, and regulations. Except as may be required by law, the Company does not undertake any obligation to update or report any modification, termination, or other activity under current or future Rule 10b5-1 plans that may be adopted by Mr. Sijbrandij, Mr. Robins or other officers or directors of the Company.
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ITEM 9C. DISCLOSURES REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
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PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information required by this item will be set forth in our definitive proxy statement to be filed with the Securities and Exchange Commission not later than 120 days after the end of our fiscal year ended January 31, 2024 in connection with our 2024 annual meeting of shareholders, or the Proxy Statement, and is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item will be set forth in the Proxy Statement and is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNER AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The information required by this item will be set forth in the Proxy Statement and is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required by this item will be set forth in the Proxy Statement and is incorporated herein by reference.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The information required by this item will be set forth in the Proxy Statement and is incorporated herein by reference.
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PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENTS SCHEDULES
(1) All Financial Statements
See Index to Consolidated Financial Statements in Item 8 herein.
(2) Financial Statements Schedules
The following additional financial statement schedules should be considered in conjunction with our consolidated financial statements. All other financial statement schedules have been omitted because the required information is not present in amounts sufficient to require submission of the schedule, not applicable, or because the required information is included in the consolidated financial statements or notes thereto.
Schedule II: Valuation and Qualifying Accounts
The table below details the activity of the deferred tax valuation allowance for the fiscal years ended January 31, 2024, 2023, and 2022:
Balance at Beginning of Year Additions Write-offs or Deductions Balance at End of Year
(in thousands)
Year ended January 31, 2024
Deferred tax valuation allowance $ 159,470 $ 168,915 $ — $ 328,385
Year ended January 31, 2023
Deferred tax valuation allowance $ 115,839 $ 43,631 $ — $ 159,470
Year ended January 31, 2022
Deferred tax valuation allowance $ 74,870 $ 40,969 $ — $ 115,839
(3) Exhibits
Incorporated by Reference Filed or Furnished Herewith
Exhibit Number Description Form File Number Exhibit Filing Date
3.1 Restated Certificate of Incorporation 2021 of GitLab Inc.
10-Q 001-40895 3.2 12/7/2021
3.2 Amended and Restated Bylaws of GitLab Inc.
8-K 001-40895 3.1 12/15/2022
4.1 Form of Class A Common Stock Certificate of GitLab Inc.
S-1/A 333-259602 4.1 10/12/2021
4.2 Form of Class B Common Stock Warrant
S-1/A 333-259602 4.3 10/4/2021
4.3 Description of Registrant’s Securities
10-K 001-40895 4.4 4/8/2022
10.1† Form of Indemnification Agreement between GitLab Inc. and each of directors and executive officers
S-1 333-259602 10.1 9/17/2021
10.2† GitLab Inc. 2015 Equity Incentive Plan and related form agreements
S-1 333-259602 10.2 9/17/2021
10.3† GitLab Inc. 2021 Equity Incentive Plan and related form agreements
X
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10.4† GitLab Inc. 2021 Employee Stock Purchase Plan
10-Q 001-40895 10.4 6/7/2022
10.5† Form of Offer Letter between GitLab Inc. and each of its named executive officers
S-1/A 333-259602 10.5 10/4/2021
10.6†‡ Form of Global Performance Stock Unit Award Agreement
10-Q 001-40895 10.6 9/7/2022
10.7† Service Continuation Agreement between the Registrant and Michael McBride
10-Q 001-40895 10.7 9/6/2023
21.1 List of Subsidiaries
X
23.1 Consent of KPMG LLP, independent registered public accounting firm
X
31.1 Certification of Principal Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
X
31.2 Certification of Principal Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
X
32.1* Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
X
32.2* Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
X
97.1 GitLab Inc. Policy Relating to Recovery of Erroneously Awarded Compensation
X
101.INS XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. X
101.SCH Inline XBRL Taxonomy Extension Schema Document. X
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document. X
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document. X
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document. X
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document. X
104 Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101). X
† Indicates management contract or compensatory plan.
‡ Registrant has omitted schedules and exhibits pursuant to Item 601(a)(5) of Regulation S-K. The Registrant agrees to furnish supplementally a copy of the omitted schedules and exhibits to the SEC upon request.
* The certifications furnished in Exhibits 32.1 and 32.2 hereto are deemed to accompany this Annual Report on Form 10-K and are not deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, nor shall they be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act, irrespective of any general incorporation language contained in such filing.
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ITEM 16. FORM 10-K SUMMARY
None.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the re gistrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
GITLAB INC.
Date: March 25, 2024
By: /s/ Sytse Sijbrandij
Name: Sytse Sijbrandij
Title: Chief Executive Officer
Date: March 25, 2024
By: /s/ Brian Robins
Name: Brian Robins
Title: Chief Financial Officer
Date: March 25, 2024
By: /s/ Erin Mannix
Name: Erin Mannix
Title: Chief Accounting Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Brian Robins and Robin Schulman, and each or any one of them, his or her true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any an d all capacities, to sign any and all amendments to this report, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-facts and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Report has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated.
Name Title Date
/s/ Sytse Sijbrandij Director and Chief Executive Officer March 25, 2024
Sytse Sijbrandij (principal executive officer)
/s/ Brian Robins Chief Financial Officer March 25, 2024
Brian Robins (principal financial officer)
/s/ Erin Mannix Chief Accounting Officer March 25, 2024
Erin Mannix (chief accounting officer)
/s/ Sundeep Bedi Director March 25, 2024
Sundeep Bedi
/s/ Karen Blasing Director March 25, 2024
Karen Blasing
/s/ Sue Bostrom Director March 25, 2024
Sue Bostrom
/s/ Matthew Jacobson Director March 25, 2024
Matthew Jacobson
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/s/ Mark Porter Director March 25, 2024
Mark Porter
/s/ Merline Saintil Director March 25, 2024
Merline Saintil
/s/ Godfrey Sullivan Director March 25, 2024
Godfrey Sullivan
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