GTLB 10-Q
Gitlab Inc. (GTLB)
10-Q
2026-09-02
For: 2026-07-31
View Original
Added on
September 02, 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
For the quarterly period ended July 31, 2026
or
For the transition period from to
Commission File Number: 001-40895
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) | |||||||||||||
Address Not Applicable1 | Zip Code Not Applicable1 | |||||||||||||
(Address of Principal Executive Offices) | Zip Code | |||||||||||||
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Class A common stock, par value $0.0000025 per share | ||||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). x Yes o No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
x | Accelerated filer | o | ||||||||||||
Non-accelerated filer | o | Smaller reporting company | ||||||||||||
Emerging growth company | ||||||||||||||
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes x No
As of August 18, 2026, the number of shares of the registrant’s Class A common stock outstanding was 165.5 million and the number of shares of the registrant’s Class B common stock outstanding was 1.1 million.
_____________________________
1 We are a remote-only company. Accordingly, we do not maintain a headquarters. For purposes of compliance with applicable requirements of the Securities Act of 1933, as amended, or the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, any stockholder communication required to be sent to our principal executive offices may be directed to the agent for service of process at Corporation Service Company, 251 Little Falls Drive , Wilmington , Delaware 19808 , or to the email address: [email protected].
TABLE OF CONTENTS
| Page | ||||||||
| PART I. | ||||||||
| Item 1. | ||||||||
| Item 2. | ||||||||
| Item 3. | ||||||||
| Item 4. | ||||||||
| PART II. | ||||||||
| Item 1. | ||||||||
| Item 1A. | ||||||||
| Item 2. | ||||||||
| Item 3. | ||||||||
| Item 4. | ||||||||
| Item 5. | ||||||||
| Item 6. | ||||||||
1
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q, or this Quarterly Report, contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. All statements contained in this Quarterly Report other than statements of historical fact, including statements regarding our future operating results and financial condition, our business strategy and plans, market growth, and our objectives for future operations, are forward-looking statements. The words “believe,” “may,” “will,” “potentially,” “estimate,” “continue,” “anticipate,” “intend,” “could,” “would,” “project,” “target,” “plan,” “expect,” and similar expressions are intended to identify forward-looking statements.
Forward-looking statements contained in this Quarterly Report include, but are not limited to, statements about:
•our future financial performance, including our expectations regarding our total revenue, cost of revenue, gross profit or gross margin, operating expenses, including changes in operating expenses and our ability to achieve and maintain future profitability;
•our business plan and our ability to effectively manage our growth;
•our total market opportunity;
•anticipated trends, growth rates, and challenges in our business and in the markets in which we operate;
•market acceptance of our intelligent orchestration platform for DevSecOps and our ability to increase adoption of such platform;
•beliefs and objectives for future operations;
•our ability to further penetrate our existing customer base and attract, retain, and expand our customer base;
•our ability to timely and effectively scale and adapt our intelligent orchestration platform for DevSecOps;
•our ability to develop new features and bring them to market in a timely manner;
•our ability to increase adoption of GitLab Flex;
•our incorporation of artificial intelligence features into our products;
•our expectations to grow our partner network;
•our ability to maintain, protect, and enhance our intellectual property;
•our ability to continue to expand internationally;
•the effects of increased competition in our markets and our ability to compete effectively;
•future acquisitions or investments in complementary companies, products, services, or technologies;
•our ability to stay in compliance with laws and regulations that currently apply or become applicable to our business both in the United States and internationally;
•the impact of any data breaches, cyberattacks or other malicious activity on our technology systems;
2
•economic and industry trends, projected growth, or trend analysis;
•the impact of macroeconomic conditions, including inflation, tariffs, volatile interest rates, regulatory uncertainty, including with respect to the federal budget, debt ceiling and potential government shutdowns, and volatility in the capital markets, and regional and other global events, including ongoing armed conflicts in different regions of the world, on our operations, financial results, and liquidity and capital resources, including on customers, sales, expenses, and team members;
•the potential impact of our 2027 Plan; and
•other statements regarding our future operations, financial condition, and prospects and business strategies.
These forward-looking statements are subject to a number of risks, uncertainties, and assumptions, including those described in the section titled “Risk Factors” and elsewhere in this Quarterly Report. Moreover, we operate in a very competitive and rapidly changing environment, and new risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties, and assumptions, the forward-looking events and circumstances discussed in this Quarterly Report may not occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.
You should not rely upon forward-looking statements as predictions of future events. The events and circumstances reflected in the forward-looking statements may not be achieved or occur. We undertake no obligation to update any of these forward-looking statements for any reason after the date of this Quarterly Report or to conform these statements to actual results or to changes in our expectations, except as required by law.
You should read this Quarterly Report and the documents that we reference in this Quarterly Report and have filed with the Securities and Exchange Commission, or the SEC, as exhibits to this Quarterly Report with the understanding that our actual future results, performance, and events and circumstances may be materially different from what we expect.
Summary Risk Factors
Our business is subject to numerous risks and uncertainties, including those risks more fully described below in the section titled “Risk Factors.” These risks include, among others, the following, which we consider our most material risks:
•Our business and operations have experienced rapid growth, and if we do not appropriately and effectively manage future growth, if any, or are unable to improve our systems, processes and controls, our business, financial condition, results of operations, and prospects will be adversely affected.
•Our recent growth may not be indicative of our future growth, and we may not be able to sustain our revenue growth rate in the future. Our growth also makes it difficult to evaluate our future prospects and may increase the risk that we will not be successful.
•We have a history of losses, anticipate increases in our operating expenses in the future, and may not achieve or sustain profitability on a consistent basis. If we cannot achieve and sustain profitability, our business, financial condition, and operating results may be adversely affected.
•Security and privacy breaches may hurt our business.
3
•We face heightened risk of security breaches because we use third-party open source technologies and incorporate a substantial amount of open source and community contributed code in our products.
•We face intense competition and could lose market share to our competitors, which would adversely affect our business, operating results, and financial condition.
•We may not be able to respond to rapid technological changes with new solutions, which could have a material adverse effect on our operating results.
•If our services fail to perform properly, whether due to material defects with the software or external issues, our reputation could be adversely affected, our market share could decline, and we could be subject to liability claims.
•The market for our services is rapidly evolving with uncertain growth expectations which would adversely affect our future results and the trading price of our Class A common stock.
•We are dependent on sales and marketing strategies to drive our growth in our revenue. These sales and marketing strategies may not be successful in continuing to generate sufficient sales opportunities. Any decline in our customer renewals and expansions could harm our future operating results.
•Our operating results may fluctuate significantly, which could make our future results difficult to predict and could adversely affect the trading price of our Class A common stock.
•As our product offerings mature and expand, our pricing and packaging for new and existing products may result in customers purchasing products on terms less favorable to us in order to replace the products they currently purchase or subscribe for from us.
•The implementation of AI, including agentic AI, and machine learning technologies in our services may result in reputational harm, liability, increased expenditures, or other adverse consequences to our business operations.
•Transparency is one of our core values. While we will continue to prioritize transparency, we must also promote "responsible" transparency as transparency can have unintended negative consequences.
•The publicly available GitLab Handbook, or Handbook, may not be up to date or accurate, which may result in negative third-party scrutiny or be used in ways that adversely affects our business.
•Customers may choose to stay on our free self-managed or SaaS product offerings instead of converting into a paying customer.
•Failure to effectively expand our marketing and sales capabilities could harm our ability to increase our customer base and achieve broader market acceptance of our services.
•We rely on our management team and other key team members and will need additional personnel to grow our business, and the loss of one or more key team members or our inability to hire, integrate, train and retain qualified personnel, could harm our business.
•Our corporate culture has contributed to our success, and if we cannot maintain this culture, we could lose the innovation, creativity, and teamwork fostered by our culture, and our business may be harmed.
•We engage our team members in various ways, including direct hires, through PEOs and as independent contractors. As a result of these methods of engagement, we face certain challenges and risks that can affect our business, operating results, and financial condition.
4
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
GitLab Inc.
Condensed Consolidated Balance Sheets
(in thousands, except per share data)
(unaudited)
July 31, 2026(1) | January 31, 2026(1) | |||||||||||||
| ASSETS | ||||||||||||||
| CURRENT ASSETS: | ||||||||||||||
| Cash and cash equivalents | $ | $ | ||||||||||||
| Short-term investments | ||||||||||||||
Accounts receivable, net of allowance for doubtful accounts of $ | ||||||||||||||
| Deferred contract acquisition costs, current | ||||||||||||||
| Prepaid expenses and other current assets | ||||||||||||||
| Total current assets | ||||||||||||||
| Property and equipment, net | ||||||||||||||
| Goodwill | ||||||||||||||
| Intangible assets, net | ||||||||||||||
| Deferred contract acquisition costs, non-current | ||||||||||||||
| Other non-current assets | ||||||||||||||
| TOTAL ASSETS | $ | $ | ||||||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||
| CURRENT LIABILITIES: | ||||||||||||||
| Accounts payable | $ | $ | ||||||||||||
| Accrued expenses and other current liabilities | ||||||||||||||
| Accrued compensation and benefits | ||||||||||||||
| Deferred revenue and customer advances, current | ||||||||||||||
| Total current liabilities | ||||||||||||||
| Deferred revenue, non-current | ||||||||||||||
| Other non-current liabilities | ||||||||||||||
| TOTAL LIABILITIES | ||||||||||||||
Commitments and contingencies (Note 14) | ||||||||||||||
| STOCKHOLDERS’ EQUITY: | ||||||||||||||
Preferred stock, $ | ||||||||||||||
Class A Common stock, $ | ||||||||||||||
Class B Common stock, $ | ||||||||||||||
| Additional paid-in capital | ||||||||||||||
| Accumulated deficit | ( | ( | ||||||||||||
| Accumulated other comprehensive income | ||||||||||||||
| Total GitLab stockholders’ equity | ||||||||||||||
| Noncontrolling interests | ||||||||||||||
| TOTAL STOCKHOLDERS’ EQUITY | ||||||||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | $ | ||||||||||||
(1) As of July 31, 2026 and January 31, 2026, the condensed consolidated balance sheets include assets of the consolidated variable interest entity, GitLab Information Technology (Hubei) Co., LTD (“JiHu”), of $46.1 million and $41.0 million, respectively, and liabilities of $7.6 million and $7.1 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. Refer to “Note 11. Joint Venture” for further discussion.
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
GitLab Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
| Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Revenue: | |||||||||||||||||||||||
| Subscription—self-managed and SaaS | $ | $ | $ | $ | |||||||||||||||||||
| License—self-managed and other | |||||||||||||||||||||||
| Total revenue | |||||||||||||||||||||||
| Cost of revenue: | |||||||||||||||||||||||
| Subscription—self-managed and SaaS | |||||||||||||||||||||||
| License—self-managed and other | |||||||||||||||||||||||
| Total cost of revenue | |||||||||||||||||||||||
| Gross profit | |||||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Sales and marketing | |||||||||||||||||||||||
| Research and development | |||||||||||||||||||||||
| General and administrative | |||||||||||||||||||||||
| Total operating expenses | |||||||||||||||||||||||
| Loss from operations | ( | ( | ( | ( | |||||||||||||||||||
| Interest income | |||||||||||||||||||||||
| Other income (expense), net | ( | ( | |||||||||||||||||||||
| Loss before income taxes | ( | ( | ( | ( | |||||||||||||||||||
| Provision for (benefit from) income taxes | ( | ( | |||||||||||||||||||||
| Net loss | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Net income (loss) attributable to noncontrolling interest | ( | ( | |||||||||||||||||||||
| Net loss attributable to GitLab | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Net loss per share attributable to GitLab Class A and Class B common stockholders, basic and diluted: | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Weighted-average shares used to compute net loss per share attributable to GitLab Class A and Class B common stockholders, basic and diluted: | |||||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
6
GitLab Inc.
Condensed Consolidated Statements of Comprehensive Loss
(in thousands)
(unaudited)
| Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Net loss | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Foreign currency translation adjustments | ( | ( | |||||||||||||||||||||
| Net change in unrealized losses on available-for-sale securities | ( | ( | ( | ( | |||||||||||||||||||
| Comprehensive loss including noncontrolling interest | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Net income (loss) attributable to noncontrolling interest | ( | ( | |||||||||||||||||||||
| Foreign currency translation adjustments attributable to noncontrolling interest | |||||||||||||||||||||||
| Comprehensive income (loss) attributable to noncontrolling interest | ( | ( | |||||||||||||||||||||
| Comprehensive loss attributable to GitLab | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
7
GitLab Inc.
Condensed Consolidated Statements of Stockholders’ Equity
(in thousands)
(unaudited)
Three Months Ended July 31, 2026 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Class A Common Stock | Class B Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) | Noncontrolling Interests | Total Stockholders’ Equity | |||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Balances at April 30, 2026 | $ | $ | $ | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||
| Conversion of Class B common stock to Class A common stock | — | ( | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock related to vested exercised stock options | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock under employee stock purchase plan | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock related to RSUs and PSUs vested | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Common stock withheld related to net share settlement of equity awards | ( | — | — | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Common stock repurchased | ( | — | — | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Charitable donation of common stock | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | — | — | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income (loss) | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||
Balances at July 31, 2026 | $ | $ | $ | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||
Three Months Ended July 31, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Class A Common Stock | Class B Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Noncontrolling Interests | Total Stockholders’ Equity | |||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Balances at April 30, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
| Conversion of Class B common stock to Class A common stock | — | ( | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock related to vested exercised stock options | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock under employee stock purchase plan | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock related to RSUs and PSUs vested | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Charitable donation of common stock | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Vesting of early exercised stock options | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income (loss) | — | — | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | ( | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
Balances at July 31, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
8
GitLab Inc.
Condensed Consolidated Statements of Stockholders’ Equity
(in thousands)
(unaudited)
| Six Months Ended July 31, 2026 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Class A Common Stock | Class B Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) | Noncontrolling Interests | Total Stockholders’ Equity | |||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||
Balances at January 31, 2026 | $ | $ | $ | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||
| Conversion of Class B common stock to Class A common stock | — | ( | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock related to vested exercised stock options | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock under employee stock purchase plan | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock related to RSUs and PSUs vested | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Charitable donation of common stock | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Common stock withheld related to net share settlement of equity awards | ( | — | — | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Common stock repurchased | ( | — | — | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | — | — | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income (loss) | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||
Balances at July 31, 2026 | $ | $ | $ | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||
Six Months Ended July 31, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Class A Common Stock | Class B Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) | Noncontrolling Interests | Total Stockholders’ Equity | |||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||
Balances at January 31, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
| Conversion of Class B common stock to Class A common stock | — | ( | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock related to vested exercised stock options | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock under employee stock purchase plan | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Repurchases, net of early exercised stock options | — | — | ( | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock related to RSUs and PSUs vested | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Charitable donation of common stock | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Vesting of early exercised stock options | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Change in noncontrolling interest ownership | — | — | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | ( | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
Balances at July 31, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
9
GitLab Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
| Six Months Ended July 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||
| Net loss, including amounts attributable to noncontrolling interest | $ | ( | $ | ( | |||||||
| Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||||||
| Stock-based compensation expense, net of amounts capitalized | |||||||||||
| Charitable donation of common stock | |||||||||||
| Amortization of intangible assets | |||||||||||
| Depreciation and amortization | |||||||||||
| Amortization of deferred contract acquisition costs | |||||||||||
| Net amortization of premiums or discounts on short-term investments | ( | ( | |||||||||
| Unrealized foreign exchange loss (gain), net | ( | ||||||||||
| Other non-cash expense, net | |||||||||||
| Changes in assets and liabilities: | |||||||||||
| Accounts receivable | |||||||||||
| Prepaid expenses and other current assets | |||||||||||
| Deferred contract acquisition costs | ( | ( | |||||||||
| Other non-current assets | ( | ||||||||||
| Accounts payable | |||||||||||
| Accrued expenses and other current liabilities | ( | ( | |||||||||
| Accrued compensation and benefits | ( | ||||||||||
| Deferred revenue and customer advances | |||||||||||
| Other non-current liabilities | ( | ||||||||||
| Net cash provided by operating activities | |||||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||
| Purchases of short-term investments | ( | ( | |||||||||
| Proceeds from maturities of short-term investments | |||||||||||
| Proceeds from sales of short-term investments | |||||||||||
| Additions to property and equipment | ( | ( | |||||||||
| Net cash used in investing activities | ( | ( | |||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||
| Proceeds from the issuance of common stock upon exercise of stock options, including early exercises, net of repurchases | |||||||||||
| Issuance of common stock under employee stock purchase plan | |||||||||||
| Common stock repurchased | ( | ||||||||||
| Payments for taxes related to net share settlement of equity awards | ( | ||||||||||
| Net cash provided by (used in) financing activities | ( | ||||||||||
| Impact of foreign exchange on cash and cash equivalents | ( | ||||||||||
| Net increase (decrease) in cash and cash equivalents | ( | ||||||||||
| Cash and cash equivalents at beginning of period | |||||||||||
| Cash and cash equivalents at end of period | $ | $ | |||||||||
| Supplemental disclosure of cash flow information: | |||||||||||
| Cash refunds for income taxes related to the bilateral advance pricing agreement | $ | ( | $ | ||||||||
| Cash paid (refunds) for income taxes, including amounts related to the final settlement of JiHu formation | $ | $ | ( | ||||||||
| Supplemental disclosure of non-cash investing and financing activities: | |||||||||||
| Unpaid property and equipment in accounts payable and accrued expenses | $ | $ | |||||||||
| Excise tax on share repurchases included in accrued expenses | $ | $ | |||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
10
GitLab Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
1. Organization and Description of Business
GitLab Inc. (the “Company”) began as an open source project in 2011 and was incorporated in Delaware on September 12, 2014. The Company operates on an all-remote model. The Company is a technology company and its primary offering is “GitLab”, an intelligent orchestration platform for DevSecOps delivered as a single application. GitLab is used by a wide range of organizations. The Company also provides related training and professional services. GitLab is offered on both self-managed and software-as-a-service ("SaaS") models. The principal markets for GitLab are currently located in the United States, Europe, and Asia Pacific. The Company is focused on accelerating innovation and broadening the distribution of its platform to companies across the world to help them become better software-led businesses.
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2. Basis of Presentation and Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. Accordingly, they do not include all disclosures normally required in annual consolidated financial statements prepared in accordance with U.S. GAAP.
Fiscal Year
The Company's fiscal year ends on January 31. For example, references to fiscal year 2027 and 2026 refer to the fiscal year ending January 31, 2027 and the fiscal year ended January 31, 2026, respectively.
Use of Estimates
Principles of Consolidation
The condensed consolidated financial statements include 100% of the accounts of wholly 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.
Summary of Significant Accounting Policies
There were no significant changes to the Company’s significant accounting policies disclosed in “Note 2” of the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2026.
Segment Reporting
The Company derives revenue globally and manages its business activities on a consolidated basis. The Company’s primary offering is GitLab, an intelligent orchestration platform for DevSecOps delivered as a single application which is offered on both self-managed and SaaS models.
The Company operates its business as one
The Company’s CODM primarily uses consolidated net loss as the measure of profit or loss to facilitate analysis of the Company’s financial trends, and for internal planning and forecasting purposes. Consolidated expense information is included on the consolidated statements of operations. The measure of segment assets is reported on the consolidated balance sheets as total assets. The Company presents
12
financial information about geographical mix of revenue in “Note 3. Revenues” of the condensed consolidated financial statements.
13
3. Revenues
Disaggregation of Revenue
The following table shows the components of revenues and their respective percentages of total revenue for the periods indicated (in thousands, except percentages):
| Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Subscription—self-managed and SaaS | $ | $ | $ | $ | |||||||||||||||||||
| Subscription—self-managed | |||||||||||||||||||||||
| SaaS | |||||||||||||||||||||||
| License—self-managed and other | $ | $ | $ | $ | |||||||||||||||||||
| License—self-managed | |||||||||||||||||||||||
| Professional services and other | |||||||||||||||||||||||
| Total revenue | $ | $ | $ | $ | |||||||||||||||||||
Total Revenue by Geographic Location
The following table summarizes the Company’s total revenue by geographic location based on the region of the Company’s contracting entity, which may be different than the region of the customer (in thousands):
| Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| United States | $ | $ | $ | $ | |||||||||||||||||||
| Europe | |||||||||||||||||||||||
| Asia Pacific | |||||||||||||||||||||||
| Total revenue | $ | $ | $ | $ | |||||||||||||||||||
Deferred Revenue and Customer Advances, and Contract Assets
During the three and six months ended July 31, 2026, the Company recognized $231.1 million and $375.5 million, respectively, of revenue that was included in the deferred revenue balance at the beginning of each period, compared to $177.9 million and $288.6 million, respectively, for the three and six months ended July 31, 2025.
Customer advances represent consideration received from customers under GitLab Flex arrangements (“Flex”) in which the customer has not yet selected the specific performance obligation to be delivered. Customer advances are included within deferred revenue and customer advances, current on the condensed consolidated balance sheets. As of July 31, 2026, customer advances were $15.0 million.
Contract assets were $2.0 million and $4.5 million as of July 31, 2026 and January 31, 2026, respectively, and are included in prepaid expenses and other current assets on the condensed consolidated balance sheets.
Remaining Performance Obligations
As of July 31, 2026, the aggregate transaction price allocated to billed and unbilled remaining performance obligations for which revenue has not yet been recognized was approximately $1.2 billion, of which $40.4 million relates to non-cancellable customer advances under Flex contracts where specific
14
products and quantities are determined by the customer at a later date. This $40.4 million reflects the total dollar amount customers have committed under Flex contracts entered into through July 31, 2026 that had not yet been provisioned to specific products or services, of which $15.0 million had been billed and was reflected in customer advances as of that date, as described above under “Customer Advances.” As of July 31, 2026, excluding non-cancellable Flex customer advances, 65 % is expected to be recognized as revenue over the next 12 months, with the remainder recognized thereafter.
Concentration of Credit Risk and Significant Customers
Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash, cash equivalents, short-term investments, and accounts receivable. At times, cash deposits may be in excess of insured limits. The Company believes that the financial institutions or corporations that hold its cash, cash equivalents and short-term investments are financially sound and, accordingly, minimal credit risk exists with respect to these balances. The Company maintains allowances for potential credit losses on accounts receivable when deemed necessary.
The Company uses various distribution channels. As of July 31, 2026, three channel partners represented 19 %, 11 % and 12 % of the accounts receivable balance, respectively, while as of January 31, 2026, two channel partners represented 17 % and 13 % of the accounts receivable balance, respectively. There were no individual customers whose balance represented more than 10% of accounts receivable as of July 31, 2026 and January 31, 2026.
There were no individual customers whose revenue represented more than 10% of total revenue during all periods presented.
4. Cash Equivalents and Short-Term Investments
The following table summarizes the Company’s cash equivalents and available-for-sale short-term investments by significant investment category as of July 31, 2026 (in thousands):
As of July 31, 2026 | |||||||||||||||||||||||
| Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||||||||||
| Level 1: | |||||||||||||||||||||||
| Cash equivalents | |||||||||||||||||||||||
| Money market funds | $ | $ | — | $ | — | $ | |||||||||||||||||
| Level 2: | |||||||||||||||||||||||
| Cash equivalents | |||||||||||||||||||||||
| U.S. Treasury securities | |||||||||||||||||||||||
Total cash equivalents (1) | |||||||||||||||||||||||
| Short-term investments | |||||||||||||||||||||||
| Commercial paper | ( | ||||||||||||||||||||||
| Corporate debt securities | ( | ||||||||||||||||||||||
| U.S. Agency securities | ( | ||||||||||||||||||||||
| U.S. Treasury securities | ( | ||||||||||||||||||||||
| Total short-term investments | ( | ||||||||||||||||||||||
| Total cash equivalents and short-term investments | $ | $ | $ | ( | $ | ||||||||||||||||||
(1) Included in “cash and cash equivalents” in the condensed consolidated balance sheet as of July 31, 2026, in addition to cash of $72.8 million.
15
The following table summarizes the Company’s cash equivalents and available-for-sale short-term investments by significant investment category as of January 31, 2026 (in thousands):
As of January 31, 2026 | |||||||||||||||||||||||
| Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||||||||||
| Level 1: | |||||||||||||||||||||||
| Cash equivalents | |||||||||||||||||||||||
| Money market funds | $ | $ | — | $ | — | $ | |||||||||||||||||
Total cash equivalents (1) | |||||||||||||||||||||||
| Level 2: | |||||||||||||||||||||||
| Short-term investments | |||||||||||||||||||||||
| Commercial paper | |||||||||||||||||||||||
| Corporate debt securities | ( | ||||||||||||||||||||||
| U.S. Agency securities | ( | ||||||||||||||||||||||
| U.S. Treasury securities | ( | ||||||||||||||||||||||
| Total short-term investments | ( | ||||||||||||||||||||||
| Total cash equivalents and short-term investments | $ | $ | $ | ( | $ | ||||||||||||||||||
(1) Included in “cash and cash equivalents” in the condensed consolidated balance sheet as of January 31, 2026, in addition to cash of $76.8 million.
The fair value of the Company’s Level 1 financial instruments, such as money market funds which are traded in active markets, is based on quoted market prices for identical instruments. The fair value of the Company’s Level 2 financial instruments such as commercial paper, corporate debt and U.S. government securities are obtained from an independent pricing service, which may use inputs other than quoted prices that are directly or indirectly observable in the market, including readily available pricing sources for the identical underlying security that may not be actively traded. As of July 31, 2026 and January 31, 2026, the Company did not have any Level 3 financial instruments.
During the six months ended July 31, 2026, our consolidated joint venture, JiHu purchased and subsequently sold equity securities, with changes in fair value recorded in other income (expense), net. As of July 31, 2026, JiHu held no equity securities.
The following table summarizes unrealized losses on the Company’s cash equivalents and available-for-sale 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 | Carrying Value | Gross Unrealized Losses | ||||||||||||||||||||||||||||||
July 31, 2026 | |||||||||||||||||||||||||||||||||||
| U.S. Agency securities | $ | $ | ( | $ | $ | $ | $ | ( | |||||||||||||||||||||||||||
| Commercial paper | ( | ( | |||||||||||||||||||||||||||||||||
| Corporate debt securities | ( | ( | |||||||||||||||||||||||||||||||||
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| U.S. Treasury securities | ( | ( | |||||||||||||||||||||||||||||||||
| Total cash equivalents and short-term investments | $ | $ | ( | $ | $ | $ | $ | ( | |||||||||||||||||||||||||||
| Less Than 12 Months | 12 Months or Greater | Total | |||||||||||||||||||||||||||||||||
| Carrying Value | Gross Unrealized Losses | Carrying Value | Gross Unrealized Losses | Carrying Value | Gross Unrealized Losses | ||||||||||||||||||||||||||||||
January 31, 2026 | |||||||||||||||||||||||||||||||||||
| U.S. Agency securities | $ | $ | ( | $ | $ | $ | $ | ( | |||||||||||||||||||||||||||
| Commercial paper | |||||||||||||||||||||||||||||||||||
| Corporate debt securities | ( | ( | |||||||||||||||||||||||||||||||||
| U.S. Treasury securities | ( | ( | |||||||||||||||||||||||||||||||||
| Total cash equivalents and short-term investments | $ | $ | ( | $ | $ | $ | $ | ( | |||||||||||||||||||||||||||
For the periods presented, the Company did not have any material realized gains or losses as a result of maturities or sales of short-term investments.
The following table classifies the Company’s available-for-sale short-term investments by contractual maturities (in thousands):
| July 31, 2026 | January 31, 2026 | ||||||||||||||||||||||
| Amortized cost | Fair Value | Amortized cost | Fair Value | ||||||||||||||||||||
| Due within 1 year | $ | $ | $ | $ | |||||||||||||||||||
| Due between 1 year to 2 years | |||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
All available-for-sale securities have been classified as current, based on management’s ability to use the funds in current operations.
5. Supplemental Financial Statement Information
Other Income (Expense), Net
Other income (expense), net consisted of the following (in thousands):
| Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Foreign exchange gains (losses), net | $ | $ | ( | $ | $ | ( | |||||||||||||||||
| Other income, net | |||||||||||||||||||||||
| Total other income (expense), net | $ | $ | ( | $ | $ | ( | |||||||||||||||||
17
6. Acquisitions
In March 2024, the Company acquired Oxeye Security Limited for $20.3 million. The acquisition includes a $3.2 million founder holdback payable over three years , recognized as compensation expense.
During the six months ended July 31, 2026, $1.6 million was paid to the two co-founders pursuant to the holdback arrangement. As of July 31, 2026, $0.5 million of the founder holdback remained unpaid.
The Company recorded founder holdback compensation expense of $0.6 million and $0.9 million for the three and six months ended July 31, 2026, respectively, and $0.3 million and $0.4 million for the three and six months ended July 31, 2025, respectively, in general and administrative expenses in the condensed consolidated statements of operations.
7. Goodwill and Intangible Assets, Net
Goodwill
The carrying amount of goodwill was as follows (in thousands):
| Carrying Amount | |||||
Balance as of January 31, 2026 | $ | ||||
Foreign currency translation adjustments | |||||
Balance as of July 31, 2026 | $ | ||||
There was no
Intangible Assets
Intangible assets, net consisted of the following (in thousands):
July 31, 2026 | Gross Carrying Amount | Accumulated Amortization | Net Book Value | Weighted average remaining amortization period (years) | |||||||||||||||||||
| Developed technology from business combination | $ | $ | ( | $ | |||||||||||||||||||
| Developed technology from asset acquisitions | ( | ||||||||||||||||||||||
| Total | $ | $ | ( | $ | |||||||||||||||||||
January 31, 2026 | Gross Carrying Amount | Accumulated Amortization | Net Book Value | Weighted average remaining amortization period (years) | |||||||||||||||||||
| Developed technology from business combination | $ | $ | ( | $ | |||||||||||||||||||
| Developed technology from asset acquisitions | ( | ||||||||||||||||||||||
| Total | $ | $ | ( | $ | |||||||||||||||||||
Amortization expense was $2.0 4.0
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As of July 31, 2026, future amortization expense related to the intangibles assets is expected to be as follows (in thousands):
| Fiscal Years | |||||
| Remainder of 2027 | $ | ||||
| 2028 | |||||
| Total future amortization | $ | ||||
8. Team Member Benefit Plans
The Company contributes to defined contribution 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 $1.7 million and $4.1 million for the three and six months ended July 31, 2026, respectively, and $1.5 million and $3.8 million for the three and six months ended July 31, 2025, respectively.
9. Equity
On May 14, 2026, Sytse Sijbrandij, the Company's Executive Chair, converted 15,134,451 shares of Class B common stock into 15,134,451 shares of Class A common stock on a one -for-one basis. Each share of Class B common stock is entitled to ten votes per share and is convertible into one share of Class A common stock, which is entitled to one vote per share. The conversion had no impact on total stockholders' equity. Following the conversion, Mr. Sijbrandij remains the Company's largest individual shareholder of Class A common stock.
Equity Incentive Plans
In September 2021, the Company adopted the 2021 Equity Incentive Plan (the “2021 Plan”) as a successor of the Company’s 2015 Equity Incentive Plan. Shares reacquired by the Company or allocable to expired or canceled stock options under either plan are added to the shares available for issuance under the 2021 Plan.
Share Repurchase Program
In March 2026, the Company's Board of Directors authorized the repurchase of up to $400.0 million of the Company's Class A common stock (the "2026 Repurchase Program"). The 2026 Repurchase Program may be modified, suspended, or terminated at any time and does not require the Company to repurchase any specific number or dollar amount of shares. Repurchases may be made from time to time in the open market, through privately negotiated transactions, through Rule 10b5-1 trading plans, or by other means, subject to market conditions, applicable legal requirements, and the Company's capital allocation priorities.
During the six months ended July 31, 2026, the Company repurchased 5,840,297 shares of its Class A common stock for an aggregate purchase price of $154.7 million, at average prices of $26.47 per share. Repurchased shares were retired immediately upon settlement. As of July 31, 2026, $245.3 million remained available for repurchase under the 2026 Repurchase Program.
19
Stock Options, RSUs and PSUs
The following table summarizes options activity under the Plans, and related information:
| Number of Stock Options Outstanding (in thousands) | Weighted Average Exercise Price | Weighted Average Remaining Years | Aggregate Intrinsic value (in millions) | ||||||||||||||||||||
Balances at January 31, 2026 | $ | $ | |||||||||||||||||||||
| Options exercised | ( | ||||||||||||||||||||||
| Options canceled | ( | ||||||||||||||||||||||
Balances at July 31, 2026 | $ | $ | |||||||||||||||||||||
Options vested at July 31, 2026 | $ | $ | |||||||||||||||||||||
During the three and six months ended July 31, 2026, the Company recorded $0.7 million and $4.5 million stock-based compensation expense related to options, respectively. During the three and six months ended July 31, 2025, the Company recorded $4.4 million and $9.3 million stock-based compensation expense related to options, respectively.
The following table summarizes the Company’s restricted stock unit (“RSU”) activity:
| Number of Shares (in thousands) | Weighted- Average grant date fair value | ||||||||||
Balances at January 31, 2026 | $ | ||||||||||
| Granted | |||||||||||
| Vested | ( | ||||||||||
| Canceled/forfeited | ( | ||||||||||
Balances at July 31, 2026 | $ | ||||||||||
These RSUs are grants of shares of the Company’s Class A 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 to four years ratably on a combination of bi-annual and quarterly basis. During the three and six months ended July 31, 2026, the Company recorded $56.2 million and $97.6 million stock-based compensation expense related to RSUs, respectively. During the three and six months ended July 31, 2025, the Company recorded $46.9 million and $92.0 million stock-based compensation expense related to RSUs, respectively.
As of July 31, 2026, total unrecognized stock-based compensation cost related to RSUs of $434.2 million is expected to be recognized over a weighted-average period of 2.8 years.
PSUs
During the six months ended July 31, 2026, the Company granted performance stock units (“PSUs”) to certain members of its leadership team. The Company granted 1,631,155 PSUs with a weighted-average grant date fair value of $21.92 per share, subject to the achievement of specified performance targets in fiscal year 2027 and continuous service through the applicable vesting dates. The Company also granted 821,210 PSUs subject to the achievement of a specified market condition based on the Company's relative total shareholder return ("TSR") and continuous service through the applicable vesting dates.
20
For market-condition PSUs, the Company estimated an aggregate grant date fair value of $25.52 per share on the grant date using the Monte Carlo simulation model with the following assumptions: (i) expected volatility of 57.16 % and (ii) risk-free interest rate of 3.85 %. Provided that the requisite service is rendered, the total fair value of these awards at the date of grant will be recognized as compensation expense on a straight-line basis over the requisite service period, even if the market condition is not achieved.
During the three and six months ended July 31, 2026, the Company recorded $11.7 million and $12.1 million, respectively, related to PSUs. During the three and six months ended July 31, 2025, the Company recorded a net gain of $2.2 million and a net expense of $1.3 million, respectively, related to PSUs.
As of July 31, 2026, total unrecognized stock-based compensation expense related to PSUs was $50.9 million, which is expected to be recognized over a weighted-average period of 1.3 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, 2026, the Company’s stock price on the purchase date, May 29, 2026, 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 $5.9 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 new offering period, which began June 1, 2026, using the Black-Scholes option-pricing model:
| Three Months Ended July 31, | |||||||||||
2026 | 2025 | ||||||||||
| Risk-free interest rate | |||||||||||
| Volatility | |||||||||||
| Expected term (in years) | |||||||||||
| Dividend yield | |||||||||||
The Company recorded $7.7 million and $11.2 million of stock-based compensation expense related to the ESPP during the three and six months ended July 31, 2026, respectively. The Company recorded $4.2 million and $6.7 million of stock-based compensation expense related to the ESPP during the three and six months ended July 31, 2025, respectively. As of July 31, 2026, approximately $13.1 million of total unrecognized compensation cost was related to the ESPP that is expected to be recognized over 1.8 years.
Stock-Based Compensation Expense
The Company recognized stock-based compensation expense as follows (in thousands):
21
| Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Cost of revenue | $ | $ | $ | $ | |||||||||||||||||||
| Sales and marketing | |||||||||||||||||||||||
| Research and development | |||||||||||||||||||||||
| General and administrative | |||||||||||||||||||||||
Total stock-based compensation expense (1) | $ | $ | $ | $ | |||||||||||||||||||
(1) The table above includes stock-based compensation of JiHu. Refer to “Note 11. Joint Venture” for further discussion.
The corporate income tax benefit recognized in the condensed consolidated statements of operations for stock-based compensation expense was zero
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 2026 and 2025, the Company’s board of directors approved annual donations of 163,556 and 163,555 shares of Class A common stock to the GitLab Foundation (the “Foundation”), a California nonprofit public benefit corporation, respectively. The Foundation is also a related party as certain of the Company’s officers serve as directors of the Foundation. These donations shall occur in four equal quarterly distributions.
During the six months ended July 31, 2026 and 2025, the Company donated 81,778
The fair value of the common stock was determined based on the quoted market price on the grant date. The donation expense of $1.2 million and $2.0 million was recorded in general and administrative expense in the condensed consolidated statements of operations for the three and six months ended July 31, 2026, respectively. The donation expense of $1.8 million and $3.5 million was recorded in general and administrative expense in the condensed consolidated statements of operations for the three and six months ended July 31, 2025, respectively.
10. Restructuring and Other Related Charges
On June 1, 2026, the Company’s Board of Directors approved a restructuring plan (the “2027 Plan”). It is intended to help position the Company for long-term success by realigning its operating structure to optimize execution against its strategic priorities. The 2027 Plan impacted approximately 14 % of the Company’s global workforce and is expected to be substantially complete with respect to employee separations by the end of fiscal year 2027.
The Company expects total charges under the 2027 Plan to be approximately $30 million to $35 million, inclusive of amounts recognized to date.
Restructuring and related charges include severance and termination benefits accounted for under ASC 420, Exit or Disposal Cost Obligations, retention incentives for continuing team members, stock-based compensation charges associated with modified or accelerated awards, and other associated costs. Retention incentives represent bonuses payable to continuing employees contingent upon remaining employed through specified service dates, generally through the first quarter of fiscal year 2028, and are recognized ratably over the requisite service period.
The following table summarizes the restructuring charges included in the Company’s condensed consolidated statements of operations for the three and six months ended July 31, 2026 (in thousands):
22
| Severance and Related Team Member Benefits | Retention Costs | Stock-Based Compensation | Other Restructuring Costs | Total | |||||||||||||
| Cost of revenue | $ | $ | $ | $ | $ | ||||||||||||
| Research and development | |||||||||||||||||
| Sales and marketing | |||||||||||||||||
| General and administrative | |||||||||||||||||
| Total | $ | $ | $ | $ | $ | ||||||||||||
The following table summarizes the activity in the restructuring liability in accordance with ASC 420 (in thousands). Retention incentives for continuing team members are excluded from the table below, as they are accounted for outside the scope of ASC 420:
Balance as of January 31, 2026 | $ | ||||
| Charges | |||||
| Cash payments | ( | ||||
Balance as of July 31, 2026 | $ | ||||
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11. Joint Venture
The Company accounted for JiHu as a variable interest entity and consolidated the entity in accordance with ASC Topic 810, Consolidation. As of July 31, 2026 and January 31, 2026, the Company retained control over JiHu with its equity stake at approximately 54
JiHu maintains employee stock option plans for its employees (the "JiHu ESOPs"). Compensation costs related to these awards are recognized on a graded attribution method, as the grants include a performance condition.
Due to executive departures, during the three and six months ended July 31, 2026, JiHu recorded a net reversal of stock-based compensation expense of $1.2 million and $0.3 million, respectively. During the three and six months ended July 31, 2025, JiHu recorded $1.0 million and $0.8 million of stock-based compensation expense (net of forfeitures), respectively.
As of July 31, 2026, approximately $0.7 million of total unrecognized compensation cost was related to the JiHu ESOPs that is expected to be recognized over a weighted-average period of 3.1 years.
Selected Financial Information
Selected financial information of JiHu, post intercompany eliminations, is as follows (in thousands):
| Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Revenue | $ | $ | $ | $ | |||||||||||||||||||
| Cost of revenue | |||||||||||||||||||||||
| Gross profit | |||||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Sales and marketing | |||||||||||||||||||||||
| Research and development | |||||||||||||||||||||||
| General and administrative | ( | ||||||||||||||||||||||
| Total operating expenses | |||||||||||||||||||||||
| Income (loss) from operations | ( | ( | |||||||||||||||||||||
| Interest income | |||||||||||||||||||||||
| Other income (expense), net | ( | ( | ( | ( | |||||||||||||||||||
| Net income (loss) before income taxes | ( | ( | |||||||||||||||||||||
| Provision for income taxes | |||||||||||||||||||||||
| Net income (loss) | $ | $ | ( | $ | $ | ( | |||||||||||||||||
| Net income (loss) attributable to noncontrolling interest | $ | $ | ( | $ | $ | ( | |||||||||||||||||
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| July 31, 2026 | January 31, 2026 | ||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Property and equipment, net | |||||||||||
| Other assets | |||||||||||
| Total assets | $ | $ | |||||||||
| Total liabilities | $ | $ | |||||||||
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12. Income Taxes
The Company's provision for income taxes is based on its worldwide estimated annual effective tax rate, except for (i) jurisdictions for which a loss is expected for the year and no benefit can be realized on those losses, (ii) jurisdictions for which forecasted pre-tax income or loss cannot be reasonably estimated, and (iii) the tax effect of discrete items occurring during the period. Tax for jurisdictions excluded from the worldwide estimated annual effective tax rate is calculated separately.
For the three and six months ended July 31, 2026, the Company recorded an income tax benefit of $3.2 million and $1.2 million on pretax loss of $39.3 million and $42.9 million, respectively. The income tax benefit for both periods was primarily attributable to the JiHu formation tax settlement with the China Tax Authority (“CTA”), partially offset by income tax expense on the earnings of the Company’s foreign operations. During the three and six months ended July 31, 2026, the Company made withholding tax ("WHT") payments of $6.1 5.9
For the three and six months ended July 31, 2025, the Company recorded income tax expense of $2.2 million and $4.8 million, respectively, on pretax loss of $7.8 million and $41.5 million, respectively. The income tax expense for both periods was primarily related to the Company’s foreign operations.
During the three and six months ended July 31, 2026, the Company incurred restructuring expenses that were treated as a discrete item and excluded from the estimated annual effective tax rate calculation, as such costs are significant and infrequent in nature. The associated tax benefit was calculated on a with-and-without basis and recognized in the period incurred, rather than recognized ratably over the fiscal year through the estimated annual effective tax rate. The associated tax benefit was not material, as it was limited to the incremental federal and state current taxes that would have been payable absent the restructuring costs, after utilization of available net operating loss carryforwards and tax credits.
The One Big Beautiful Bill Act (“OBBBA”), enacted on July 4, 2025, modified various U.S. international tax provisions, including the U.S. taxation of profits derived from foreign operations and the associated foreign tax credit limitations, which became effective for the Company in fiscal year 2027. The OBBBA also permitted immediate expensing of U.S. research and development expenditures beginning in fiscal year 2026, which reduced the Company’s domestic cash taxes. The Company will continue to evaluate its effect on future periods.
Under ASC 740, Income Taxes, the determination of the Company’s ability to realize its deferred tax asset requires an assessment of both negative and positive evidence. Consistent with prior years, the Company concluded that it is not more likely than not that its deferred tax assets in certain jurisdictions will be realized. All tax attributes agreed upon in the BAPA, including U.S. federal and state net operating losses (“NOLs”) and credits, as well as Netherlands NOLs, remain subject to full valuation allowance, as they are not more likely than not to be realized. 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 to expectations of future profitability, which are inherently uncertain. Cumulative losses incurred by certain entities in recent periods represented sufficient negative evidence to require a valuation allowance against their net deferred tax assets. The Company evaluates the valuation allowance each reporting period, and the allowance could be released, in whole or in part, if operating results improve sufficiently to support realization of the related deferred tax assets.
As of July 31, 2026, unrecognized tax benefits were $26.4 million, of which $5.2 million would affect the effective tax rate if recognized. As of January 31, 2026, the unrecognized tax benefits were $31.3 million, of which $10.6 million would affect the effective tax rate if recognized. The decrease was primarily attributable to the JiHu formation tax settlement with the China Tax Authority. The Company is unable to reasonably estimate the timing of future payment of its unrecognized tax benefits or the amount by which the liability will increase or decrease over the next 12 months.
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It is the Company's policy to classify accrued interest and penalties related to unrecognized tax benefits in the provision for income taxes. Accrued interest and penalties were $1.1 million as of July 31, 2026 and $7.2 million as of January 31, 2026, respectively.
13. Net Loss per Share
The following table sets forth basic and diluted loss per share for each of the periods presented (in thousands, except per share data):
| Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Numerator: | |||||||||||||||||||||||
| Net loss attributable to GitLab | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Denominator: | |||||||||||||||||||||||
| Weighted-average shares used to compute net loss per share attributable to GitLab Class A and Class B common stockholders, basic and diluted | |||||||||||||||||||||||
| Net loss per share attributable to GitLab Class A and Class B common stockholders, basic and diluted | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Potentially dilutive securities that were not included in the diluted per share calculations because they would be anti-dilutive were as follows (in thousands):
| As of | |||||||||||
| July 31, 2026 | July 31, 2025 | ||||||||||
| Shares subject to outstanding common stock options | |||||||||||
| Unvested RSUs and PSUs | |||||||||||
| Shares subject to the ESPP | |||||||||||
| Total | |||||||||||
14. Commitments and Contingencies
Contractual Obligations and Commitments
The Company’s purchase obligations represent third-party non-cancellable hosting infrastructure agreements, subscription arrangements and other commitments used in the ordinary course of business to meet operational requirements. There were no material changes to the Company's non-cancellable purchase obligations disclosed in our Annual Report on Form 10-K for the fiscal year ended January 31,
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2026, other than a new $10.0 million, one-year agreement with a third-party cloud services provider entered into during the six months ended July 31, 2026.
Loss Contingencies
In accordance with ASC 450, Loss Contingencies, the Company accrues for contingencies when losses become probable and reasonably estimable. Accordingly, the Company has recorded an estimated liability related to certain labor matters regarding its use of contractors in certain foreign countries. As of July 31, 2026 and January 31, 2026, the estimated liability relating to these matters was $0.9
Warranties and Indemnifications
The Company enters into service level agreements with customers which warrant defined levels of uptime and support response times and permit those customers to receive credits for prepaid amounts in the event that those performance and response levels are not met. To date, the Company has not experienced any significant failures to meet defined levels of performance and response. In connection with the service level agreements, the Company has not incurred any significant costs and has not accrued any liabilities in the condensed 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 these circumstances, payment may be conditional on the other party making a claim pursuant to the procedures specified in the particular contract. Further, the Company’s obligations under these agreements may be limited in terms of time and/or amount, and in some instances, the Company may have recourse against third parties for certain payments.
In addition, the Company has agreed to indemnify its directors and executive officers for costs associated with any fees, expenses, judgments, fines, and settlement amounts incurred by any of these persons in any action or proceeding to which any of those persons is, or is threatened to be, made a party by reason of the person’s service as a director or officer, including any action by the Company, arising out of that person’s services as the Company’s director or officer or that person’s services provided to any other company or enterprise at the Company’s request. The Company maintains director and officer insurance coverage that may enable the Company to recover a portion of any future amounts paid.
Legal Proceedings
We are, and from time to time may become, involved in legal proceedings or be subject to claims arising in the ordinary course of our business. We are not presently a party to any legal proceedings that in the opinion of management, if determined adversely to us, would individually or taken together have a material adverse effect on our business, financial condition or operating results.
Defending such proceedings is costly and can impose a significant burden on management and team members. 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.
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15. Subsequent Event
On August 21, 2026, all outstanding shares of Class B common stock were automatically converted into shares of Class A common stock on a one -for-one basis (the "Sunset Date"), as the outstanding shares of Class B common stock represented less than 5% of the aggregate outstanding shares of common stock. Following the conversion, GitLab has a single class of common stock outstanding. The conversion had no impact on total stockholders' equity.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q. You should review the section titled “Special Note Regarding Forward-Looking Statements” above in this Quarterly Report on Form 10-Q for a discussion of forward-looking statements and important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled “Risk Factors” in this Quarterly Report on Form 10-Q. Our historical results are not necessarily indicative of the results that may be expected for any period in the future.
Overview
GitLab is the intelligent orchestration platform for DevSecOps, where software teams and their Artificial Intelligence (“AI”) agents stay in flow to ship software faster. Built with a unified data model, our platform brings together development, operations, Information Technology (“IT”), security, and business teams across the entire software development lifecycle to deliver better, more secure software faster.
AI has accelerated individual coding, but teams lose momentum coordinating across planning, testing, security, deployment, and operations. Fragmented toolchains and tool-specific AI agents create bottlenecks that slow software delivery. GitLab's intelligent orchestration helps solve this by enabling teams to orchestrate AI agents to execute tasks autonomously across the software lifecycle while maintaining quality, security, and speed.
GitLab accelerates customer innovation by reducing software development cycles from weeks to minutes. The platform eliminates the need for point tools, increases productivity, and embeds security into development workflows with automated enforcement to improve software security, quality, and compliance while enabling faster delivery.
We serve teams of all sizes, scopes, and complexities. As a result, we have more than 50 million registered users, and approximately 50% of the Fortune 100 companies are GitLab customers1. We define our active customers as those with more than $5,000 of Annual Recurring Revenue, or ARR, in a given period, who we refer to as our Base Customers. A single organization with separate subsidiaries, segments, or divisions that uses our platform is considered a single customer for determining ARR.
1Fortune 500® is a registered trademark of Fortune Media IP Limited, used under license. Claim based on GitLab data. Fortune 100 refers to the top 20% ranked companies in the 2025 Fortune 500 list, published in June 2025. Fortune and Fortune Media IP Limited are not affiliated with, and do not endorse products or services of GitLab.
GitLab is the only intelligent orchestration platform for DevSecOps built on an open-core business model. Any customer or contributor can add or enhance functionality by contributing code to the core product or extending our Continuous Integration (“CI”)/Continuous Delivery (“CD”) Catalog and AI Catalog. In calendar year 2025, users contributed more than 6,500 merge requests, extending our in-house research and development (“R&D”) and empowering our users to improve the DevSecOps solution they use daily. Our open-core approach builds trust with our customers and enables us to maintain our high velocity of innovation. We make our strategy, direction, and product roadmap publicly available.
GitLab offers flexible deployment options. Customers can install self-managed GitLab instances in their own on-premises or hybrid cloud environments, use our fully managed SaaS offering in public or private clouds, or deploy GitLab Dedicated, our single-tenant SaaS solution for organizations with complex security and compliance requirements.
In June 2026, we introduced GitLab Flex (“Flex”), a purchasing model that allows customers to make a single annual dollar commitment and adjust their allocation of that commitment month-to-month across
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platform seats, AI usage, and add-on capabilities without requiring contract amendments. Unprovisioned amounts committed under Flex arrangements are recorded as customer advances and are not classified as deferred revenue until the customer makes an affirmative election to provision specific products or services. See “Remaining Performance Obligations” and “Note 3. Revenues” to our condensed consolidated financial statements for additional information.
See the section entitled “Key Business Metrics—Dollar-Based Net Retention Rate and ARR” below for additional information about how we define ARR.
Factors Affecting Our Performance
Sustaining innovation and technology leadership
We believe we have built a highly differentiated platform that gives us an advantage over our competitors by empowering business, development, security, operations, and IT teams to collaborate in a single application across the entire DevSecOps lifecycle. Our technology leadership is an outcome of various factors, including our strong community, network of contributors, and continued enhancement of The GitLab platform by developing new features and expanding the functionality of existing features with speed and consistency. We have had a history of releasing enhancements to The GitLab platform every month and, as of July 31, 2026, had done so for the last 178 months. We intend to continue releasing new software on a monthly cadence.
We also intend to continue investing in research and development to further enhance The GitLab platform and sustain our innovation and technology leadership. We have a history of investing in our open source community and intend to continue to leverage our open core software to accelerate innovation. We also intend to continue to add headcount to our research and development team to extend the functionality and range of The GitLab platform by bringing new and improved products and services to our customers.
We expect our research and development expenses to increase on an absolute basis in future periods. We foresee that such investment in research and development will contribute to our long-term growth, but may also negatively impact our short-term profitability. As engaged members of the GitLab open-source community, our contributors often serve as subject matter experts at market-leading developer events and The GitLab platform is presented on the cutting edge of innovation. We intend to continue to invest in building out this community to foster more contributions and collaboration in the space. Our open source community, in turn, accelerates our ability to innovate and provide a better platform to our customers. We intend to expend additional resources in the future to continue enhancing The GitLab platform and introducing new products, features and functionality.
Acquiring New Customers
Our future growth depends in large part on our ability to acquire new customers. This, in turn, relies on our ability to reach teams and organizations through our marketing and sales efforts. To this end, we are making investments in our sales and marketing efforts to expand our reach and differentiate The GitLab platform from competitive products and services. We believe that eventually the vast majority of organizations will switch to the GitLab platform and embrace a single application approach, creating a substantial opportunity to continue to grow our customer base. As a result, our Base Customers increased to 11,114 as of July 31, 2026 from 10,338 as of July 31, 2025, an increase of 8% and our $100,000 ARR customers increased to 1,571 as of July 31, 2026 from 1,344 as of July 31, 2025, an increase of 17%. See the section entitled “—Key Business Metrics—Dollar-Based Net Retention Rate and ARR” below for information about how we define ARR.
Our operating results and growth prospects will depend in part on our ability to attract new customers. While we believe we have a significant market opportunity that The GitLab platform addresses, we will need to continue to invest in sales and marketing, research and development, and customer support to further grow our customer base, both in the United States and internationally. We believe that we have
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more than 50 million registered users, which includes users of our free tier offering, providing a base of potential new customers. We intend to continue to add headcount to our global sales and marketing team to acquire new customers and to increase sales to existing customers.
Retaining and Expanding Our Existing Customers
We employ a “land and expand” business strategy that focuses on efficiently acquiring new customers and growing our relationships with existing customers over time. We believe that as our customers realize the benefits of a single application approach, they will increase the use of The GitLab platform, enhancing our ability to expand revenue generation within our existing customers over time. As a result of our approach, as of July 31, 2026 and 2025, our Dollar-Based Net Retention Rate was 117% and 121%, respectively. See the section entitled “—Key Business Metrics—Dollar-Based Net Retention Rate and ARR” below for information about how we define Dollar-Based Net Retention Rate.
We plan to continue investing in sales and marketing, with a focus on expanding usage of our platform with our existing customers. We believe that this expansion will provide us with substantial operating leverage because the costs to expand sales within existing customers are significantly less than the costs to acquire new customers. Our future revenue growth and our ability to achieve and maintain profitability is dependent upon our ability to continue landing new customers, expanding the adoption of The GitLab platform by additional users within their organizations, selling add-on offerings, and upgrading customers to higher-priced tiers. Ultimately, our ability to increase sales to existing customers will depend on several factors, including our customers’ satisfaction with The GitLab platform, our pricing, competition, and overall changes in our customers’ spending levels.
Partnerships, Alliances, Channels, and Integrations
We believe that our further growth depends in part on our ability to build and maintain successful partnerships, alliances, channels and integrations. We are continuously investing in developing a strong ecosystem and partner network, comprised of cloud and technology partners, resellers, and system integrators, as a way to expand our go-to-market strategy. We plan to continue investing in and developing these relationships to broaden our distribution footprint and drive greater awareness of our brand and The GitLab platform. We believe that these partnerships will extend our sales reach and provide product and technology integrations that will accelerate implementation of The GitLab platform in the United States and internationally. While expending resources in developing these partnerships and alliances may adversely impact our short-term profitability, we believe these investments will lead to longer term growth for the business as a whole.
Continuing to Scale our Business
We plan to continue investing in our business so that we can capitalize on our market opportunity. We believe that these investments will contribute to our long-term growth, although they may adversely affect our operating results in the near term. Furthermore, we expect our general and administrative expenses to increase in absolute amount for the foreseeable future given the additional expenses for accounting, compliance, and insurance as a public company. We plan to balance these investments in future growth with a continued focus on managing our operating results.
Key Business Metrics
We monitor the following key metrics to help us evaluate our business, identify trends affecting our business, formulate business plans, and make strategic decisions.
Dollar-Based Net Retention Rate and ARR
We believe that our ability to retain and expand our revenue generated from our existing customers is an indicator of the long-term value of our customer relationships and our potential future business opportunities. Dollar-Based Net Retention Rate measures the percentage change in our ARR derived
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from our customer base at a point in time. Our calculation of ARR and by extension Dollar-Based Net Retention Rate, includes both self-managed and SaaS subscription revenue. We report Dollar-Based Net Retention Rate on a threshold basis of 130% each quarter or the actual number if below 130%.
We calculate ARR by taking the monthly recurring revenue, or MRR, and multiplying it by 12. MRR for each month is calculated by aggregating, for all customers during that month, monthly revenue from committed contractual amounts of subscriptions, including our Flex, self-managed and SaaS offerings but excluding professional services. We calculate Dollar-Based Net Retention Rate as of a period end by starting with our customers as of the 12 months prior to such period end, or the Prior Period ARR. We then calculate the ARR from these customers as of the current period end, or the Current Period ARR. The calculation of Current Period ARR includes any upsells, price adjustments, user growth within a customer, contraction, and attrition. We then divide the total Current Period ARR by the total Prior Period ARR to arrive at the Dollar-Based Net Retention Rate.
As of July 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Dollar-Based Net Retention Rate | 117% | 121% | |||||||||
Customers with ARR of $100,000 or More
We believe that our ability to increase the number of $100,000 ARR customers is an indicator of our market penetration and strategic demand for The GitLab platform. A single organization with separate subsidiaries, segments, or divisions that use The GitLab platform is considered a single customer for determining each organization’s ARR. We do not count our reseller or distributor channel partners as customers. In cases where customers subscribe to The GitLab platform through our channel partners, each end customer is counted separately.
As of July 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| $100,000 ARR customers | 1,571 | 1,344 | |||||||||
Components of Our Results of Operations
Revenue
Subscription - self-managed and SaaS
Subscription revenue primarily consists of support, maintenance, upgrades, and updates on a when-and-if-available basis for our self-managed offering and the right to access our product in a cloud-based-infrastructure that we host for our SaaS offering. Subscription revenue is recognized ratably over the contractual term as the performance obligation is satisfied.
The typical term of a subscription contract is one to three years.
License - self-managed and other
The license component of our self-managed offering provides the right to use our proprietary software. License revenue is recognized up-front when control of the software license transfers to the customer.
Other revenue consists of professional services, including consulting, implementation, and training which is recognized as services are performed.
See “Note 3. Revenues” to our condensed consolidated financial statements for additional information.
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Cost of Revenue
Subscription - self-managed and SaaS
Cost of revenue for self-managed and SaaS subscriptions consists primarily of allocated cloud-hosting costs paid to third-party service providers, personnel-related costs associated with our customer support personnel, including contractors, third-party payment processing fees, and allocated overhead. Personnel-related expenses consist of salaries, benefits, bonuses, and stock-based compensation. As our SaaS and Duo Agent Platform offerings make up an increasing percentage of our total revenue, we expect to see increased associated cloud-related costs, such as hosting and managing costs, which may adversely impact our gross margins.
License - self-managed and other
Cost of self-managed license and other revenue consists primarily of contractor and personnel-related costs, including stock-based compensation expense, associated with the professional services team, third-party payment processing fees, and allocated overhead. We expect our cost of revenue for self-managed license and other to increase in absolute dollars as our self-managed and other revenue increases.
Operating Expenses
Our operating expenses consist of sales and marketing, research and development, and general and administrative expenses. Personnel-related expenses are the most significant component of operating expenses and consist of salaries, benefits, bonuses, stock-based compensation, and sales commissions. Operating expenses also include IT overhead costs.
Sales and Marketing
Sales and marketing expenses consist primarily of personnel-related expenses associated with our sales and marketing personnel, advertising, travel and entertainment related expenses, branding and marketing events, promotions, software subscriptions, and our allocated cloud infrastructure expenses for our free tier. Sales and marketing expenses also include sales commissions paid to our sales force. Such costs incurred on acquisition of an initial contract are capitalized and amortized over an estimated period of benefit of three years.
We expect sales and marketing expenses to increase in absolute dollars as we continue to make strategic investments in our sales and marketing organization to drive additional revenue, further penetrate the market, and expand our global customer base, but to decrease as a percentage of our total revenue over time, although our sales and marketing expenses may fluctuate as a percentage of our total revenue from period-to-period depending on the timing of these expenses.
Research and Development
Research and development expenses consist primarily of personnel-related expenses, including contractors, as well as cloud infrastructure expenses to support our internal development efforts, and software and subscription services. Costs related to research and development are expensed as incurred.
We expect research and development expenses to increase in absolute dollars as we continue to increase investments in our existing products and services. However, we anticipate research and development expenses to decrease as a percentage of our total revenue over time, although our research and development expenses may fluctuate as a percentage of our total revenue from period-to-period depending on the timing of these expenses.
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General and Administrative
General and administrative expenses consist primarily of personnel-related expenses for our finance, legal, human resources, and corporate administrative functions. General and administrative expenses also include external legal, accounting, and director and officer insurance, as well as other consulting and professional services fees, software and subscription services, in-person company-wide event expenses, and any contract termination fees.
We incur expenses as a result of operating as a public company, including costs to comply with the rules and regulations applicable to companies listed on a national securities exchange, costs related to compliance and reporting obligations, costs related to Sarbanes-Oxley compliance, and expenses for insurance, investor relations, and related professional services. We expect that our general and administrative expenses will increase in absolute dollars as our business grows but will decrease as a percentage of our total revenue over time, although our general and administrative expenses may fluctuate as a percentage of our total revenue from period-to-period depending on the timing of these expenses.
Interest Income, and Other Income (Expense), Net
Interest income consists primarily of interest earned on our cash equivalents and short-term investments.
Other income (expense), net consists primarily of foreign currency transaction gains and losses and indirect tax credit adjustments related to the JiHu formation.
Provision for (Benefit from) Income Taxes
Provision for (benefit from) income taxes consists primarily of income taxes in the foreign and state jurisdictions in which we conduct business. We maintain a full valuation allowance against our deferred tax assets in certain jurisdictions because we have concluded that it is not more likely than not that the deferred tax assets will be realized.
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Results of Operations
The following table sets forth our results of operations for the periods presented (in thousands):
| Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Revenue: | |||||||||||||||||||||||
| Subscription—self-managed and SaaS | $ | 258,311 | $ | 212,684 | $ | 497,617 | $ | 407,165 | |||||||||||||||
| License—self-managed and other | 27,943 | 23,276 | 52,795 | 43,304 | |||||||||||||||||||
| Total revenue | 286,254 | 235,960 | 550,412 | 450,469 | |||||||||||||||||||
Cost of revenue:(1) | |||||||||||||||||||||||
| Subscription—self-managed and SaaS | 38,258 | 21,753 | 68,849 | 41,021 | |||||||||||||||||||
| License—self-managed and other | 7,380 | 6,752 | 14,277 | 12,519 | |||||||||||||||||||
| Total cost of revenue | 45,638 | 28,505 | 83,126 | 53,540 | |||||||||||||||||||
| Gross profit | 240,616 | 207,455 | 467,286 | 396,929 | |||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
Sales and marketing(1) | 134,363 | 109,583 | 253,721 | 217,170 | |||||||||||||||||||
Research and development(1) | 94,980 | 71,488 | 166,462 | 136,898 | |||||||||||||||||||
General and administrative(1) | 68,208 | 44,735 | 119,787 | 95,822 | |||||||||||||||||||
| Total operating expenses | 297,551 | 225,806 | 539,970 | 449,890 | |||||||||||||||||||
| Loss from operations | (56,935) | (18,351) | (72,684) | (52,961) | |||||||||||||||||||
| Interest income | 12,202 | 11,511 | 24,149 | 22,373 | |||||||||||||||||||
| Other income (expense), net | 5,406 | (911) | 5,661 | (10,882) | |||||||||||||||||||
| Loss before income taxes | (39,327) | (7,751) | (42,874) | (41,470) | |||||||||||||||||||
| Provision for (benefit from) income taxes | (3,195) | 2,245 | (1,163) | 4,784 | |||||||||||||||||||
| Net loss | $ | (36,132) | $ | (9,996) | $ | (41,711) | $ | (46,254) | |||||||||||||||
Net loss attributable to noncontrolling interest(2) | 712 | (788) | 105 | (1,171) | |||||||||||||||||||
| Net loss attributable to GitLab | $ | (36,844) | $ | (9,208) | $ | (41,816) | $ | (45,083) | |||||||||||||||
(1)Includes stock-based compensation expense as follows:
| Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (in thousands) | (in thousands) | ||||||||||||||||||||||
| Cost of revenue | $ | 3,891 | $ | 2,261 | $ | 6,755 | $ | 4,190 | |||||||||||||||
| Sales and marketing | 25,327 | 19,950 | 42,772 | 42,041 | |||||||||||||||||||
| Research and development | 21,803 | 19,197 | 35,433 | 33,469 | |||||||||||||||||||
| General and administrative | 23,985 | 12,876 | 40,107 | 30,411 | |||||||||||||||||||
| Total stock-based compensation expense | $ | 75,006 | $ | 54,284 | $ | 125,067 | $ | 110,111 | |||||||||||||||
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(2)Our results of operations include our variable interest entity, JiHu. The ownership interest of other investors is recorded as a noncontrolling interest. See “Note 11. Joint Venture” to our condensed consolidated financial statements for additional details.
The following table sets forth the components of our condensed consolidated statements of operations as a percentage of total revenue for each of the periods presented:
| Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Revenue | 100 | % | 100 | % | 100 | % | 100 | % | |||||||||||||||
| Cost of revenue | 16 | 12 | 15 | 12 | |||||||||||||||||||
| Gross profit | 84 | 88 | 85 | 88 | |||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Sales and marketing | 47 | 46 | 46 | 48 | |||||||||||||||||||
| Research and development | 33 | 30 | 30 | 30 | |||||||||||||||||||
| General and administrative | 24 | 19 | 22 | 21 | |||||||||||||||||||
| Total operating expenses | 104 | 96 | 98 | 100 | |||||||||||||||||||
| Loss from operations | (20) | (8) | (13) | (12) | |||||||||||||||||||
| Interest income | 4 | 5 | 4 | 5 | |||||||||||||||||||
| Other income (expense), net | 2 | — | 1 | (2) | |||||||||||||||||||
| Loss before income taxes | (14) | (3) | (8) | (9) | |||||||||||||||||||
| Provision for (benefit from) income taxes | (1) | 1 | — | 1 | |||||||||||||||||||
| Net loss | (13) | % | (4) | % | (8) | % | (10) | % | |||||||||||||||
| Net income (loss) attributable to noncontrolling interest | — | — | — | — | |||||||||||||||||||
| Net loss attributable to GitLab | (13) | % | (4) | % | (8) | % | (10) | % | |||||||||||||||
Comparison of the Three and Six months ended July 31, 2026 and 2025
Revenue
| Three Months Ended July 31, | Change | Six Months Ended July 31, | Change | ||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | $ | % | 2026 | 2025 | $ | % | ||||||||||||||||||||||||||||||||||||||||
| (in thousands, except percentages) | (in thousands, except percentages) | ||||||||||||||||||||||||||||||||||||||||||||||
| Subscription—self-managed and SaaS | $ | 258,311 | $ | 212,684 | $ | 45,627 | 21 | % | $ | 497,617 | $ | 407,165 | $ | 90,452 | 22 | % | |||||||||||||||||||||||||||||||
| License—self-managed and other | 27,943 | 23,276 | 4,667 | 20 | 52,795 | 43,304 | 9,491 | 22 | |||||||||||||||||||||||||||||||||||||||
| Total revenue | $ | 286,254 | $ | 235,960 | $ | 50,294 | 21 | % | $ | 550,412 | $ | 450,469 | $ | 99,943 | 22 | % | |||||||||||||||||||||||||||||||
Revenue increased $50.3 million, or 21%, to $286.3 million for the three months ended July 31, 2026 from $236.0 million for the three months ended July 31, 2025. Revenue increased $99.9 million, or 22%, to $550.4 million for the six months ended July 31, 2026 from $450.5 million for the six months ended July 31, 2025. The increase was primarily due to the ongoing demand for the GitLab platform, including adding new customers, the expansion within our existing paid customers, and an increase in our number of customers with $100,000 or greater in ARR. As of July 31, 2026 and 2025, our expansion is reflected by our Dollar-Based Net Retention Rate being 117% and 121%, respectively. We had 1,571 customers
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with ARR over $100,000 as of July 31, 2026, increasing from 1,344 customers with ARR over $100,000 as of July 31, 2025.
Revenue attributed to our variable interest entity, JiHu, was $3.3 million and $2.2 million for the three months ended July 31, 2026 and 2025, and $5.8 million and $4.1 million for the six months ended July 31, 2026 and 2025, respectively. See “Note 11. Joint Venture” to our condensed consolidated financial statements for additional details.
Remaining Performance Obligations
As of July 31, 2026, the aggregate transaction price allocated to billed and unbilled remaining performance obligations for which revenue has not yet been recognized was approximately $1.2 billion, of which $40.4 million relates to non-cancellable customer advances under Flex contracts where specific products and quantities are determined by the customer at a later date, of which $15.0 million had been billed and was reflected in customer advances as of that date, as described in “Note 3. Revenues” to our condensed consolidated financial statements. As of July 31, 2026, excluding non-cancellable Flex customer advances, 65% is expected to be recognized as revenue over the next 12 months, with the remainder recognized thereafter.
Cost of Revenue, Gross Profit, and Gross Margin
| Three Months Ended July 31, | Change | Six Months Ended July 31, | Change | ||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | $ | % | 2026 | 2025 | $ | % | ||||||||||||||||||||||||||||||||||||||||
| (in thousands, except percentages) | (in thousands, except percentages) | ||||||||||||||||||||||||||||||||||||||||||||||
| Cost of revenue | $ | 45,638 | $ | 28,505 | $ | 17,133 | 60 | % | $ | 83,126 | $ | 53,540 | $ | 29,586 | 55 | % | |||||||||||||||||||||||||||||||
| Gross profit | 240,616 | 207,455 | 33,161 | 16 | 467,286 | 396,929 | 70,357 | 18 | |||||||||||||||||||||||||||||||||||||||
| Gross margin | 84 | % | 88 | % | (4) | % | 85 | % | 88 | % | (3) | % | |||||||||||||||||||||||||||||||||||
Cost of revenue increased by $17.1 million, to $45.6 million for the three months ended July 31, 2026 from $28.5 million for the three months ended July 31, 2025, primarily due to an increase of $11.0 million in third party hosting costs for SaaS and cloud usage. The remaining change was primarily attributable to an increase of $4.3 million in personnel-related expenses, driven by an increase in our average customer support and professional services headcount and an increase of $1.6 million in stock-based compensation expenses (as discussed in the section titled “Stock-Based Compensation Expense” below), and an increase of $1.0 million in restructuring costs. Gross margin decreased by 4% to 84% for the three months ended July 31, 2026 compared to 88% for the three months ended July 31, 2025.
Cost of revenue increased by $29.6 million, to $83.1 million for the six months ended July 31, 2026 from $53.5 million for the six months ended July 31, 2025, primarily due to an increase of $18.6 million in third party hosting costs for SaaS and cloud usage. The remaining change was primarily attributable to an increase of $8.1 million in personnel-related expenses, driven by an increase in our average customer support and professional services headcount and an increase of $2.6 million in stock-based compensation expenses (as discussed in the section titled “Stock-Based Compensation Expense” below), and an increase of $1.0 million in restructuring costs. Gross margin decreased by 3% to 85% for the six months ended July 31, 2026 compared to 88% for the six months ended July 31, 2025. The decrease in gross margin was primarily attributable to an increase in third party hosting costs for SaaS and cloud usage.
Cost of revenue attributed to our variable interest entity, JiHu, was $0.8 million and $0.4 million for the three months ended July 31, 2026 and 2025, and $1.3 million and $0.9 million for the six months ended July 31, 2026 and 2025, respectively. See “Note 11. Joint Venture” to our condensed consolidated financial statements for additional details.
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Sales and Marketing
| Three Months Ended July 31, | Change | Six Months Ended July 31, | Change | ||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | $ | % | 2026 | 2025 | $ | % | ||||||||||||||||||||||||||||||||||||||||
| (in thousands, except percentages) | (in thousands, except percentages) | ||||||||||||||||||||||||||||||||||||||||||||||
| Sales and marketing expenses | $ | 134,363 | $ | 109,583 | $ | 24,780 | 23 | % | $ | 253,721 | $ | 217,170 | $ | 36,551 | 17 | % | |||||||||||||||||||||||||||||||
Sales and marketing expenses increased by $24.8 million, to $134.4 million for the three months ended July 31, 2026 from $109.6 million for the three months ended July 31, 2025, primarily due to an increase of $9.3 million in personnel-related expenses, driven by an increase in our average sales and marketing headcount and an increase of $5.4 million in stock-based compensation expenses (as discussed in the section titled “Stock-Based Compensation Expense” below), an increase of $5.2 million in restructuring costs, and an increase of $3.4 million in hosting expenses. The remaining change was primarily attributable to an increase of $1.7 million in marketing spend and an increase of $1.3 million in consulting expenses.
Sales and marketing expenses increased by $36.6 million, to $253.7 million for the six months ended July 31, 2026 from $217.2 million for the six months ended July 31, 2025, primarily due to an increase of $9.7 million in hosting expenses, an increase of $7.3 million in personnel-related expenses, driven by an increase in our average sales and marketing headcount and an increase of $0.7 million in stock-based compensation expenses (as discussed in the section titled “Stock-Based Compensation Expense” below), an increase of $5.2 million in restructuring costs, and an increase of $4.1 million from company events. The remaining change was primarily attributable to an increase of $2.5 million in consulting expenses and an increase of $1.9 million in marketing spend.
Sales and marketing expenses attributed to our variable interest entity, JiHu, were $0.6 million and $1.5 million for the three months ended July 31, 2026 and 2025, and $2.1 million and $3.0 million for the six months ended July 31, 2026 and 2025, respectively. See “Note 11. Joint Venture” to our condensed consolidated financial statements for additional details.
Research and Development
| Three Months Ended July 31, | Change | Six Months Ended July 31, | Change | ||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | $ | % | 2026 | 2025 | $ | % | ||||||||||||||||||||||||||||||||||||||||
| (in thousands, except percentages) | (in thousands, except percentages) | ||||||||||||||||||||||||||||||||||||||||||||||
| Research and development expenses | $ | 94,980 | $ | 71,488 | $ | 23,492 | 33 | % | $ | 166,462 | $ | 136,898 | $ | 29,564 | 22 | % | |||||||||||||||||||||||||||||||
Research and development expenses increased by $23.5 million, to $95.0 million for the three months ended July 31, 2026 from $71.5 million for the three months ended July 31, 2025, primarily driven by an increase of $8.0 million in restructuring costs, an increase of $6.1 million in personnel-related expenses, driven by an increase of $2.6 million in stock-based compensation expenses (as discussed in the section titled “Stock-Based Compensation Expense” below), and an increase of $4.2 million primarily from an in-person company event. The remaining change was primarily attributable to an increase of $3.6 million in hosting expenses and an increase of $1.6 million in software expenses.
Research and development expenses increased by $29.6 million, to $166.5 million for the six months ended July 31, 2026 from $136.9 million for the six months ended July 31, 2025, primarily driven by an increase of $8.3 million in personnel-related expenses, driven by an increase of $2.0 million in stock-
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based compensation expenses (as discussed in the section titled “Stock-Based Compensation Expense” below), an increase of $8.0 million in restructuring costs, an increase of $6.3 million in hosting expenses, and an increase of $4.2 million primarily from an in-person company event. The remaining change was primarily attributable to an increase of $2.1 million in software expenses.
Research and development expenses attributed to our variable interest entity, JiHu, were $0.5 million and $0.7 million for the three months ended July 31, 2026 and 2025, and $1.1 million and $0.3 million for the six months ended July 31, 2026 and 2025, respectively. See “Note 11. Joint Venture” to our condensed consolidated financial statements for additional details.
General and Administrative
| Three Months Ended July 31, | Change | Six Months Ended July 31, | Change | ||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | $ | % | 2026 | 2025 | $ | % | ||||||||||||||||||||||||||||||||||||||||
| (in thousands, except percentages) | (in thousands, except percentages) | ||||||||||||||||||||||||||||||||||||||||||||||
| General and administrative expenses | $ | 68,208 | $ | 44,735 | $ | 23,473 | 52 | % | $ | 119,787 | $ | 95,822 | $ | 23,965 | 25 | % | |||||||||||||||||||||||||||||||
General and administrative expenses increased by $23.5 million to $68.2 million for the three months ended July 31, 2026 from $44.7 million for the three months ended July 31, 2025, primarily due to an increase of $16.7 million in personnel-related expenses, mainly attributable to an increase in our average general and administrative headcount and an increase of $11.1 million in stock-based compensation expenses (as discussed in the section titled “Stock-Based Compensation Expense” below), an increase of $5.2 million in restructuring costs, and an increase of $1.3 million in software expenses.
General and administrative expenses increased by $24.0 million to $119.8 million for the six months ended July 31, 2026 from $95.8 million for the six months ended July 31, 2025, primarily due to an increase of $19.1 million in personnel-related expenses, mainly attributable to an increase in our average general and administrative headcount and an increase of $9.7 million in stock-based compensation expenses (as discussed in the section titled “Stock-Based Compensation Expense” below), and an increase of $5.2 million in restructuring costs. This was partially offset by a decrease of $1.5 million in charitable donation of common stock.
General and administrative expenses attributed to our variable interest entity, JiHu, were not material for the three months ended July 31, 2026, compared to $1.6 million for the three months ended July 31, 2025, and were $1.3 million and $2.9 million for the six months ended July 31, 2026 and 2025, respectively. See “Note 11. Joint Venture” to our condensed consolidated financial statements for additional details.
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Stock-Based Compensation Expense
| Three Months Ended July 31, | Change | Six Months Ended July 31, | Change | ||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | $ | % | 2026 | 2025 | $ | % | ||||||||||||||||||||||||||||||||||||||||
| (in thousands, except percentages) | (in thousands, except percentages) | ||||||||||||||||||||||||||||||||||||||||||||||
| Cost of revenue | $ | 3,891 | $ | 2,261 | $ | 1,630 | 72 | % | $ | 6,755 | $ | 4,190 | $ | 2,565 | 61 | % | |||||||||||||||||||||||||||||||
| Sales and marketing | 25,327 | 19,950 | 5,377 | 27 | 42,772 | 42,041 | 731 | 2 | |||||||||||||||||||||||||||||||||||||||
| Research and development | 21,803 | 19,197 | 2,606 | 14 | 35,433 | 33,469 | 1,964 | 6 | |||||||||||||||||||||||||||||||||||||||
| General and administrative | 23,985 | 12,876 | 11,109 | 86 | 40,107 | 30,411 | 9,696 | 32 | |||||||||||||||||||||||||||||||||||||||
| Total stock-based compensation expense | $ | 75,006 | $ | 54,284 | $ | 20,722 | 38 | % | $ | 125,067 | $ | 110,111 | $ | 14,956 | 14 | % | |||||||||||||||||||||||||||||||
Stock-based compensation expense increased by $20.7 million, to $75.0 million for the three months ended July 31, 2026 from $54.3 million for the three months ended July 31, 2025. The increase was primarily driven by an increase of $12.4 million related to PSU awards granted during the current fiscal year and an increase of $9.3 million in RSU expense.
Stock-based compensation expense increased by $15.0 million, to $125.1 million for the six months ended July 31, 2026 from $110.1 million for the six months ended July 31, 2025. The increase was primarily due to an increase of $12.4 million related to PSU awards granted during the current fiscal year and an increase of $5.6 million in RSU expense, partially offset by a decrease in option expense.
Stock-based compensation attributed to our variable interest entity, JiHu, during the three and six months ended July 31, 2026 was a net reversal of stock-based compensation expense of $1.2 million and $0.3 million, respectively, and during the three and six months ended July 31, 2025 was $1.0 million and $0.8 million of stock-based compensation expense (net of forfeitures), respectively. See “Note 11. Joint Venture” to our condensed consolidated financial statements for additional details.
Interest Income and Other Income (Expense), Net
| Three Months Ended July 31, | Change | Six Months Ended July 31, | Change | ||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | $ | % | 2026 | 2025 | $ | % | ||||||||||||||||||||||||||||||||||||||||
| (in thousands, except percentages) | (in thousands, except percentages) | ||||||||||||||||||||||||||||||||||||||||||||||
| Interest income | $ | 12,202 | $ | 11,511 | $ | 691 | 6 | % | $ | 24,149 | $ | 22,373 | $ | 1,776 | 8 | % | |||||||||||||||||||||||||||||||
| Foreign exchange gains (losses), net | 1,817 | (1,117) | 2,934 | (263) | 2,353 | (11,071) | 13,424 | (121) | |||||||||||||||||||||||||||||||||||||||
| Other income, net | 3,589 | 206 | 3,383 | 1,642 | 3,308 | 189 | 3,119 | 1650 | |||||||||||||||||||||||||||||||||||||||
| Total other income (expense), net | $ | 5,406 | $ | (911) | $ | 6,317 | (693) | % | $ | 5,661 | $ | (10,882) | $ | 16,543 | (152) | % | |||||||||||||||||||||||||||||||
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Interest income increased for the three and six months ended July 31, 2026 compared to the three and six months ended July 31, 2025, primarily due to income earned from our cash, cash equivalents, and short-term investments, driven by higher average balances during the three and six months ended July 31, 2026 compared to the three and six months ended July 31, 2025.
Foreign exchange gains (losses), net increased for the three and six months ended July 31, 2026 compared to the three and six months ended July 31, 2025 primarily related to the revaluation of non-functional currency denominated monetary assets and liabilities.
Other income, net increased for the three and six months ended July 31, 2026 compared to the three and six months ended July 31, 2025 primarily due to indirect tax benefit related to the final settlement of amounts associated with the formation of JiHu.
Provision for (Benefit from) Income Taxes
| Three Months Ended July 31, | Change | Six Months Ended July 31, | Change | ||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | $ | % | 2026 | 2025 | $ | % | ||||||||||||||||||||||||||||||||||||||||
| (in thousands, except percentages) | (in thousands, except percentages) | ||||||||||||||||||||||||||||||||||||||||||||||
| Provision for (benefit from) income taxes | $ | (3,195) | $ | 2,245 | $ | (5,440) | (242.3)% | $ | (1,163) | $ | 4,784 | $ | (5,947) | (124.3)% | |||||||||||||||||||||||||||||||||
| Effective tax rate | 8.0% | (32.2)% | 40.2% | 2.7 | % | (11.9) | % | 14.6% | |||||||||||||||||||||||||||||||||||||||
Our effective tax rate increased by approximately 40.2 percentage points for the three months ended July 31, 2026 as compared to the three months ended July 31, 2025, and by approximately 14.6 percentage points for the six months ended July 31, 2026 as compared to the six months ended July 31, 2025. Because we are in a pretax loss position, a tax benefit is expressed as a positive rate. We recognized a benefit of 15.0 percent and 13.8 percent for the three and six months ended July 31, 2026 due to the settlement of a JiHu formation withholding tax matter with the China Tax Authority.
Our effective tax rate for the three and six months ended July 31, 2026 differed from the U.S. federal statutory tax rate of 21%, primarily due to the mix of income and losses across the jurisdictions in which we operate, the Base Erosion and Anti-abuse Tax (“BEAT”), nondeductible expenses, discrete tax items, and losses for which no benefit was recognized, partially offset by tax credits.
Liquidity and Capital Resources
Since inception, we have financed operations primarily through proceeds received from issuances of equity securities, preferred stock and payments received from our customers.
As of July 31, 2026 and January 31, 2026, our principal source of liquidity was cash, cash equivalents, and short-term investments aggregating to $1,257.0 million and $1,259.9 million, respectively, which were held for working capital and strategic investment purposes. As of July 31, 2026, cash and cash equivalents consist of cash in banks and money markets funds, while short-term investments mainly consist of treasuries, corporate debt securities, agency securities, and commercial paper.
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We believe that our existing cash, cash equivalents, and short-term investments will be sufficient to support working capital and capital expenditure requirements for at least the next 12 months. Our future capital requirements will depend on many factors, including our revenue growth rate, the timing and the amount of cash received from customers, the expansion of sales and marketing activities, the timing and extent of spending to support research and development efforts, the price at which we are able to procure third-party cloud infrastructure, expenses associated with our international expansion, the introduction of platform enhancements, the continuing market adoption of the GitLab platform, and the amount and timing of any share repurchases. In the future, we may enter into arrangements to acquire or invest in complementary businesses, products, and technologies. We may be required to seek additional equity or debt financing. In the event that we require additional financing, we may not be able to raise such financing on terms acceptable to us or at all. If we are unable to raise additional capital or generate cash flows necessary to expand our operations and invest in continued innovation, we may not be able to compete successfully, which would harm our business, operating results, and financial condition.
The following table shows a summary of our cash flows for the periods presented:
| Six Months Ended July 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| (in thousands) | |||||||||||
| Net cash provided by operating activities | $ | 146,105 | $ | 155,671 | |||||||
| Net cash used in investing activities | $ | (5,378) | $ | (138,461) | |||||||
| Net cash provided by (used in) financing activities | $ | (143,346) | $ | 15,679 | |||||||
Operating Activities
Our largest source of operating cash is payments received from our customers. Our primary uses of cash from operating activities are for personnel-related expenses, sales and marketing expenses, third-party cloud infrastructure expenses, and overhead expenses. Net cash used in operating activities was $3.1 million for the three months ended July 31, 2026, primarily due to the timing of accounts receivable collections and cash payments associated with our restructuring activities, notwithstanding which we have generated positive cash flows for each of the six months ended July 31, 2026 and 2025 from operating activities.
Cash provided by operating activities during the six months ended July 31, 2026 was $146.1 million, primarily consisting of our net loss of $41.7 million, adjusted for non-cash items of $153.9 million (mainly attributable to stock-based compensation expense of $125.1 million and amortization of deferred contract acquisition costs, net of $23.5 million), and net cash inflows of $33.9 million provided by changes in our operating assets and liabilities. The main drivers of the changes in operating assets and liabilities were the decrease in accounts receivable of $46.0 million, the decrease in prepaid expenses and other current assets of $7.7 million, the increase in accrued compensation and benefits of $7.6 million, the increase in deferred revenue of $4.5 million, partially offset by the increase in deferred contract acquisition costs of $24.7 million and the decrease in accrued expenses and other current liabilities of $7.0 million. These changes primarily reflect improved operational performance with successful collections driving lower accounts receivable, ongoing customer subscription growth contributing to increased deferred revenue, and an increase in deferred contract acquisition costs driven by sales commissions capitalized on new and renewed customer contracts executed during the period.
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Cash provided by operating activities during the six months ended July 31, 2025 was $155.7 million, primarily consisting of our net loss of $46.3 million, adjusted for non-cash items of $152.0 million (mainly attributable to stock-based compensation expense of $110.1 million and amortization of deferred contract acquisition costs, net of $27.3 million), and net cash inflows of $49.9 million used in changes of our operating assets and liabilities. The main drivers of the changes in operating assets and liabilities were the decrease of accounts receivable of $69.8 million, the increase in accrued expenses and other liabilities of $4.3 million and the increase in deferred revenue of $9.5 million, partially offset by the decrease in accrued compensation and related expenses of $11.1 million and the decrease in deferred contract acquisition costs of $20.4 million. These changes primarily reflect improved operational performance with successful collections driving lower accounts receivable, higher accrued expenses for research and development spending, ongoing customer subscription growth contributing to increased deferred revenue, and the seasonal payment of prior period commissions and bonuses impacting accrued compensation balances.
Investing Activities
Cash used in investing activities during the six months ended July 31, 2026 was $5.4 million, primarily consisting of $2.8 million in purchases of short-term investments, net of proceeds from maturities and sales of short-term investments, and $2.6 million in additions to property and equipment.
Cash used in investing activities during the six months ended July 31, 2025 was $138.5 million, primarily consisting of $134.6 million in purchases of short-term investments, net of proceeds from maturities and sales of short-term investments, and $3.8 million in purchases of property and equipment.
Financing Activities
Cash used in financing activities during the six months ended July 31, 2026 was $143.3 million, primarily attributable to $154.7 million in repurchases of common stock and $0.9 million of payments for taxes related to net share settlement of equity awards, partially offset by $5.4 million in proceeds from the issuance of common stock upon exercise of stock options and $6.9 million of proceeds from the issuance of common stock under the ESPP.
During the six months ended July 31, 2026, we repurchased 5,840,297 shares of our Class A common stock for aggregate consideration of $154.7 million under our 2026 Repurchase Program. We funded these repurchases from the existing cash and short-term investments. As of July 31, 2026, $245.3 million remained available for future repurchases.
Cash provided by financing activities during the six months ended July 31, 2025 was $15.7 million, attributable to $7.3 million of proceeds from the issuance of common stock upon stock options exercises and $8.4 million of proceeds from the issuance of common stock under the ESPP.
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Adjusted Free Cash Flow
Adjusted free cash flow is a non-GAAP financial measure that we calculate as net cash provided by operating activities less cash used for additions to property and equipment, plus any non-recurring income tax payments related to the BAPA or minus any non-recurring income tax refunds related to the BAPA, plus any non-recurring payments related to the formation of JiHu (see “Note 12. Income Taxes” for further discussion). We believe that adjusted free cash flow is a useful indicator of liquidity that provides information to management and investors about the amount of cash generated from our operations that, after the investments in additions to property and equipment, any non-recurring income tax payments or refunds related to the BAPA, and any non-recurring payments related to the formation of JiHu, can be used for strategic initiatives, including investing in our business, repurchasing shares of our common stock, and strengthening our financial position. One limitation of adjusted free cash flow is that it does not reflect our future contractual commitments. Additionally, adjusted free cash flow does not represent the total increase or decrease in our cash balance for a given period.
The following table presents a reconciliation of adjusted free cash flow to net cash provided by operating activities, the most directly comparable financial measure calculated in accordance with GAAP, for the periods presented (in thousands):
| Six Months Ended July 31, | ||||||||||||||
| 2026 | 2025 | |||||||||||||
| Computation of adjusted free cash flow | ||||||||||||||
| GAAP net cash provided by (used in) operating activities | $ | 146,105 | $ | 155,671 | ||||||||||
| Less: Additions to property and equipment | (2,606) | (3,816) | ||||||||||||
| Less: Income tax refunds related to BAPA | (1,058) | (1,305) | ||||||||||||
| Add: Non-recurring payments related to the formation of JiHu | 14,036 | — | ||||||||||||
| Non-GAAP adjusted free cash flow | $ | 156,477 | $ | 150,550 | ||||||||||
Contractual Obligations and Commitments
For more information regarding our contractual obligations, refer to “Note 14. Commitments and Contingencies” to our condensed consolidated financial statements.
Critical Accounting Estimates
Our condensed consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles, or GAAP. The preparation of the condensed consolidated financial statements in conformity with U.S. 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 condensed consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. We base these estimates on historical and anticipated results, trends, and various other assumptions that we believe are reasonable under the circumstances, including assumptions as to future events. Actual results could differ from those estimates. To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, operating results, and cash flows will be affected.
For additional information about our critical accounting policies and estimates, see the disclosure included in our Annual Report on Form 10-K for the fiscal year ended January 31, 2026, which was filed with the SEC on March 17, 2026.
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Recently Issued Accounting Pronouncements
Aside from the new accounting pronouncements already discussed in our Annual Report on Form 10-K for the fiscal year ended January 31, 2026, there were no additional pronouncements issued or effective during the period that would materially affect our condensed consolidated financial statements.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
We have operations both within the United States and internationally. We are exposed to market risk in the ordinary course of our business. Market risk represents the risk of loss that may impact our financial condition due to adverse changes in financial market prices and rates. Our market risk exposure is primarily the result of fluctuations in interest rates and foreign currency exchange rates.
Interest Rate Risk
As of July 31, 2026 and January 31, 2026, we had $1,257.0 million and $1,259.9 million of cash, cash equivalents, and short-term investments, respectively. As of July 31, 2026 and January 31, 2026, our cash equivalents and short-term investments of $1,184.2 million and $1,183.1 million, respectively, mainly consist of money market funds, treasuries, agency securities, corporate debt securities and commercial paper. Our cash, cash equivalents, and short-term investments are held for working capital and strategic investment purposes. We do not enter into investments for trading or speculative purposes. Our fixed-income portfolio is subject to fluctuations in interest rates, which could affect our results of operations. Based on our investment portfolio balance as of July 31, 2026, a hypothetical increase or decrease in interest rates of 1% (100 basis points) would result in a decrease or an increase in the fair value of our portfolio of approximately $6.9 million. Such losses would only be realized if we sell the investments prior to maturity. The weighted-average life of our investment portfolio was approximately 7 months as of July 31, 2026.
Foreign Currency Exchange Risk
To date, all of our sales contracts have been denominated in U.S. dollars, except for our variable interest entity, JiHu, which sells in local currency in its designated area. Our revenue is not subject to a material foreign currency risk. Operating expenses within the United States are primarily denominated in U.S. dollars, while operating expenses incurred outside the United States are primarily denominated in each country’s respective local currency. Our consolidated results of operations and cash flows are, therefore, subject to fluctuations due to changes in foreign currency exchange rates and may be adversely affected in the future due to changes in foreign exchange rates.
Our reporting currency is the U.S. dollar, and the functional currency of our foreign subsidiaries is each country’s respective local currency. Assets and liabilities of the foreign subsidiaries are translated into U.S. dollars at the exchange rates in effect at the reporting date, and income and expenses are translated at average exchange rates during the period, with the resulting translation adjustments directly recorded as a component of accumulated other comprehensive income. Foreign currency transaction gains and losses are recorded in other income (expense), net in the condensed consolidated statements of operations. The volatility of exchange rates depends on many factors that we cannot forecast with reliable accuracy. In the event our foreign currency denominated assets, liabilities, or expenses increase, our operating results may be more greatly affected by fluctuations in the exchange rates of the currencies in which we do business. Moreover, as of July 31, 2026, we have $40.6 million of cash and cash equivalents denominated in currencies other than the U.S. dollar. The value of these cash balances may materially change along with the weakness or strength of the U.S. dollar. As of July 31, 2026, a hypothetical 10% change in foreign currency exchange rates would have a material impact on our condensed consolidated financial statements.
We have not engaged in the hedging of foreign currency transactions to date, although we may choose to do so in the future.
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ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
In connection with the preparation of this Quarterly Report on Form 10-Q, as of July 31, 2026, an evaluation was performed under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, 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 Exchange Act). Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that, as of July 31, 2026, our disclosure controls and procedures were, in design and operation, effective at a reasonable assurance level.
Changes in Internal Control over Financial Reporting
There were no changes to our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended July 31, 2026 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 control 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 control 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.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are, and from time to time may become, involved in legal proceedings or be subject to claims arising in the ordinary course of our business. We are not presently a party to any legal proceedings that in the opinion of management, if determined adversely to us, would individually or taken together have a material adverse effect on our business, financial condition or operating results.
Defending such proceedings is costly and can impose a significant burden on management and team members. 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 us because of defense and settlement costs, diversion of management resources and other factors.
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ITEM 1A. RISK FACTORS
Investing in our Class A common stock involves a high degree of risk. You should carefully consider the risks and uncertainties described below, together with all of the other information in this Quarterly Report on Form 10-Q, including the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and our condensed consolidated financial statements and the accompanying notes included elsewhere in this Quarterly Report on Form 10-Q before making a decision to invest in our Class A common stock. Our business, financial condition, operating results, or prospects could also be adversely affected by risks and uncertainties that are not presently known to us or that we currently believe are not material. If any of the risks occur, our business, financial condition, operating results, and prospects could be adversely affected. In that event, the market price of our Class A common stock could decline, and you could lose all or part of your investment.
Risks Related to Our Business and Financial Position
Our business and operations have experienced rapid growth, and if we do not appropriately and effectively manage future growth, if any, or are unable to improve our systems, processes and controls, our business, financial condition, results of operations, and prospects will be adversely affected.
We have experienced rapid growth, both in terms of employee headcount and customer growth, as well as increased demand for our products. We anticipate that we will continue to expand our operations and responsibly grow our headcount in the near term, and our success will depend in part on our ability to manage that growth effectively, although there is no assurance that our rate of growth will continue at its current pace. Our total number of Base Customers has grown to 11,114 as of July 31, 2026 from 10,338 as of July 31, 2025. The growth and expansion of our business places a continuous strain on our management and operational and financial resources. In addition, as customers adopt our products for an increasing number of use cases, we have had to support more complex commercial relationships. To effectively manage and capitalize on our growth periods, we need to manage headcount capital and processes efficiently, while continuing to make investments to improve and expand our information technology and financial infrastructure, our security and compliance requirements, our operating and administrative systems, our relationships with various partners and other third parties. Our rate of growth may also be impacted as a result of global business or macroeconomic conditions, including inflation, tariffs, volatile interest rates, uncertainty with respect to the federal budget, debt ceiling and potential government shutdowns, volatility of the global debt and equity markets, and investment decisions by our customers.
We may not be able to sustain the pace of improvements to our products successfully or implement systems, processes, and controls in an efficient or timely manner or in a manner that does not negatively affect our results of operations. Failure to effectively manage growth or improve our systems, processes, and controls, or the failure to operate in the intended manner could result in the following adverse impacts to our business: difficulty or delays in deploying customers, declines in quality or customer satisfaction, increases in costs, difficulties in introducing new features or other operational difficulties, inability to manage the growth of our business and to forecast our revenue, expenses, and earnings accurately, or to prevent losses.
Our recent growth may not be indicative of our future growth, and we may not be able to sustain our revenue growth rate in the future. Our growth also makes it difficult to evaluate our future prospects and may increase the risk that we will not be successful.
Our total revenue for the six months ended July 31, 2026 and 2025 was $550.4 million and $450.5 million, respectively, representing a growth rate of 22%. You should not rely on the revenue growth of any prior quarter or annual period as an indication of our future performance. As a result of our limited history operating as a public company, our ability to accurately forecast our future results of operations is limited and subject to a number of uncertainties, including our ability to plan for and model future growth, and our
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usage (or consumption) billing model. Our historical revenue growth should not be considered indicative of our future performance.
Further, in future periods, our revenue could decline or our revenue growth rate could slow. Many factors may contribute to this decline, including changes to technology, such as increased AI adoption, our usage billing models, increased competition, slowing demand for The DevSecOps platform, the maturation of our business, a failure by us to continue capitalizing on growth opportunities, our failure, for any reason, to continue to take advantage of growth opportunities and a global economic downturn, among others. If our growth rate declines, investors’ perceptions of our business and the market price of our Class A common stock could be adversely affected.
In addition, we expect to continue to responsibly expend financial and other resources to align with our:
•product development, including investments in our product development team and the development of new features and functionality for The DevSecOps platform, including those related to artificial intelligence, or AI;
•expansion and enablement of our sales, services, and marketing organization to increase brand awareness and drive adoption of The DevSecOps platform;
•technology and sales channel partnerships;
•international expansion;
•acquisitions or strategic investments; and
•general administration, including increased legal and accounting expenses associated with being a public company.
These investments may not result in increased revenue in our business. In addition, we have made, or intend to make, investments in AI tools whose costs are subject to third-party pricing increases, usage-based variability, and contractual minimums and if these AI tooling costs increase, our operating expenses and cash flow could be adversely affected. If we are unable to maintain or increase our revenue at a rate sufficient to offset the expected increase in our costs, our business, financial position and results of operations will be harmed, and we may not be able to achieve or maintain profitability.
Our ability to forecast our future results of operations is subject to a number of uncertainties, including our ability to effectively plan for and model future growth and our usage billing models. We have encountered in the past, and may encounter in the future, risks and uncertainties frequently experienced by growing companies in rapidly changing industries. If we fail to achieve the necessary level of efficiency in our organization as it grows, or if we are not able to accurately forecast future growth, our business would be harmed. Moreover, if the assumptions that we use to plan our business are incorrect or change in reaction to changes in our market, or we are unable to maintain consistent revenue or revenue growth, our share price could be volatile, and it may be difficult to achieve and maintain profitability.
We have a history of losses, anticipate increases in our operating expenses in the future, and may not achieve or sustain profitability on a consistent basis. If we cannot achieve and sustain profitability, our business, financial condition, and operating results may be adversely affected.
We have incurred losses in each year since our inception, including net losses of approximately $6.3 million, $56.0 million and $41.8 million in fiscal year 2025, 2026 and the six months ended July 31, 2026, respectively. As of July 31, 2026, we had an accumulated deficit of approximately $1.3 billion. While we have experienced significant growth in revenue in recent periods, we cannot assure you that we will achieve profitability in future periods or that, if at any time we are profitable, we will sustain profitability. We also expect our operating and other expenses to increase in the foreseeable future as we continue to invest in our future growth, including implementing usage billing, expanding our research and
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development function to drive further development of The DevSecOps platform (including related to AI capabilities), expanding our sales and marketing activities, developing the functionality to expand into adjacent markets, and reaching customers in new geographic locations, which will negatively affect our operating results if our total revenue does not increase. While we consistently evaluate opportunities to reduce our operating costs and optimize efficiencies, we cannot guarantee that these efforts will be successful or that we will not re-accelerate operating expenditures in the future in order to capitalize on growth opportunities. In addition to the anticipated costs to continue to grow our business, we also expect to continue to incur significant legal, accounting, and other expenses as a public company. These efforts and expenses may be more costly than we expect, and we cannot guarantee that we will be able to increase our revenue to offset our operating expenses. Our revenue growth may slow or our revenue may decline for a number of reasons, including reduced demand for The DevSecOps platform, increased competition, an increased use of our free product offerings, a decrease in the growth or reduction in size of our overall market, usage billing, or any inability on our part to capitalize on growth opportunities. Further, as our SaaS offering makes up an increasing percentage of our total revenue, we expect to see increased associated cloud-related costs, such as hosting and infrastructure costs, which may adversely impact our gross margins. Any failure to increase our revenue or to manage our costs as we continue to grow and invest in our business would prevent us from achieving or maintaining profitability or achieving or maintaining positive operating cash flow at all or on a consistent basis, which would cause our business, financial condition, and results of operations to suffer.
As we continue to invest in infrastructure, develop our services and features, responsibly manage our headcount and expand our sales and marketing activity, we may continue to have losses in future periods and these may increase significantly. As a result, our losses in future periods may be significantly greater than the losses we would incur if we developed our business more slowly. In addition, we may find that these efforts require greater investment of time and human and capital resources than we currently anticipate and/or that they may not result in increases in our revenues or billings. Any failure by us to achieve and sustain profitability on a consistent basis could cause the value of our Class A common stock to decline.
Security and privacy breaches may hurt our business.
The DevSecOps platform hosts, processes, stores, and transmits our customers’ proprietary and sensitive data, including personal data, and financial data. We also use third-party service providers and sub-processors to help us deliver services to our customers and their end-users. These vendors may host, process, store, or transmit personal data, or other confidential information of our team members, our partners, our customers, or our customers’ end-users. We collect such information from individuals located both in the United States and abroad and may host, process, store, or transmit such information outside the country in which it was collected. While we, our third-party cloud providers, our third-party processors, and our customers have implemented security measures designed to protect against security breaches, these measures could fail or may be insufficient, resulting in the unauthorized access or disclosure, modification, misuse, destruction, or loss of our or our customers’ data or other sensitive information. Any security breach of our DevSecOps platform, our operational systems, physical facilities, or the systems of our third-party processors, or the perception that a breach has occurred, could result in litigation, indemnity obligations, regulatory enforcement actions, investigations, compulsory audits, fines, penalties, mitigation and remediation costs, disputes, reputational harm, diversion of management’s attention, and other liabilities and damage to our business. Even though we do not control the security measures of our customers and other third parties, we may be considered responsible for any breach of such measures or suffer reputational harm even where we do not have recourse to the third party that caused the breach, if it is found that GitLab failed to conduct comprehensive third party risk due diligence. In addition, any failure by our vendors to comply with applicable law or regulations could result in proceedings against us by governmental entities or others.
Security incidents of our or our third-party service provider’s information technology systems that compromise the confidentiality, integrity, and availability of our data could result in sensitive data exposure. Cyber attacks may also occur, including, but not limited to, denial-of-service attacks,
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ransomware attacks, application security attacks, software-supply chain attacks, compromised credentials, business email compromises, computer malware, viruses, and social engineering (including phishing), which are prevalent in our industry and our customers’ industries. AI has shifted previously defined security boundaries for GitLab and our providers, including new and novel language-based attack vectors. AI incorporated into our and our third-party service provider’s products may introduce security risks including, but not limited to, AI-enabled social engineering, automated vulnerability exploitation, inadvertent data exposure due to model training, inappropriate data access using AI-enabled features, and AI supply-chain attacks. On the other hand, we could increase our vulnerability to cybersecurity incidents or other technology related failures due to, or as a result of, the timing of our evaluation, updating, or integration of new technology or AI enabled systems used in our business. Any security breach, disruption or other technology related failure could result in the loss or destruction of or unauthorized access to, or use, alteration, disclosure, or acquisition of confidential and/or personal data, which may result in damage to our reputation, early termination of our contracts, litigation, regulatory investigations, or other liabilities. If our, our customers’, or our partners’ security measures are breached as a result of third-party action, team member error, misconfiguration, malfeasance (including bribery) or otherwise and, as a result, someone obtains unauthorized access to The DevSecOps platform, including personal and/or confidential data of our customers, our reputation could be damaged, our business may suffer loss of current customers and future opportunities and we could incur significant financial liability including fines, cost of recovery, and costs related to remediation measures.
Techniques used to obtain unauthorized access or to sabotage systems change frequently, including novel AI-specific attack vectors and vulnerabilities. The use of agentic AI is changing the fundamental ways that we secure and defend our platform and operations as both threat actors and security teams are using AI to industrialize their attacks. Traditional perimeter controls and static security rules are no longer the most effective security mechanisms and we, in alignment with our industry, are reinforcing our defensive capabilities in areas such as, but not limited to, behavioral analysis, automated detection response, and zero-trust. However, we may be unable to fully anticipate these techniques or implement adequate preventative measures. If an actual or perceived security breach occurs, the market perception of our security measures could be harmed, and we could lose sales and customers. If we are, or are perceived to be, not in compliance with data protection, consumer privacy, or other legal or regulatory requirements or operational norms bearing on the collection, processing, storage, or other treatment of data records, including personal data, our reputation and operating performance may suffer. Further, we need to continually monitor and remain compliant with all applicable changes in local, state, national, or international legal or regulatory requirements. Any significant violations of data privacy could result in the loss of business, litigation, and regulatory investigations and penalties that could damage our reputation and adversely impact our results of operations and financial condition.
Because code is executed on our infrastructure on behalf of customers and users, including open source projects hosted on GitLab, we face heightened security risks beyond those of standard SaaS providers. Unlike platforms that primarily store and transmit data, we operate a platform on which code can be executed, which creates additional attack surface and potential for harm.
We have contractual and legal obligations to notify relevant stakeholders of security breaches. Most jurisdictions have enacted laws requiring companies to notify affected individuals, regulatory authorities, and relevant others of security breaches involving certain types of data, including personal data. In addition, our agreements with certain customers and partners may require us to notify them in the event of a security breach. Such mandatory disclosures are costly, could lead to negative publicity, may cause our customers to lose confidence in the effectiveness of our security measures, and may require us to expend significant capital and other resources to respond to or alleviate problems caused by the actual or perceived security breach.
A security breach may cause us to breach customer contracts. Our agreements with certain customers may require us to use industry-standard or reasonable measures to safeguard sensitive personal data or confidential information. A security breach could lead to claims by our customers, their end-users, or other relevant stakeholders that we have failed to comply with such legal or contractual
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obligations. As a result, we could be subject to legal action or our customers could end their relationships with us. There can be no assurance that any limitations of liability in our contracts would be enforceable or adequate or would otherwise protect us from liabilities or damages.
Litigation resulting from security breaches may adversely affect our business. Unauthorized access to The DevSecOps platform, systems, networks, or physical facilities could result in litigation with our customers, our customers’ end-users, or other relevant stakeholders. These proceedings could force us to spend money in defense or settlement, divert management’s time and attention, increase our costs of doing business, or adversely affect our reputation. We could be required to fundamentally change our business activities and practices or modify The DevSecOps platform capabilities in response to such litigation, which could have an adverse effect on our business. If a security breach were to occur, and the confidentiality, integrity, or availability of our data or the data of our partners, our customers or our customers’ end-users was disrupted, we could incur significant liability, or The DevSecOps platform, systems, or networks may be perceived as less desirable, which could negatively affect our business and damage our reputation.
If we fail to detect, contain, or remediate a security breach in a timely manner, or a breach otherwise affects a large amount of data of one or more customers, or if we suffer a cyber attack that impacts our ability to operate The DevSecOps platform, we may suffer material damage to our reputation, business, financial condition, and results of operations. Further, while we maintain cyber insurance that may provide coverage for these types of incidents, such coverage may not be adequate to cover the costs and other liabilities related to these incidents. In addition, we cannot be sure that our existing insurance coverage and coverage for errors and omissions will continue to be available on acceptable terms or that our insurers will not deny coverage as to any future claim. Our risks are likely to increase as we continue to expand The DevSecOps platform, grow our customer base, and host, process, store, and transmit increasingly large amounts of proprietary and confidential data.
We face heightened risk of security breaches because we use third-party open source technologies and incorporate a substantial amount of open source and community contributed code in our products.
The DevSecOps platform is built using open-source technology and GitLab accepted community code contributions. Using or incorporating any third-party technology can become a vector for supply-chain cyber attacks. Such attacks are prevalent in our industry and our customers’ industries, and our use of open-source technology may, or may be perceived to, leave us vulnerable to security attacks. We have previously been, and may in the future become, the target of cyber attacks by third parties seeking unauthorized access to our or our customers’ data or to disrupt our operations or ability to provide our services. If we are the target of cyber attacks as a result of our use of open source code, it may substantially damage our reputation and adversely affect our business, financial condition, and operating results.
We face intense competition and could lose market share to our competitors, which would adversely affect our business, operating results, and financial condition.
The markets for our services are highly competitive, with limited barriers to entry. Competition presents an ongoing threat to the success of our business. We expect competition in the software business generally, and in all of the stages of the software development lifecycle that our product covers in particular, to continue to increase. We expect to continue to face intense competition from current competitors, as well as from new entrants into the market or from adjacent markets. If we are unable to anticipate or react to these challenges, our competitive position would weaken, and we would experience a decline in revenue or reduced revenue growth, and loss of market share that would adversely affect our business, financial condition, and operating results.
We face competition in several areas due to the nature of our product. Our product offering is broad across all stages of the software development lifecycle which means we compete with many providers
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with offerings across all stages. We compete with well-established providers such as Microsoft and Atlassian as well as other companies with offerings in fewer stages, including with respect to both code hosting and code collaboration services, as well as file storage, distribution services, and AI, including AI-native coding tools. Competition in these markets may intensify further as advances in AI enable rapid, low-cost development of software applications.
We believe that our ability to compete depends upon many factors both within and beyond our control, including the following:
•the ability of our products or of those of our competitors to deliver the positive business outcomes prioritized and valued by our customers and prospects;
•our ability to price our products competitively, including our usage billing model and our ability to transition users of our free product offering to a paid version of The DevSecOps platform;
•the timing and market acceptance of services, including the developments and enhancements to those services offered by us or our competitors, including incorporation of AI into such services;
•the amount and quality of communications, postings, and sharing by our users on public forums, which can promote improvements on The DevSecOps platform but may also lead to disclosure of commercially sensitive details;
•our ability to monetize activity on our services;
•customer service and support efforts;
•sales and marketing efforts;
•ease of use, performance and reliability of solutions developed either by us or our competitors;
•our ability to manage our operations in a cost effective manner;
•insolvency or credit difficulties confronting our customers, affecting their ability to purchase or pay for our product offering;
•our reputation and brand strength relative to our competitors;
•introduction of new technologies or standards that compete with or are unable to be adopted in our products;
•ability to attract new team members or retain existing team members which could affect our ability to attract new customers, service existing customers, enhance our product or handle our business needs;
•our ability to maintain and grow our community of users; and
•the length and complexity of our sales cycles.
Many of our current and potential competitors have greater financial, technical, marketing and other resources and larger customer bases than we do. Furthermore, our current or potential competitors may be acquired by third parties with greater available resources and the ability to initiate or withstand substantial price competition. In addition, many of our competitors have established sales and marketing relationships and have access to larger customer bases. Our competitors may also establish cooperative relationships among themselves or with third parties that may further enhance their product offerings or resources. These factors may allow our competitors to respond more quickly than we can to new or emerging technologies and changes in customer preferences. These competitors may engage in more extensive research and development efforts, undertake more far-reaching marketing campaigns and adopt more aggressive pricing policies which may undercut our pricing policies and allow them to build a
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larger user base or to monetize that user base more effectively than us. If our competitors’ products, platforms, services or technologies maintain or achieve greater market acceptance than ours, if they are successful in bringing their products or services to market earlier than ours, or if their products, platforms or services are more technologically capable than ours, then our revenues could be adversely affected.
In addition, some of our competitors may offer their products and services at a lower price or for free, or may offer a competing product with other services or products that together result in offering the competing product for free. If we are unable to achieve our target pricing levels or successfully implement usage billing, our operating results would be negatively affected. Pricing pressures, usage billing, and increased competition could result in reduced sales, reduced margins, losses or a failure to maintain or improve our competitive market position, any of which could adversely affect our business.
Many of our users extend the functionality of The DevSecOps platform using third-party code editors and integrated development environments, or IDEs, including editors and IDEs developed by our competitors. Our development and distribution of integrations with such tools is subject to the integration policies and technical specifications imposed by the developer of the tool. A change to the policies and specifications pertaining to any of these third-party tools (including those developed by Microsoft), could cause us to lose market share to competitors whose products and services continue to support integrations with such tools.
We may not be able to respond to rapid technological changes with new solutions, which could have a material adverse effect on our operating results.
The DevSecOps market is characterized by rapid technological change, fluctuating price points, and frequent new product and service introductions. Our ability to increase our user base and increase revenue from existing customers will depend heavily on our ability to enhance and improve our existing solutions, introduce new features and products, both independently and in conjunction with third-party developers and technology partners, reach new platforms and sell into new markets. Customers may require features and capabilities that our current solutions do not have. If we fail to develop solutions that satisfy customer preferences in a timely and cost-effective manner, we may fail to renew our subscriptions with existing customers and create or increase demand for our solutions, and our business may be materially and adversely affected.
The introduction of new services by competitors or the development of entirely new technologies to replace existing offerings could make our solutions obsolete or adversely affect our business. In addition, any new markets or countries into which we attempt to sell our solutions may not be receptive. We may experience difficulties, including delayed releases and upgrades, with software development, design, or marketing that could delay or prevent our development, introduction, or implementation of new solutions and enhancements. Delayed releases or upgrades, or releases with defects, could result in adverse publicity, loss of revenue, delay in market acceptance, or claims by customers brought against us, all of which could have a material adverse effect on our reputation, business, operating results, and financial condition. Moreover, upgrades and enhancements to our solutions may require substantial investment and we have no assurance that such investments will be successful. If users do not widely adopt enhancements to our solutions, we may not be able to realize a return on our investment. If we are unable to develop, license, or acquire enhancements to our existing solutions on a timely and cost-effective basis, or if such enhancements do not achieve market acceptance, our business, operating results, and financial condition may be adversely affected.
If our services fail to perform properly, whether due to material defects with the software or external issues, our reputation could be adversely affected, our market share could decline, and we could be subject to liability claims.
Our products are inherently complex and may contain material defects, software “bugs” or errors. Any defects in functionality or operational procedures that cause interruptions in the availability of our products could result in:
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•loss or delayed market acceptance and sales;
•loss of customer data;
•breach of warranty claims;
•sales credits or refunds for prepaid amounts related to unused subscription services;
•loss of customers;
•diversion of development and customer service resources;
•loss of operational time;
•destruction or compromised integrity of data and/or intellectual property; and
•injury to our reputation.
The costs incurred in correcting any material defects, software “bugs” or errors might be substantial and could adversely affect our operating results.
We rely on information technology systems to process, transmit and store electronic information. Our ability to effectively manage our business depends significantly on the reliability and capacity of these systems. The operation, success and growth of our business (whether now or in the future) depends on streamlined processes made available through information systems, global communications, internet activity, and other network processes. The future operation, success and growth of our business depends on streamlined processes made available through information systems, global communications, internet activity, and other network processes.
Our information technology systems may be subject to damage or interruption from telecommunications problems, data corruption, software errors, fire, flood, acts of terror and armed conflicts, global pandemics and natural disasters, power outages, systems disruptions, system conversions, and/or human error. Our existing safety systems, data backup, access protection, user management and information technology emergency planning may not be sufficient to prevent data loss or long-term network outages. In addition, we may have to upgrade our existing information technology systems or choose to incorporate new technology systems from time to time in order for such systems to support the increasing needs of our expanding business. Introduction of new technology, or upgrades and maintenance to our existing systems, could result in increased costs or unforeseen problems which may disrupt or reduce our operating efficacy.
We may also encounter service interruptions, outage, or disruption due to issues interfacing with our customers’ IT systems, including stack misconfigurations or improper environment scaling, defective updates or upgrades, or due to cybersecurity attacks on ours or our customers’ IT systems. Any such service interruption may have an adverse impact on our reputation and future operating results.
Because of the nature and importance of the data that our customers collect and manage by means of our services, it is possible that failures or errors in our systems could result in data loss or corruption, and/or cause the information that we or our customers collect to be incomplete or contain inaccuracies that our customers regard as material. Furthermore, the availability or performance of our products could be adversely affected by a number of factors, including: customers’ inability to access the internet, customers’ inappropriate use of our software, the failure of our network or software systems, security breaches, or variability in user traffic for our services. We may be required to issue credits or refunds for prepaid amounts related to unused services or otherwise be liable to our customers for damages they may incur resulting from certain events. If a customer’s internet service provider fails to provide sufficient capacity to support our products, otherwise experiences service outages, interruption or disruption, or intentionally or unintentionally restricts or limits our ability to send, deliver, or receive electronic communications or provide services, such failure could interrupt our customers’ access to our products,
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adversely affect their perception of our products’ reliability and reduce our revenues. In addition to potential liability, if we experience interruptions in the availability of our products or services, our reputation could be adversely affected and we could lose customers. Our production systems might not be sufficiently resilient against regional outages and recovery from such an outage might take an extended period of time. Further, while we have in place a data recovery plan, our data backup systems might fail and our data recovery plans may be insufficient to fully recover all of our or our customers’ data hosted on our system.
While we currently maintain errors and omissions insurance, it may be inadequate or may not be available in the future on acceptable terms, or at all. In addition, our policy may not cover all claims made against us and defending a suit, regardless of its merit, could be costly and divert management’s attention.
The market for our services is rapidly evolving with uncertain growth expectations which would adversely affect our future results and the trading price of our Class A common stock.
Because the market for our services is rapidly evolving, it is difficult to predict customer adoption, customer demand for our services, the size and growth rate of this market, the entry of competitive products or the success of existing competitive services. Any expansion or contraction in our market depends on a number of factors, including the cost, performance and perceived value associated with our services and the appetite and ability of customers to use and pay for the services we provide. Further, even if the overall market for the type of services we provide continues to grow, we face intense competition from larger and more well-established providers and we may not be able to compete effectively or achieve market acceptance of our products. If we or other software and SaaS providers experience security incidents, loss of customer data, or disruptions in delivery or service, the market for these applications as a whole, including The DevSecOps platform and products, may be negatively affected. If the market for our services does not achieve widespread adoption, we do not compete effectively in this market, or there is a reduction in demand for our software or our services in our market caused by a lack of customer acceptance, implementation challenges for deployment, technological challenges, lack of accessible data, competing technologies and services, decreases in corporate spending, including as a result of global business or macroeconomic conditions, including inflation, tariffs, volatile interest rates, uncertainty with respect to the federal budget, debt ceiling and potential government shutdowns, volatility of the global debt and equity markets, actual or perceived instability in the global banking sector, or otherwise, it could result in reduced customer orders and decreased revenues, which could require slowing our rate of headcount growth and would adversely affect our business operations and financial results.
We are dependent on sales and marketing strategies to drive our growth in our revenue. These sales and marketing strategies may not be successful in continuing to generate sufficient sales opportunities. Any decline in our customer renewals and expansions could harm our future operating results.
Our business model depends on generating and maintaining a large user base that is satisfied with The DevSecOps platform. We rely on satisfied customers to expand their footprint by buying new products and services and onboarding additional users. We have implemented user limits on our free SaaS product, and have limited historical data with respect to the number of current and previous free users and the rates in which customers convert to paying customers. As a result, we may not accurately predict future customer purchasing trends.
In future periods, our growth could slow or our profits could decline for several reasons, including decreased demand for our product offerings and our professional services, usage billing, increased competition, a decrease in the growth of our overall market, a decrease in corporate spending, including as a result of global business or macroeconomic conditions, including inflation, tariffs, volatile interest rates, uncertainty with respect to the federal budget, debt ceiling and potential government shutdowns, volatility of the global debt and equity markets, and actual or perceived instability in the global banking
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sector, or otherwise, or our failure, for any reason, to continue to capitalize on growth opportunities. We may be forced to change or abandon our revenue model in order to compete with our competitors’ offerings.
It could also become increasingly difficult to predict revenue and timing of collections given our billing models and our mix of annual, multi-year and other types of billing structures, including consumption-based offerings. Our failure to execute on our revenue projections could impair our ability to meet our business objectives and adversely affect our results of operations and financial condition. Additionally, under applicable accounting rules, the timing of revenue recognition under Flex depends in part on the pace of conversion of our self-managed base onto Flex, customer adoption and usage patterns, which we cannot control. We may not be able to accurately forecast the timing or magnitude of revenue recognition, which could lead investors and analysts to misinterpret our performance and contribute to volatility in the price of our securities. There can be no assurance that our efforts to explain these dynamics will prevent adverse reactions in the market for our securities.
Our future success also depends in part on our ability to increase usage or consumption, sell more subscriptions and additional services to our current customers. Even if customers choose to renew their current subscriptions with us, they may decline to purchase additional services or they may choose to downtier or otherwise decrease the number of seats or usage in their subscription. If our customers do not purchase additional subscriptions and services from us, our revenue may decline and our operating results may be harmed. Paying customers may decline or fluctuate as a result of a number of factors, including their satisfaction with our services and our end-customer support, the frequency and severity of product outages, our product uptime or latency, their satisfaction with the speed of delivering new features, the pricing of our, or competing, services, and the impact of macroeconomic conditions on our customers and their corporate spending. We have limited historical data with respect to rates of paying customers buying more seats, uptiering, downtiering and churning, so we may not accurately predict future customer trends.
Our customer expansions and renewals may decline or fluctuate, and conversely, contractions and down-tiers may increase, or fluctuate, as a result of a number of factors, including: quality of our sales efforts, customer usage, customer satisfaction with our services and customer support, our prices (including price increases we have implemented in the past), the prices of competing services, mergers and acquisitions affecting our customer base, the effects of global economic conditions, including inflation, tariffs, volatile interest rates, uncertainty with respect to the federal budget, debt ceiling and potential government shutdowns and volatility of the global debt and equity markets, and actual or perceived instability in the global banking sector, or reductions in our customers’ spending levels generally (including, our customers that have or may have to downsize their operations or headcount). If we cannot use our marketing strategies in a cost-effective manner or if we fail to promote our services efficiently and effectively, our ability to acquire new customers or expand the services of our existing customers may suffer. In addition, an increase in the use of online and social media for product promotion and marketing may increase the burden on us to monitor compliance of such materials and increase the risk that such materials could contain problematic product or marketing claims in violation of applicable regulations.
Further, we have previously discontinued certain lower priced product offerings, requiring users of these products to switch to another paid offering, switch to our free product, or discontinue using our products. Additionally, we have implemented user limits on our free SaaS product. To the extent we discontinue or add additional limits on our free or lower-priced product offerings, we cannot assure you that our customers will purchase our products, and if our end customers do not purchase our products, our revenues may grow more slowly than expected or decline.
Our operating results may fluctuate significantly, which could make our future results difficult to predict and could adversely affect the trading price of our Class A common stock.
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Our operating results may vary significantly from period to period, which could adversely affect our business and financial condition. Our operating results have varied significantly from period to period in the past, and we expect that our operating results will continue to vary significantly in the future such that period-to-period comparisons of our operating results may not be meaningful. Accordingly, our financial results in any one quarter or fiscal year should not be relied upon as indicative of future performance. Our quarterly or annual financial results may fluctuate as a result of several factors, many of which are outside of our control and may be difficult to predict, including:
•our ability to attract and retain new customers;
•the addition or loss of material customers, including through acquisitions or consolidations;
•the timing of recognition of revenues (including from Flex) and impact of usage billing;
•the amount and timing of operating expenses related to the maintenance and expansion of our business, operations and infrastructure;
•general economic, industry and market conditions, in both domestic and our foreign markets, including inflation, tariffs, volatile interest rates, uncertainty with respect to the federal budget, debt ceiling and potential government shutdowns and volatility of the global debt and equity markets, and actual or perceived instability in the global banking sector, the potential effects of health pandemics or epidemics and other global events, including the impacts of the U.S. presidential election and ongoing armed conflicts in different regions of the world;
•customer renewal rates and whether customers renew into Flex or consumption-based products;
•the timing and success of new service introductions by us or our competitors or any other change in the competitive dynamics of our industry, including consolidation among competitors, customers or strategic partners;
•our ability to convert users of our free product offerings into subscribing customers;
•increases or decreases in the number of elements of our services or pricing changes upon any renewals of customer agreements;
•allocation of software development in customers’ budget;
•seasonal variations in sales of our products;
•decisions by potential customers to use products of our competitors;
•the timing of expenses related to the development or acquisition of technologies or businesses and potential future charges for impairment of goodwill from acquired companies;
•extraordinary expenses such as litigation or other dispute-related settlement payments or outcomes;
•future accounting pronouncements or changes in our accounting policies or practices;
•negative media coverage or publicity;
•political events;
•the amount and timing of operating costs and capital expenditures related to the expansion of our business, in the U.S. and foreign markets;
•the cost to develop and upgrade The DevSecOps platform to incorporate new technologies; and
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•increases or decreases in our expenses caused by fluctuations in foreign currency exchange rates.
In addition, we experience seasonal fluctuations in our financial results as we typically receive a higher percentage of our annual orders from new customers, as well as renewal orders from existing customers, in our last two fiscal quarters as compared to the first two fiscal quarters due to the annual budget approval process of many of our customers, the timing of our customers’ decisions to make a purchase, changes our customers experienced, or may experience, in their businesses, and other variables some of which are outside of our and our customers’ control, such as macroeconomic and general economic conditions, including inflation, tariffs, and volatile interest rates.
Any of the above factors, individually or in the aggregate, may result in significant fluctuations in our financial and other operating results from period to period. As a result of this variability, our historical operating results should not be relied upon as an indication of future performance. Moreover, this variability and unpredictability could result in our failure to meet our operating plan or the expectations of investors or analysts for any period. If we fail to meet such expectations for the reasons described above or any other reasons, our stock price could fall substantially.
As our product offerings mature and expand, our pricing and packaging for new and existing products may result in customers purchasing products on terms less favorable to us in order to replace the products they currently purchase or subscribe for from us.
As our product offerings and the markets for our services mature, or as new competitors introduce new products or services that are similar to or compete with ours, we may be unable to attract new customers at the same price or based on the same pricing model as we have used historically. Moreover, some customers may demand greater price concessions or additional functionality at the same price levels, and some customers may choose to adjust their usage rates due to our usage billing. As a result, in the future we may be required to reduce our prices or adjust existing products or packaging, or provide more features without corresponding increases in price, which could adversely affect our revenues, gross margin, profitability, financial position and cash flow.
In addition, our customers have no obligation to renew their subscriptions for our services after the expiration of the initial subscription period. A majority of our subscriptions are on a one-year period. Our customers may renew for fewer or other elements of our services or negotiate for different pricing terms. Our customers’ renewal rates may decline or fluctuate as a result of a number of factors, including their dissatisfaction with our pricing or our services, their ability to continue their operations and spending levels, and changes in other technology components used within the customer’s organization. Changes in product packaging, pricing strategy, or product offerings, or the implementation or execution of the foregoing, may not be seen favorably by our customers and may have an adverse effect on our ability to retain our current customers and acquire new ones. For example, we have previously discontinued certain lower priced product offerings, and we have in the past implemented price increases, which may cause customers who previously used these tiers to opt for our free version or to cease using our products completely. We may also decide to raise the prices of our product offerings in the future. If our customers do not renew their subscriptions on similar pricing terms, our revenues may decline, and our business could suffer. In addition, over time the average term of our contracts could change based on renewal rates or for other reasons.
The implementation of AI, including agentic AI, and machine learning technologies in our services may result in reputational harm, liability, increased expenditures, or other adverse consequences to our business operations.
We have implemented AI capabilities throughout GitLab’s services, including as part of the GitLab Duo suite of AI features. AI, and particularly agentic AI, has become increasingly central to our business strategy. The technologies underpinning these features exist in a rapidly-evolving regulatory and commercial environment which presents regulatory, litigation, ethical, reputational, and financial risks.
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Many states, regions, and supranational bodies have proposed or enacted regulations related to the use of AI and machine learning technologies. These regulations impose prescriptive obligations related to the development, offering, and use of AI technologies and expose us to an increased risk of regulatory enforcement and litigation.
Additionally, issues relating to intellectual property rights in AI-generated content have not been fully addressed by the courts, laws, or regulations and there has been an increase in litigation in this area. Accordingly, the implementation of generative AI technologies into our services may result in exposure to claims related to copyright infringement or other intellectual property misappropriation.
Furthermore, many of our AI features involve the processing of personal data and any processing of personal data is subject to comprehensive privacy and data protection laws, including the E.U. General Data Protection Regulation, or the GDPR, and the California Consumer Privacy Act, or the CCPA. Specific obligations under these regulations, such as requirements for lawful basis, data minimization, automated decision-making, and storage limitation, apply equally to personal data processed by the GitLab Duo suite of AI features. Any difficulties in addressing privacy or data protection concerns relating to our AI features may result in liability or regulatory investigations and fines, as well as damage to our sales and reputation.
Our AI features may also generate output or perform actions, as applicable, that are misleading, insecure, inaccurate, harmful, or otherwise flawed, which may harm our reputation, business, or customers, or expose us to legal liability.
Some of our AI-powered features, including those offered through the GitLab Duo Agent Platform, are designed to automate elements of the software development lifecycle based on user-defined goals and context. As the prevalence and scrutiny of such agentic AI systems increases, we may face regulatory, litigation, ethical, reputational, and financial risks.
We rely on third-party vendors for the provision of the AI models which power many of our AI features. In the event those vendors encounter service disruption, materially and adversely change the terms on which they provide access to the models, are subject to regulatory or other national security actions by governmental authorities, or otherwise cease providing or change the basis on which they provide access to the models such that we can no longer obtain access, our ability to provide AI-powered features may be adversely affected. Any such events could also impact our customers’ ability to use GitLab features powered by specific third-party vendors’ AI models in certain deployment contexts.
Further, developing, testing, and offering AI-powered features may lead to greater than expected expenditures for our company because deploying AI systems involves high computing costs, which could adversely affect our gross margin, profitability, financial position, and cash flow.
Transparency is one of our core values. While we will continue to prioritize transparency, we must also promote "responsible" transparency as transparency can have unintended negative consequences.
Transparency is one of our core values. As an all-remote open-source software company, we believe transparency is essential to how we operate our business and interact with our team members, the community, and our customers. We also find it to be critical for team member recruitment, retention, efficiency and our culture. In addition, our transparency is highly valued by both our customers and our contributors. While we will continue to emphasize transparency, we also promote and educate our team members about responsible internal and external transparency, as openly sharing certain types of information can potentially lead to unintended, and sometimes negative, consequences.
As a result of our transparency, our competitors and other outside parties may have access to certain information that is often kept confidential or internal at other companies through our Handbook, our team members’ open and public use of The DevSecOps platform to run our business, and other avenues of communication we commonly use. The public availability of this information may allow our competitors to
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take advantage of certain of our innovations, and may allow parties to take other actions, including litigation, that may have an adverse impact on our operating results or cause reputational harm, which in turn may have a negative economic impact.
We are also subject to Regulation FD, which imposes restrictions on the selective disclosure of material information to stockholders and other market participants, and other regulations. While we have implemented internal controls to maintain compliance with Regulation FD, if as a result of our transparency, we disclose material information in a non-Regulation FD compliant matter, we may be subject to heightened regulatory and litigation risk.
The publicly available GitLab Handbook, or Handbook, may not be up to date or accurate, which may result in negative third-party scrutiny or be used in ways that adversely affects our business.
Consistent with our commitment to our transparency and efficiency values, we maintain a publicly available company Handbook that contains important information about our operations and business practices. This Handbook is open to the public and may be used by our competitors or bad actors in malicious ways that may adversely affect our business, operating results, and financial condition. Although we aim to keep the Handbook updated, the information in the Handbook may not be up to date at all times. Also, because any of our team members can contribute to the Handbook, the information in the Handbook may not be accurate. We have implemented disclosure controls and procedures, including internal controls over financial reporting, that comply with the U.S. securities laws; however, if we fail to successfully maintain the appropriate controls, we may face unintended disclosures of material information about the company through our Handbook, which may lead to disclosure control failures, potential securities law violations, and reputational harm.
Customers may choose to stay on our free self-managed or SaaS product offerings instead of converting into a paying customer.
Our future success depends, in part, on our ability to convert users of our free self-managed or SaaS product offerings into paying customers by selling additional products, and by upselling additional subscription services. The total number of users of our free SaaS product may decline as a result of, or due to, our enforcement of user limits. As a result of our investment in new capabilities and improvements to our free product offering, users of our free product may decline to purchase additional products or subscription services if they perceive the free product to be more attractive as compared to our paid offerings. Converting users of our free product offering may require increasingly sophisticated and costly sales efforts and may not result in additional sales. In addition, the rate at which our end-customers purchase additional products and services depends on a number of factors, including the perceived need for additional products and services, the limitations on the number of users and limitations on storage and transfers applicable to the free product offering as well as general economic conditions. If our efforts to sell additional products and services to our end-customers are not successful, our business may suffer.
Failure to effectively expand our marketing and sales capabilities could harm our ability to increase our customer base and achieve broader market acceptance of our services.
Our ability to increase our customer base and expand with existing customers will depend to a significant extent on our ability to continue to expand our marketing and sales operations. We plan to continue expanding our sales force. We also plan to continue to dedicate resources to sales and marketing programs. We are expanding our marketing and sales capabilities to target additional potential customers, including some larger organizations, but there is no guarantee that we will be successful attracting and maintaining these businesses as customers, and even if we are successful, these efforts may divert our resources away from and negatively impact our ability to attract and maintain our current customer base. All of these efforts will require us to invest financial and other resources. If we are unable to find efficient ways to deploy our marketing spend or to hire, develop, and retain talent required to maintain and support our growth, if our new sales talent are unable to achieve desired productivity levels
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in a reasonable period of time, or if our sales and marketing programs are not effective, our ability to increase our customer base and achieve broader market acceptance of our services could be harmed.
Any failure to offer high-quality technical support services, including success tiers, or adequately sell such services, may adversely affect our relationships with our customers and our financial results.
Once our products are deployed, our customers depend on our technical support organization to resolve technical issues. We may be unable to respond quickly enough to accommodate short-term increases in customer demand for support services, and customers may not purchase the success tiers that we offer. We also may be unable to modify the format of our support services to compete with changes in support services provided by our competitors. Increased customer demand for these services, without corresponding revenues, could increase costs and adversely affect our operating results. In addition, our sales process is highly dependent on our services and business reputation and on positive recommendations from our existing customers. Any failure to maintain high-quality technical support, or a market perception that we do not maintain high-quality support, could adversely affect our reputation, our ability to sell our services to existing and prospective customers, and our business, operating results and financial position.
Customers may demand more customized configuration and integration services, or custom features and functions that we do not offer, which could adversely affect our business and operating results.
Our current and future customers may demand more customized configuration and integration services, which increase our up-front investment in sales and deployment efforts, with no guarantee that these customers will increase the scope of their subscription. As a result of these factors, we may need to devote a significant amount of sales, operations, engineering, support, and professional services resources to individual customers, increasing the cost and time required to complete sales. If prospective customers require customized features or functions that we do not offer, and which would be difficult for them to deploy themselves, then the market for our applications will be more limited and our business could suffer.
If we fail to adapt and respond effectively to rapidly changing technology, evolving industry standards, and changing customer needs, requirements, or preferences, our services may become less competitive.
Our industry is subject to rapid technological change, evolving industry standards and practices, and changing customer needs, requirements, and preferences. The success of our business will depend, in part, on our ability to adapt and respond effectively to these changes on a timely basis, including our ability to timely provide enhancements and new features for our existing services or new services that achieve market acceptance or that keep pace with rapid technological developments and the competitive landscape. The success of new services and enhancements depends on several factors, including the timely delivery, introduction, and market acceptance of such services. If we are unable to develop and sell new services that satisfy our customers and provide enhancements and new features for our existing services that keep pace with rapid technological and industry change, our revenue and operating results could be adversely affected. Furthermore, we have in the past experienced delays in the planned release dates of new features and upgrades, and have discovered defects in new solutions after their introduction. There can be no assurance that new solutions or upgrades will be released according to schedule, or that when released they will not contain defects. If new technologies emerge that are able to deliver competitive products at lower prices, more efficiently, more conveniently, or more securely, such technologies could adversely impact our ability to compete.
Our services must also integrate with a variety of network, hardware, mobile, cloud, and software platforms and technologies, including third-party AI services, and we need to continuously modify and enhance our services to adapt to changes and innovation in these technologies, including changes in
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internet-related hardware, operating systems, cloud computing infrastructure, and other software, communication, browser and open source technologies. If developers widely adopt new software platforms, we would have to develop new versions of our products to work with those new platforms. This development effort may require significant engineering, marketing, and sales resources, all of which would affect our business and operating results. Any failure of our services to operate effectively with future infrastructure platforms and technologies could reduce the demand for our products and significantly impair our revenue growth. We may not be successful in either developing these modifications and enhancements or in bringing them to market in a timely fashion. Furthermore, uncertainties about the timing and nature of new network platforms or technologies, or modifications to existing platforms or technologies, could increase our research and development expenses. If we are unable to respond to these changes in a timely or cost-effective manner, our services may become less marketable and less competitive or obsolete, which may result in customer dissatisfaction, and adversely affect our business.
Our channel partners may provide a poor experience to customers putting our brand or company growth at risk. Channel partners may deliver poor services or a poor selling experience delaying customer purchase or hurting the company brand.
In addition to our direct sales force, we use channel partners to sell and support our products. Channel partners, or concentration among certain channel partners, may become an increasingly important aspect of our business, particularly with regard to enterprise, governmental, and international sales. Our future growth in revenue and ability to achieve and sustain profitability may depend in part on our ability to identify, establish, and retain successful channel partner relationships in the United States and internationally, which will take significant time and resources and involve significant risk. If we are unable to maintain our relationships with these channel partners, or otherwise develop and expand our indirect distribution channel, our business, operating results, financial condition, or cash flows could be adversely affected.
We cannot be certain that we will be able to identify suitable indirect sales channel partners. To the extent we do identify such partners, we will need to negotiate the terms of a commercial agreement with them under which the partner would distribute The DevSecOps platform. We cannot be certain that we will be able to negotiate commercially-attractive terms with any channel partner, if at all. In addition, all channel partners must be trained to distribute The DevSecOps platform and must allocate appropriately skilled resources to the customers. In order to develop and expand our distribution channel, we must develop and improve our processes for channel partner introduction and training. If we do not succeed in identifying suitable indirect sales channel partners, our business, operating results, and financial condition may be adversely affected.
We also cannot be certain that we will be able to maintain successful relationships with any channel partners and, to the extent that our channel partners are unsuccessful in selling our products, our ability to sell our products and our business, operating results, and financial condition could be adversely affected. Our channel partners may offer customers the products and services of several different companies, including products and services that compete with our products. Because our channel partners generally do not have an exclusive relationship with us, we cannot be certain that they will prioritize or provide adequate resources to sell our products. Moreover, divergence in strategy by any of these channel partners may materially adversely affect our ability to develop, market, sell, or support our products. We cannot assure you that our channel partners will continue to cooperate with us. In addition, actions taken or omitted to be taken by such parties may adversely affect us. In addition, we rely on our channel partners to operate in accordance with the terms of their contractual agreements with us. For example, our agreements with our channel partners limit the terms and conditions pursuant to which they are authorized to resell or distribute our products and offer technical support and related services. We also typically require our channel partners to represent to us the dates and details of products sold through to our customers. If our channel partners do not comply with their contractual obligations to us, our business, operating results, and financial condition may be adversely affected.
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We track certain performance metrics with internal tools and data models and do not independently verify such metrics. Certain of our performance metrics are subject to inherent challenges in measurement, and real or perceived inaccuracies in such metrics may harm our reputation and negatively affect our business.
Our internal tools and data models have a number of limitations and our methodologies for tracking these metrics may change over time, which could result in unexpected changes to our metrics, including the metrics we report. We calculate and track performance metrics with internal tools, which are not independently verified by any third party. While we believe our metrics are reasonable estimates of our customer base for the applicable period of measurement, the methodologies used to measure these metrics require significant judgment and may be susceptible to algorithmic or other technical errors. For example, the accuracy and consistency of our performance metrics may be impacted by changes to internal assumptions regarding how we account for and track customers, limitations on system implementations, and limitations on the ability of third-party tools to match our database. If the internal tools we use to track these metrics undercount or overcount performance or contain algorithmic or other technical errors, the data we report may not be accurate. In addition, limitations or errors with respect to how we measure data (or the data that we measure) may affect our understanding of certain details of our business, which could affect our longer-term strategies. If our performance metrics are not accurate representations of our business, user base, or traffic levels; if we discover material inaccuracies in our metrics; or if the metrics we rely on to track our performance do not provide an accurate measurement of our business, our reputation may be harmed, we may be subject to legal or regulatory actions, and our operating and financial results could be adversely affected.
We rely to a significant degree on a number of independent open source contributors, to develop and enhance the open source technologies we use to provide our products and services.
In our development process we rely upon numerous open core software programs which are outside of our direct control. Members of corresponding leadership committees and core teams, many of whom are not employed by us, are primarily responsible for the oversight and evolution of the codebases of these open source technologies. If the project committees and contributors fail to adequately further develop and enhance open source technologies, or if the leadership committees fail to oversee and guide the evolution of the open source technologies in the manner that we believe is appropriate to maximize the market potential of our offerings, then we would have to rely on other parties, or we would need to expend additional resources, to develop and enhance our offerings. We also must devote adequate resources to our own internal contributors to support their continued development and enhancement of open source technologies, and if we do not do so, we may have to turn to third parties or experience delays in developing or enhancing open source technologies. We cannot predict whether further developments and enhancements to these technologies will be available from reliable alternative sources. In either event, our development expenses could be increased, and our technology release and upgrade schedules could be delayed. Delays in developing, completing, or delivering new or enhanced offerings could cause our offerings to be less competitive, impair customer acceptance of our offerings and result in delayed or reduced revenue for our offerings.
Our failure or inability to protect our intellectual property rights, or claims by others that we are infringing upon or unlawfully using their intellectual property, could diminish the value of our brand and weaken our competitive position, and adversely affect our business, financial condition, operating results, and prospects.
We currently rely on a combination of copyright, trademark, patent, trade secret, and unfair competition laws, as well as confidentiality agreements and procedures and licensing arrangements, to establish and protect our intellectual property rights. We have devoted substantial resources to the development of our proprietary technologies and related processes. In order to protect our proprietary technologies and processes, we rely in part on patent and trade secret laws and confidentiality agreements with our team members, licensees, independent contractors, commercial partners, and other advisors. These agreements may not effectively prevent disclosure of confidential information and may
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not provide an adequate remedy in the event of unauthorized disclosure of confidential information. We cannot be certain that the steps taken by us to protect our intellectual property rights will be adequate to prevent infringement of such rights by others. Additionally, the process of obtaining patent or trademark protection is expensive and time-consuming, and we may not be able to prosecute all necessary or desirable patent applications or apply for all necessary or desirable trademark applications at a reasonable cost or in a timely manner. Moreover, intellectual property protection may be unavailable or limited in some foreign countries where laws or law enforcement practices may not protect our intellectual property rights as fully as in the United States, and it may be more difficult for us to successfully challenge the use of our intellectual property rights by other parties in these countries. Costly and time-consuming litigation could be necessary to enforce and determine the scope of our proprietary rights, and our failure or inability to obtain or maintain trade secret protection or otherwise protect our proprietary rights could adversely affect our business.
We may in the future be subject to intellectual property infringement claims and lawsuits in various jurisdictions, and although we are diligent in our efforts to protect our intellectual property we cannot be certain that our products or activities do not violate the patents, trademarks, or other intellectual property rights of third-party claimants. Companies in the technology industry and other patent, copyright, and trademark holders seeking to profit from royalties in connection with grants of licenses own large numbers of patents, copyrights, trademarks, domain names, and trade secrets and frequently commence litigation based on allegations of infringement, misappropriation, or other violations of intellectual property or other rights. As we face increasing competition and gain an increasingly high profile, the likelihood of intellectual property rights claims against us may grow.
Further, from time to time, we may receive letters from third parties alleging that we are infringing upon their intellectual property rights or inviting us to license their intellectual property rights. Our technologies and other intellectual property may be found to infringe upon such third-party rights, and such successful claims against us could result in significant monetary liability, prevent us from selling some of our products and services, or require us to change our branding. In addition, resolution of claims may require us to redesign our products, license rights from third parties at a significant expense, or cease using those rights altogether. And we may in the future bring claims against third parties for infringing our intellectual property rights. Costs of supporting such litigation and disputes may be considerable, and there can be no assurances that a favorable outcome will be obtained. Patent infringement, trademark infringement, trade secret misappropriation, and other intellectual property claims and proceedings brought against us or brought by us, whether successful or not, could require significant attention of our management and resources and have in the past and could further result in substantial costs, harm to our brand, and have an adverse effect on our business.
Our open source and source code-available business model makes our software vulnerable to authorized and unauthorized distribution and sale.
We license many significant components of our software under permissive open source software licenses which grant licensees broad permissions to use, copy, modify, and distribute the covered software. Under these licenses, third parties are entitled to distribute and sell the covered software without payment to us.
Features available on our paid tiers are source code-available subject to a proprietary software license. This proprietary license prohibits, amongst other things, distribution and sale of the covered software. Notwithstanding these prohibitions, by virtue of the source code’s being publicly available, the covered software is vulnerable to unauthorized distribution and sale by third parties.
We are or may be the defendant in lawsuits or other claims that could cause us to incur substantial liabilities.
We have from time to time been, and are likely to in the future become, defendants in actual or threatened lawsuits brought by or on behalf of our current and former team members, competitors,
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vendors, shareholders, governmental or regulatory bodies, or third parties who use The DevSecOps platform. In addition, our agreements sometimes include indemnification provisions which can subject us to costs and damages in the event of a claim against an indemnified third party. In either case, the various claims in such lawsuits may include, among other things, negligence or misconduct in the operation of our business and provision of services, intellectual property infringement, unfair competition, or violation of employment or privacy laws or regulations. Such suits may seek, as applicable, direct, indirect, consequential, punitive or other penalties or monetary damages, injunctive relief, and/or attorneys’ fees. Litigation is inherently unpredictable, and it is not possible to predict the outcome of any such lawsuits, individually or in the aggregate. However, these lawsuits may consume substantial amounts of our financial and managerial resources and might result in adverse publicity, regardless of the ultimate outcome of the lawsuits. In addition, we and our subsidiaries may become subject to similar lawsuits in the same or other jurisdictions. An unfavorable outcome with respect to these lawsuits and any future lawsuits could, individually or in the aggregate, cause us to incur substantial liabilities that may have a material adverse effect upon our business, financial condition or results of operations. In addition, an unfavorable outcome in one or more of these cases could cause us to change our compensation plans for our team members, which could have a material adverse effect upon our business. Further, while we maintain insurance that may provide coverage for these types of lawsuits and other claims, such coverage may not be adequate to cover the related costs and other liabilities.
We have been and could in the future be subject to securities class action litigation and shareholder derivative suits.
Securities class action litigation, and ensuing shareholder derivative suits, are often instituted against companies following, among other things, periods of volatility in the market price of a company’s securities. Such suits may seek, as applicable, direct, indirect, consequential, punitive or other penalties or monetary damages, injunctive relief, and/or attorneys’ fees. These types of litigation could result in substantial costs, adverse publicity, and a diversion of management’s attention and resources, which could adversely affect our business operating results, or financial condition. Additionally, the cost of directors’ and officers’ liability insurance may increase, which may cause us to opt for lower overall policy limits or to forgo insurance that we may otherwise rely on to cover significant defense costs, settlements, and damages awarded to plaintiffs.
We may engage in merger and acquisition activities and joint ventures, which could require significant management attention, disrupt our business, dilute stockholder value, and adversely affect our operating results.
As part of our business strategy, we have in the past and expect to continue to make investments in and/or acquire other companies, products, or technologies. We may not be able to find suitable acquisition candidates and we may not be able to complete acquisitions on favorable terms, if at all. Even if we complete acquisitions or joint ventures, we may not ultimately strengthen our competitive position or achieve our goals, and any acquisitions or joint ventures we complete could be viewed negatively by users or investors. In addition, if we fail to successfully integrate such acquisitions, or the assets, technologies or talent associated with such acquisitions, into our company, we may have depleted the company’s capital resources without attractive returns, and the revenue and operating results of the combined company could be adversely affected.
We may face additional risks in connection with acquisitions and joint ventures, including:
•diversion of management time and focus from operating our business to addressing acquisition integration challenges;
•coordination of research and development and sales and marketing functions;
•integration of product and service offerings;
•retention of key team members from the acquired company;
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•changes in relationships with strategic partners as a result of product acquisitions or strategic positioning resulting from the acquisition;
•integration of customers from the acquired company;
•cultural challenges associated with integrating team members from the acquired company into our organization;
•integration of the acquired company’s accounting, management information, human resources and other administrative systems;
•the need to implement or improve controls, procedures and policies at a business that prior to the acquisition may have lacked sufficiently effective controls, procedures and policies;
•additional legal, regulatory or compliance requirements;
•financial reporting, revenue recognition or other financial or control deficiencies of the acquired company that we do not adequately address and that cause our reported results to be incorrect;
•liability for activities of the acquired company before the acquisition, including intellectual property infringement claims, violations of laws, commercial disputes, tax liabilities and other known and unknown liabilities;
•unanticipated write-offs or charges; and
•litigation or other claims in connection with the acquired company, including claims from terminated team members, customers, former stockholders or other third parties.
Further, we may have to pay cash, incur debt, or issue equity securities to pay for any such acquisition or joint venture, each of which could affect our financial condition or the value of our capital stock and could result in dilution to our stockholders. If we incur more debt it would result in increased fixed obligations and could also subject us to covenants or other restrictions that would impede or may be beyond our ability to manage our operations. Additionally, we may receive indications of interest from other parties interested in acquiring some or all of our business. The time required to evaluate such indications of interest could require significant attention from management, disrupt the ordinary functioning of our business, and adversely affect our operating results.
Our failure to address these risks or other problems encountered in connection with acquisitions activities and joint ventures could cause us to fail to realize the anticipated benefits of these acquisitions, investments or joint ventures, cause us to incur unanticipated liabilities, and harm our business generally.
If our estimates or judgments relating to our critical accounting policies prove to be incorrect, our operating results could be adversely affected.
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, as described in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this Quarterly Report on Form 10-Q. The results of these estimates form the basis for making judgments about the carrying values of assets, liabilities, and equity, and the amount of revenue and expenses that are not readily apparent from other sources. Significant assumptions and estimates used in preparing our consolidated financial statements include those related to revenue recognition, stock-based compensation, allowance for doubtful accounts, deferred contract acquisition costs, income taxes, impairment of goodwill and long-lived assets. Our operating results may be adversely affected if our assumptions change or if actual circumstances differ from those in our assumptions, which could
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cause our operating results to fall below the expectations of securities analysts and investors, resulting in a decline in the price of our common stock.
Adverse tax laws or regulations could be enacted or existing laws could be applied to us or our customers, which could increase the costs of our services and adversely impact our business.
The application of federal, state, local, and international tax laws to services provided electronically is evolving. New sales, use, value-added tax, digital service or other tax laws, statutes, rules, regulations or ordinances could be enacted at any time (possibly with retroactive effect), and could be applied solely or disproportionately to services provided over the internet. If we are unsuccessful in collecting such taxes from our customers, we could be held liable for such costs, thereby adversely impacting our operating results and cash flows. Moreover, we are subject to the examination of our sales, use, and value-added tax returns by U.S. state and foreign tax authorities. We regularly assess the likelihood of outcomes resulting from these examinations and have reserved for potential adjustments that may result from these examinations. We cannot provide assurance that the final determination of these examinations will not have an adverse effect on our financial position and results of operations.
The termination of our relationship with our payment solutions providers could have a severe, negative impact on our ability to collect revenue from customers.
All web direct customers purchase our solution using online payment solutions such as credit cards, which represent the majority of the payment transactions we receive, and our business depends upon our ability to offer such payment options. The termination of our ability to process payments on any material payment solution would significantly impair our ability to operate our business and significantly increase our administrative costs related to customer payment processing. If we fail to maintain our compliance with the data protection and documentation standards adopted by our payment processors and applicable to us, these processors could terminate their agreements with us, and we could lose our ability to offer our customers a credit card or other payment option. If these processors increase their payment processing fees because we experience excessive chargebacks or refunds or for other reasons, it could adversely affect our business and operating results. Increases in payment processing fees would increase our expense and adversely affect our operating results.
We process, store and use personal data and other data, which subjects us to governmental regulation and other legal obligations, including in the United States, the European Union, or the E.U., the United Kingdom, or the U.K., Canada, and Australia, related to privacy, and our actual or perceived failure to comply with such laws, regulations and contractual obligations could result in significant liability and reputational harm.
We receive, store and process personal data and other customer data. There are numerous federal, state, local and foreign laws regarding privacy and the storing, sharing, access, use, processing, disclosure and protection of personal data and other customer data, the scope of which is changing, subject to differing interpretations, and which may be inconsistent among countries or conflict with other rules.
With respect to E.U. and U.K. team members, contractors and other personnel, as well as for our customers’ and prospective customers’ personal data, such as contact and business information, we are subject to the GDPR and applicable national implementing legislation of the GDPR, and the U.K. General Data Protection Regulation and U.K. Data Protection Act 2018, or the U.K. GDPR, respectively. We are a controller with respect to this data.
The GDPR and U.K. GDPR impose stringent data protection requirements and, where we are acting as a controller, includes requirements to: provide detailed disclosures about how personal data is collected and processed (in a concise, intelligible and easily accessible form); demonstrate that an appropriate legal basis is in place or otherwise exists to justify data processing activities; grant rights for data subjects in regard to their personal data including the right to be “forgotten,” the right to data portability, the right to correct personal data, and the right to access personal data; notify data protection
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regulators or supervisory authorities (and in certain cases, affected individuals) of significant data breaches; define pseudonymized (key-coded) data; limit the retention of personal data; maintain a record of data processing; and comply with the principle of accountability and the obligation to demonstrate compliance through policies, procedures, trainings and audits. Where we act as a processor and process personal data on behalf of our customers, we are required to execute mandatory data processing clauses with those customers and maintain a record of data processing, among other requirements under the GDPR and U.K. GDPR. The GDPR and U.K. GDPR provide for penalties for noncompliance of up to the greater of €20 million or 4% of worldwide annual revenues (in the case of the GDPR) or £17 million and 4% of worldwide annual revenue (in the case of the U.K. GDPR). As we are required to comply with both the GDPR and the U.K. GDPR, we could be subject to parallel enforcement actions with respect to breaches of the GDPR or U.K. GDPR which affects both E.U. and U.K. data subjects. In addition to the foregoing, a breach of the GDPR or U.K. GDPR could result in regulatory investigations, reputational damage, orders to cease or change our processing of our personal data, enforcement notices, and/or assessment notices (for a compulsory audit). We may also face civil claims including representative actions and other class action type litigation (where individuals have suffered harm), potentially amounting to significant compensation or damages liabilities, as well as associated costs, diversion of internal resources, and reputational harm.
The GDPR and U.K. GDPR requires, among other things, that personal data only be transferred outside of the European Economic Area, or the E.E.A., or the U.K., respectively, to jurisdictions that have not been deemed adequate by the European Commission or by the U.K. data protection regulator, respectively, including the United States, if certain safeguards are taken to legitimize those data transfers. Legal developments in the E.U. have resulted in complexity and uncertainty regarding such transfers. For example, the Court of Justice of the European Union, or the CJEU, has previously advised that the Standard Contractual Clauses (a standard form of contract approved by the European Commission as an adequate personal data transfer mechanism) are not alone sufficient to protect data transferred to the United States or other countries not deemed adequate and the current E.U.-U.S. Data Privacy Framework, or the DPF, which permits certified U.S.-based organizations to receive transfers of personal data from the E.E.A. and the U.K, has previously been subject to proposed legal challenges before the CJEU. Thus, the Standard Contractual Clauses remain an important data transfer mechanism for transfers to countries outside of the E.E.A. and the U.K., but the use of Standard Contractual Clauses must still be assessed on a case-by-case basis taking into account the legal regime applicable in the destination country, in particular applicable surveillance laws and rights of individuals, and additional measures and/or contractual provisions may need to be put in place. The European Data Protection Board has also issued a decision imposing higher burdens on the use of data transfer mechanisms, such as the Standard Contractual Clauses, for cross-border data transfers and the CJEU has stated that if a competent supervisory authority believes that the Standard Contractual Clauses cannot be complied with in the destination country and that the required level of protection cannot be secured by other means, such supervisory authority is under an obligation to suspend or prohibit that transfer. Since the decision by the CJEU, supervisory authorities, including the CNIL and the Austrian Data Protection Authority, are now looking at cross-border transfers more closely, and have publicly stated that the transfer of data to the United States using certain analytics tools is illegal. While these decisions related specifically to analytics tools and may be inapplicable to organizations certified under the DPF, it has been suggested that it is far-reaching and applies to any transfer of E.U. personal data to the United States. We will continue to monitor this situation, and evaluate and utilize, where appropriate, all data transfer mechanisms available to us, but this may require the removal of tools from our services and websites where data is transferred from the E.U. to the United States, or impact the manner in which we provide our services, which could adversely affect our business.
We are also subject to evolving privacy laws in multiple jurisdictions on cookies and e-marketing. In the E.U. and the U.K., regulators are increasingly focusing on compliance with requirements in the online behavioral advertising ecosystem, and current national laws that implement the ePrivacy Directive may increase fines for non-compliance. In the E.U. and the U.K., informed consent is required for the placement of a cookie or similar technologies on a user’s device and for direct electronic marketing. The
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U.K. GDPR also imposes conditions on obtaining valid consent, such as a prohibition on pre-checked consents and a requirement to ensure separate consents are sought for each type of cookie or similar technology. Further, a recent European court decision and regulators’ recent guidance are driving increased attention to cookies and tracking technologies. In addition, in the United States, plaintiffs are increasingly asserting claims under state and federal wiretapping and privacy statutes, such as the California Invasion of Privacy Act and the federal Wiretap Act, alleging that cookies, pixels, session replay tools, chat features, software development kits, and similar tracking technologies constitute the unauthorized interception or recording of communications. Such claims are frequently brought not only as class actions but also as individual and mass arbitration demands and pre-litigation demand letters, and can carry statutory damages assessed on a per-violation basis. Regardless of their merit, these claims can be costly and time-consuming to defend, and the potential for aggregated statutory damages may create pressure to settle. If regulators start to enforce the strict approach in recent guidance, this could lead to substantial costs, limit the effectiveness of our marketing activities, divert the attention of our technology personnel, adversely affect our margins, increase costs and subject us to additional liabilities. Regulation of cookies and similar technologies, and any decline of cookies or similar online tracking technologies as a means to identify and potentially target users, may lead to broader restrictions and impairments on our marketing and personalization activities and may negatively impact our efforts to understand users.
We depend on a number of third parties in relation to the operation of our business, a number of which process personal data on our behalf or as our sub-processor. To the extent required by applicable law, we attempt to mitigate the associated risks of using third parties by performing security assessments and detailed due diligence, entering into contractual arrangements to ensure that providers only process personal data according to our instructions or equivalent instructions to that of our customer (as applicable), and that they have sufficient technical and organizational security measures in place. Where we transfer personal data outside the E.U. or the U.K. to such third parties, we do so in compliance with the relevant data export requirements, as described above. There is no assurance that these contractual measures and our own privacy and security-related safeguards will protect us from the risks associated with the third-party processing, storage and transmission of such information. Any violation of data or security laws by our third-party processors could have a material adverse effect on our business and result in the fines and penalties under the GDPR and the U.K. GDPR outlined above.
Additionally, we are subject to the CCPA, as expanded by the California Privacy Rights Act, or the CPRA, which increases privacy rights for California consumers and imposes obligations on companies that process their personal data. The CCPA requires covered companies to, among other things, provide new disclosures to California consumers and affords such consumers new privacy rights such as the ability to opt out of certain sales of personal data and expanded rights to access and deletion of their personal data, opt out of certain personal data sharing, and receive detailed information about how their personal data is collected, used and shared. The CCPA provides for civil penalties for violations, as well as a private right of action for security breaches that may increase the likelihood of, and the risks associated with, security breach litigation and the CPRA expanded consumers’ rights with respect to certain personal data and established a state agency to oversee implementation and enforcement efforts, potentially resulting in further uncertainty and requiring us to incur additional costs and expenses in an effort to comply. The CCPA has also prompted a number of passed laws and proposals for new federal and state privacy legislation that, if passed, could increase our potential liability and compliance costs, particularly in the event of a data breach, and adversely affect our business, including how we use personal data, our financial condition, and the results of our operations or prospects. Compliance with privacy legislation adds complexity and has required and may in the future require investment in additional resources for compliance programs, thus potentially resulting in additional costs and expense of resources to maintain compliance. Changing definitions of personal data and information may also limit or inhibit our ability to operate or expand our business, including limiting strategic partnerships that may involve the sharing of data. Also, some jurisdictions require that certain types of data be retained on servers within these jurisdictions. Our failure to comply with applicable laws, directives, and regulations
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may result in enforcement action against us, including fines, and damage to our reputation, any of which may have an adverse effect on our business and operating results.
We are also currently subject to China’s Personal Information Protection Law, or PIPL, which came into effect in November 2021 and which increases the protections of Chinese residents. In particular, the law is intended to protect the rights and interests of individuals, to regulate personal data processing activities, to safeguard the lawful and “orderly flow” of data, and to facilitate reasonable use of personal data. Our failure to comply with the PIPL may result in enforcement action against us, including fines, and damage to our reputation, any of which may have an adverse effect on our business and operating results. Also, the Cyberspace Administration of China has developed measures to govern cross-border transfers of personal data, such as security assessments, certifications, and Standard Contractual Clauses, all of which may impact our ability to transact with customers with operations in China. To reduce the impact of PIPL, we are in the process of transitioning certain users who are resident in China to our JiHu entity.
Further, we are subject to Payment Card Industry Data Security Standard, or PCI-DSS, a security standard applicable to companies that collect, store or transmit certain data regarding credit and debit cards, holders and transactions. We rely on vendors to handle PCI-DSS matters and to ensure PCI-DSS compliance. Despite our compliance efforts, we may become subject to claims that we have violated the PCI-DSS based on past, present, and future business practices. Our actual or perceived failure to comply with the PCI-DSS can subject us to fines, termination of banking relationships, and increased transaction fees. In addition, there is no guarantee that PCI-DSS compliance will prevent illegal or improper use of our payment systems or the theft, loss or misuse of payment card data or transaction information.
We generally seek to comply with industry standards and are subject to the terms of our privacy policies and privacy-related obligations to third parties. We strive to comply with all applicable laws, policies, legal obligations and industry codes of conduct relating to privacy and data protection to the extent possible. However, it is possible that these obligations may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another and may conflict with other rules or our practices. Any failure or perceived failure by us to comply with applicable privacy and data security laws and regulations, our privacy policies, or our privacy-related obligations to users or other third parties, or any compromise of security that results in the unauthorized release or transfer of personal data or other customer data, may result in governmental enforcement actions, litigation, or public statements against us by consumer advocacy groups or others and could cause our users to lose trust in us, which would have an adverse effect on our reputation and business. It is possible that a regulatory inquiry might result in changes to our policies or business practices. Violation of existing or future regulatory orders or consent decrees could subject us to substantial monetary fines and other penalties that could negatively affect our financial condition and operating results. In addition, it is possible that future orders issued by, or enforcement actions initiated by, regulatory authorities could cause us to incur substantial costs or require us to change our business practices in a manner materially adverse to our business.
Any significant change to applicable laws, regulations or industry practices regarding the use or disclosure of our users’ data, or regarding the manner in which the express or implied consent of users for the use and disclosure of such data is obtained – or in how these applicable laws, regulations or industry practices are interpreted and enforced by state, federal and international privacy regulators – could require us to modify our services and features, possibly in a material manner, may subject us to regulatory enforcement actions and fines, and may limit our ability to develop new services and features that make use of the data that our users voluntarily share with us.
In addition to U.S. and foreign privacy laws, we are subject to a variety of new and evolving legal and regulatory requirements related to data, content, content moderation, and safety, such as the EU Digital Services Act, or DSA, which imposes obligations on hosting service providers including requirements related to content moderation, transparency reporting, and user complaint mechanisms. Similar platform regulations have been enacted in other jurisdictions, including the UK. Compliance with the DSA and similar laws could subject us to increased compliance costs and operational requirements, and includes
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significant penalties for non-compliance of up to 6% of global annual turnover and provides for the ability of civil society organizations and non-governmental organizations to commence class action lawsuits. The interpretation and enforcement of these requirements remain subject to uncertainty, and failure to comply could result in fines, enforcement actions, or limitations on our ability to operate in affected jurisdictions, which could adversely affect our business, financial condition, and results of operations.
We are subject to various governmental export controls, trade sanctions, and import laws and regulations that could impair our ability to compete in international markets or subject us to liability if we violate these controls.
In some cases, our software is subject to export control laws and regulations, including the Export Administration Regulations administered by the U.S. Department of Commerce, and our activities may be subject to trade and economic sanctions, including those administered by the United States Department of the Treasury’s Office of Foreign Assets Control, or OFAC, and collectively, Trade Controls. As such, a license may be required to export or re-export our products, or provide related services, to certain countries and end-users, and for certain end-uses. For example, Trade Controls targeting Russia and Belarus, impose a license requirement for the export of our product to those countries, and have sanctioned various entities and individuals located there, while recent sanctions restrict the provision of certain cloud services to Russia. Those Trade Controls are unprecedented and expansive, and may continue to evolve. Further, our products incorporating encryption functionality may be subject to special controls applying to encryption items and/or certain reporting requirements.
We have procedures in place designed to ensure our compliance with Trade Controls, with which failure to comply could subject us to both civil and criminal penalties, including substantial fines, possible incarceration of responsible individuals for willful violations, possible loss of our export or import privileges, and reputational harm. We are currently working to enhance these procedures. Trade Controls are complex and dynamic regimes, and monitoring and ensuring compliance can be challenging, particularly given that our products are widely distributed throughout the world and are available for download without registration. Prior to implementing certain control procedures, we inadvertently exported our software to entities located in embargoed countries and listed on denied parties lists administered by the U.S. Department of Commerce’s Bureau of Industry and Security, or BIS, and OFAC. In September 2019, we disclosed these apparent violations to BIS and OFAC, which resulted in a BIS Warning Letter and an OFAC Cautionary Letter, in January and February 2020, respectively. While BIS and OFAC did not assess any penalties, we understand that BIS and OFAC may consider our regulatory history, including these prior disclosures and warning/cautionary letters, if the company is involved in a future enforcement case for failure to comply with export control laws and regulations. Any future failure by us or our partners to comply with applicable laws and regulations would have negative consequences for us, including reputational harm, government investigations, and penalties.
In addition, various countries regulate the import of certain encryption technology, including through import permit and license requirements, and have enacted laws that could limit our ability to distribute our products or could limit our end-customers’ ability to implement our products in those countries. Changes in our products or changes in export and import regulations in such countries may create delays in the introduction of our products into international markets, prevent our end-customers with international operations from deploying our products globally or, in some cases, prevent or delay the export or import of our products to certain countries, governments, or persons altogether. Any change in export or import laws or regulations, economic sanctions or related legislation, shift in the enforcement or scope of existing export, import or sanctions laws or regulations, or change in the countries, governments, persons, or technologies targeted by such export, import or sanctions laws or regulations, could result in decreased use of our products by, or in our decreased ability to export or sell our products to, existing or potential end-customers with international operations. Any decreased use of our products or limitation on our ability to export to or sell our products in international markets could adversely affect our business, financial condition, and results of operations.
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Failure to comply with anti-bribery, anti-corruption, anti-money laundering laws, and similar laws, could subject us to penalties and other adverse consequences.
We are subject to the U.S. Foreign Corrupt Practices Act of 1977, as amended, or the FCPA, the U.S. domestic bribery statute contained in 18 U.S.C. § 201, the U.S. Travel Act, the USA PATRIOT Act, the United Kingdom Bribery Act 2010 and other anti-bribery and anti-money laundering laws in countries outside of the United States in which we conduct our activities. Anti-corruption and anti-bribery laws have been enforced aggressively in recent years and are interpreted broadly to generally prohibit companies, their team members, and their third-party intermediaries from authorizing, offering, or providing, directly or indirectly, improper payments or benefits to recipients in the public or private sector.
We sometimes leverage third parties to sell our products and services and conduct our business abroad. We and our third-party intermediaries may have direct or indirect interactions with officials and employees of government agencies or state-owned or affiliated entities and may be held liable for the corrupt or other illegal activities of these third-party business partners and intermediaries, our team members, representatives, contractors, partners, and agents, even if we do not explicitly authorize such activities. We cannot assure you that all of our team members and agents will not take actions in violation of applicable law, for which we may be ultimately held responsible. As we increase our international sales and business, our risks under these laws may increase.
Any allegations or actual violation of the FCPA or other applicable anti-bribery, anti-corruption laws, and anti-money laundering laws could result in whistleblower complaints, sanctions, settlements, prosecution, enforcement actions, fines, damages, adverse media coverage, investigations, loss of export privileges, severe criminal or civil sanctions, or suspension or debarment from U.S. government contracts, all of which may have an adverse effect on our reputation, business, results of operations, and prospects. Responding to any investigation or action will likely result in a materially significant diversion of management’s attention and resources and significant defense costs and other professional fees. In addition, the U.S. government may seek to hold us liable for successor liability for FCPA violations committed by companies in which we invest or that we acquire. As a general matter, investigations, enforcement actions and sanctions could harm our reputation, business, results of operations, and financial condition.
A portion of our revenue is generated by sales to government entities, which are subject to a number of challenges and risks.
Sales to government entities are subject to a number of risks. Selling to government entities can be highly competitive, expensive, and time-consuming, often requiring significant up-front time and expense without any assurance that these efforts will generate a sale. Government certification requirements for products like ours may change, thereby restricting our ability to sell into the U.S. federal government, U.S. state governments, or non-U.S. government sectors until we have attained the revised certification. Government demand and payment for our products may be affected by public sector budgetary cycles, funding authorizations, government shutdowns, and general political priorities and initiatives, with funding delays, or reductions or eliminations, adversely affecting public sector demand for our products. Additionally, any actual or perceived privacy, data protection, or data security incident, or even any perceived defect with regard to our practices or measures in these areas, may negatively impact public sector demand for our products. The U.S. federal government and other government entities are in the process of implementing specific policies and obligations relating to the use of AI, and we will need to continue to monitor these developments to ensure our products that we sell to government entities remain compliant with such applicable regulations.
Additionally, we rely on certain partners to provide technical support services to certain of our government entity customers to resolve any issues relating to our products. If our partners do not effectively assist our government entity customers in deploying our products, succeed in helping our government entity customers quickly resolve post-deployment issues, or provide effective ongoing
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support, our ability to sell additional products to new and existing government entity customers would be adversely affected and our reputation could be damaged.
Government entities may have statutory, contractual, or other legal rights to terminate contracts with us for convenience, including in connection with political priorities or initiatives, or due to a default, and any such termination may adversely affect our future results of operations. Governments routinely investigate and audit government contractors’ administrative processes, and any unfavorable audit could result in the government refusing to continue buying our subscriptions, a reduction of revenue, or fines or civil or criminal liability if the audit uncovers improper or illegal activities, which could adversely affect our results of operations in a material way.
One of our competitive advantages is our ability to provide users of our products and services with access to an abundance of useful, efficient, high-quality code which in turn depends on the quality and volume of code contributed by our open source contributors.
We believe that one of our competitive advantages is the quality, quantity and collaborative nature of the code on GitLab, and that access to open source code is an important reason why users visit GitLab. In furtherance of the foregoing competitive advantages and access, we seek to foster a broad and engaged contributor community, and we encourage individuals, companies, governments, and institutions to use our products and services to learn, code and work. If contributors, including influential contributors, do not continue to contribute code, our customer base and contributor engagement may decline. Additionally, if we are not able to address user concerns regarding the safety and security of our products and services or if we are unable to successfully prevent abusive or other hostile behavior on The DevSecOps platform, the size of our customer base and contributor engagement may decline. If there is a decline in the number of contributors, customer or contributor growth rate or engagement, including as a result of the loss of influential contributors and companies who provide innovative code on GitLab, or due to the increased adoption of AI, paying customers of our online services may be deterred from using our products or services or reduce their spending with us or cease doing business with us, which would harm our business and operating results.
Seasonality may cause fluctuations in our sales and results of operations.
Historically, we have experienced seasonality in new customer contracts, as we typically enter into a higher percentage of subscription agreements with new customers and renewals with existing customers in the last two fiscal quarters of each year. We believe that this results from the procurement, budgeting, and deployment cycles of many of our customers, particularly our enterprise customers, along with variables outside of our and our customers’ control, such as macroeconomic and general economic conditions, including inflation, tariffs, volatile interest rates, uncertainty with respect to the federal budget, debt ceiling and potential government shutdowns, and volatility of the global debt and equity markets, and actual or perceived instability in the global banking sector. We expect that this seasonality, which can itself at times be unpredictable, will continue to affect our bookings, deferred revenue, and our results of operations in the future and might become more pronounced as we continue to target larger enterprise customers.
We recognize a significant portion of revenue from subscriptions over the term of the relevant subscription period, and as a result, downturns or upturns in sales are not immediately reflected in our results of operations. Further, we recognize a significant portion of our subscription revenue over the term of the relevant subscription period. As a result, much of the subscription revenue we report each fiscal quarter is the recognition of deferred revenue from subscription contracts entered into during previous fiscal quarters. Consequently, a decline in new or renewed subscriptions in any one fiscal quarter will not be fully or immediately reflected in revenue in that fiscal quarter and will negatively affect our revenue in future fiscal quarters. Accordingly, the effect of significant downturns in new or renewed sales of our subscriptions is not fully reflected in our results of operations until future periods.
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The length of our sales cycle can be unpredictable, particularly with respect to sales to large customers, and our sales efforts may require considerable time and expense.
Our results of operations may fluctuate, in part, because of the length and variability of the sales cycle of our subscriptions and the difficulty in making short-term adjustments to our operating expenses. The length of our sales cycle, from initial contact from a prospective customer to contractually committing to our paid subscriptions can vary substantially from customer to customer based on deal complexity as well as whether a sale is made directly by us. It is difficult to predict exactly when, or even if, we will make a sale to a potential customer or if we can increase sales to our existing customers, the timing of our customers’ decisions to make a purchase, greater deal scrutiny by our customers, changes our customers experienced, or may experience, in their businesses, and other variables some of which are outside of our and our customers’ control, such as macroeconomic and general economic conditions, including inflation, tariffs, volatile interest rates, uncertainty with respect to the federal budget, debt ceiling and potential government shutdowns, and volatility of the global debt and equity markets, and actual or perceived instability in the global banking sector. Our results of operations depend in part on sales to new large customers and increasing sales to existing customers. As a result, in particular, large individual sales have, in some cases, occurred in quarters subsequent to those we anticipated, or have not occurred at all. Because a substantial proportion of our expenses are relatively fixed in the short term, our results of operations will suffer if revenue falls below our expectations in a particular quarter, which could cause the price of our Class A common stock to decline.
Risks Related to our People and Culture
We rely on our management team and other key team members and will need additional personnel to grow our business, and the loss of one or more key team members or our inability to hire, integrate, train and retain qualified personnel, could harm our business.
Our future success is dependent, in part, on our ability to hire, integrate, train, retain and motivate the members of our management team and other key team members throughout our organization. The loss of key personnel, including key members of our management team, as well as certain of our key marketing, sales, finance, support, product development, human resources, or technology personnel, could disrupt our operations and have an adverse effect on our ability to grow our business.
Competition for highly skilled personnel in our industry is intense, and we may not be successful in hiring or retaining qualified personnel to fulfill our current or future needs. We have, from time to time, experienced, and we may experience in the future, difficulty in hiring and retaining highly skilled team members with appropriate qualifications. In particular, recruiting and hiring senior product engineering personnel with AI and machine learning backgrounds has been, and we expect it to continue to be, challenging. In addition, the restructuring plan we implemented in June 2026 is intended to help position us for long-term success by realigning our operating structure to optimize execution against our strategic priorities; however, it may be disruptive to our operations, may take longer to implement than anticipated, and may lead to attrition beyond planned staff reductions, or negatively impact our ability to attract and retain qualified management, technology software professionals or other personnel who are critical to our business.
Further, many of the companies with which we compete for experienced personnel have greater resources than we have. Our competitors also may be successful in recruiting and hiring members of our management team or other key team members, and it may be difficult for us to find suitable replacements on a timely basis, on competitive terms, or at all. We have in the past, and may in the future, be subject to allegations that team members we hire have been improperly solicited, or that they have divulged proprietary or other confidential information or that their former employers own such team member’s inventions or other work product, or that they have been hired in violation of non-compete provisions or non-solicitation provisions.
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In addition, job candidates and existing team members often consider the value of the benefits and equity awards they receive in connection with their employment. If the perceived value of our benefits, equity, or equity awards declines, it may adversely affect our ability to retain highly skilled team members. If we fail to attract new personnel or fail to retain and motivate our current personnel, our business and future growth prospects would be severely harmed.
Our corporate culture has contributed to our success, and if we cannot maintain this culture, we could lose the innovation, creativity, and teamwork fostered by our culture, and our business may be harmed.
We believe that our corporate culture has been and will continue to be a key contributor to our success. If we do not continue to develop our corporate culture as we continue to evolve, it could harm our ability to foster the innovation, creativity, and teamwork that we believe is important to support our growth. As our organization grows and we are required to implement more complex organizational structures, we may find it increasingly difficult to maintain the beneficial aspects of our corporate culture, which could negatively impact our future success.
We engage our team members in various ways, including direct hires, through PEOs and as independent contractors. As a result of these methods of engagement, we face certain challenges and risks that can affect our business, operating results, and financial condition.
In the locations where we directly hire our team members into one of our entities, we must ensure that we are compliant with the applicable local laws governing team members in those jurisdictions, including local employment and tax laws. In the locations where we utilize professional employer organizations, or PEOs, we contract with the PEO for it to serve as “Employer of Record” for those team members engaged through the PEO in each applicable location. Under this model, team members are employed by the PEO but provide services to GitLab. We also engage team members through a PEO self-employed model in certain jurisdictions where we contract with the PEO, which in turn contracts with individual team members as independent contractors. In all locations where we utilize PEOs, we rely on those PEOs to comply with local employment laws and regulations. We also issue equity to a substantial portion of our team members, including team members engaged through PEOs and to independent contractors, and must ensure we remain compliant with securities laws of the applicable jurisdiction where such team members are located.
Additionally, in some cases, we contract directly with team members who are independent contractors. When we engage team members through a PEO or independent contractor model, we may not be utilizing the appropriate hiring model needed to be compliant with local laws or the PEO may not be complying with local regulations. Additionally, the agreements executed between PEOs and our team members or between us and team members engaged under the independent contractor model, may not be enforceable depending on the local laws because of the indirect relationship created through these engagement models. Accordingly, as a result of our engagement of team members through PEOs, and of our relationship with independent contractors, our business, financial condition and results of operations could be materially and adversely affected. Furthermore, litigation related to our model of engaging team members, if instituted against us, could result in substantial costs and divert our management’s attention and resources from our business.
If we do not effectively hire, integrate, and train additional sales personnel, and expand our sales and marketing capabilities, we may be unable to increase our customer base and increase sales to our existing customers.
Our ability to increase our customer base and achieve broader market adoption of The DevSecOps platform will depend to a significant extent on our ability to continue to expand our sales and marketing operations. We plan to dedicate significant resources to sales and marketing programs and to expand our sales and marketing capabilities to target additional potential customers, but there is no guarantee that we will be successful in attracting and maintaining additional customers. If we are unable to find efficient
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ways to deploy our sales and marketing investments or if our sales and marketing programs are not effective, our business and operating results would be adversely affected.
Furthermore, we plan to continue expanding our sales force and there is significant competition for sales personnel with the skills and technical knowledge that we require. Our ability to achieve revenue growth will depend, in part, on our success in hiring, integrating, training, and retaining sufficient numbers of sales personnel to support our growth, particularly in international markets. New hires require significant training and may take significant time before they achieve full productivity. Our recent hires and planned hires may not become productive as quickly as we expect, and we may be unable to hire or retain sufficient numbers of qualified individuals in the markets where we do business or plan to do business. If we are unable to hire and train a sufficient number of effective sales personnel, or the sales personnel we hire are not successful in obtaining new customers or increasing sales to our existing customer base, our business, operating results, and financial condition will be adversely affected.
We are a remote-only company, meaning that our team members work remotely which poses a number of risks and challenges that can affect our business, operating results, and financial condition. We are highly dependent on technology in our operations and if our technology fails, our business could be adversely affected.
As a remote-only company, we face a number of unique operational risks. For example, technologies in our team members’ homes may not be robust enough and could cause the networks, information systems, applications, and other tools available to team members and service providers to be limited, unreliable, or unsecure. Additionally, we are highly dependent on technology as a remote-only company and if we experience problems with the operation of our current IT systems or the technology systems of third parties on which we rely, that could adversely affect, or even temporarily disrupt, all or a portion of our operations until resolved. In addition, in a remote-only company, it may be difficult for us to develop and preserve our corporate culture and our team members may have decreased opportunities to collaborate in meaningful ways. Any impediments to preserving our corporate culture and fostering collaboration could harm our future success, including our ability to retain and recruit personnel, innovate and operate effectively, and execute on our business strategy.
Unfavorable media coverage could negatively impact our business.
We receive a high degree of media coverage, including due to our commitment to transparency. Unfavorable publicity or consumer perception of our service offerings could adversely affect our reputation, resulting in a negative impact on the size of our user base and the loyalty of our users. It could negatively impact our ability to acquire new customers and could lead to customers choosing to leave GitLab. As a result, our business, financial condition and results of operations could be materially and adversely affected.
Our brand, reputation, and business may be harmed if our customers, partners, team members, contributors or the public at large disagrees with, or finds objectionable, our policies and practices or organizational decisions that we make or with the actions of members of our management team.
Our customers, partners, team members, contributors or the public at large may, from time to time, disagree with, or find objectionable, our policies and practices or organizational decisions that we make or with the actions of members of our management team. As a result of these disagreements and any negative publicity associated therewith, we could lose customers or partners, or we may have difficulty attracting or retaining team members or contributors and such disagreements may divert resources and the time and attention of management from our business. Our culture of transparency may also result in customers, partners, team members, contributors or the public at large having greater insight into our policies and practices or organizational decisions. Additionally, with the importance and impact of social media, any negative publicity regarding our policies and practices or organizational decisions or actions by members of our management team, may be magnified and reach a large portion of our customer,
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partner, team member base or contributors in a very short period of time, which could harm our brand and reputation and adversely affect our business.
Risks Related to Our International Operations
We plan to continue to strategically structure our international operations in line with our business needs, which could subject us to additional costs and risks.
We plan to continue to strategically structure our international operations in the future. Outside of the United States, we currently have direct and indirect subsidiaries in Canada, Germany, France, India, Ireland, Israel, the Netherlands, Spain, the United Kingdom, Australia, Japan, South Korea, and Singapore, and have team members in many countries. We also have a joint venture in China. There are significant costs and risks inherent in conducting business in international markets, including:
•establishing and maintaining effective controls at foreign locations and the associated increased costs;
•adapting our technologies, products, and services to non-U.S. consumers’ preferences and customs;
•increased competition from local providers;
•compliance with foreign laws and regulations;
•adapting to doing business in other languages and/or cultures;
•compliance with the laws of numerous taxing jurisdictions where we conduct business, potential double taxation of our international earnings, foreign tax withholding on intercompany transactions, and potentially adverse tax consequences due to U.S. and foreign tax laws as they relate to our international operations;
•compliance with anti-bribery laws, such as the FCPA and the U.K. Bribery Act, by us, our team members, our service providers, and our business partners;
•difficulties in staffing and managing global operations and the increased travel, infrastructure, and compliance costs associated with multiple international locations;
•complexity and other risks associated with current and future foreign legal requirements, including legal requirements related to data privacy frameworks, such as the GDPR and U.K. GDPR;
•currency exchange rate fluctuations or limitations and related effects on our operating results;
•economic and political instability in some countries, including the potential effects of health pandemics or epidemics and the ongoing armed conflicts in different regions of the world;
•the uncertainty of protection for intellectual property rights in some countries and practical difficulties of enforcing rights abroad; and
•other costs of doing business internationally.
These factors and other factors could harm our international operations and, consequently, materially impact our business, operating results, and financial condition. In addition, we implemented a restructuring plan in June 2026, and, as a result, we expect to exit operations in approximately 22 countries. This restructuring, the actual charges for which may exceed estimates, subjects us to additional risks, including risks associated with winding down or transferring local employment arrangements and PEO relationships, potential adverse tax, regulatory, or contractual consequences of exiting these jurisdictions, disruption to customer support and service continuity in affected regions, and operational and reputational risks associated with the transition. The restructuring may take longer than anticipated,
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and we cannot assure that we will be able to complete the restructuring without adverse effects on our business, operating results, or financial condition, including that anticipated cost savings may not be realized. Further, we may incur significant operating expenses as a result of our international operations, which may not be successful. We have limited experience with regulatory environments and market practices internationally, and we may not be able to penetrate or successfully operate in new markets. If we are unable to continue to expand internationally and manage the complexity of our global operations successfully, our financial condition and operating results could be adversely affected.
We have a limited operating history in China and we face risks with respect to conducting business in connection with our joint venture in China due to certain legal, political, economic and social uncertainties relating to China. Our ability to monetize our joint venture in China may be limited.
In February 2021, we partnered with two Chinese investment partners to form an independent company called GitLab Information Technology (Hubei) Co., Ltd. (极狐, pinyin: JiHu, pronounced Gee Who) which was formed to specifically serve the Chinese market. This company offers a dedicated distribution of The DevSecOps platform available as both a self-managed and SaaS that is only available in mainland China, Hong Kong and Macau. The autonomous company has its own governance structure, management team, and business support functions including Engineering, Sales, Marketing, Finance, Legal, Human Relations and Customer Support.
Our participation in this joint venture in China is subject to general, as well as industry-specific, economic, political, tax, and legal developments and risks in China. The Chinese government exercises significant control over the Chinese economy, including but not limited to controlling capital investments, allocating resources, setting monetary policy, controlling and monitoring foreign exchange rates, implementing and overseeing tax regulations, providing preferential treatment to certain industry segments or companies and issuing necessary licenses to conduct business. In addition, we could face additional risks resulting from changes in China’s data privacy and cybersecurity requirements, including China’s adoption of the Personal Information Protection Law, or PIPL, which went into effect on November 1, 2021. The PIPL shares similarities with the GDPR, including extraterritorial application, data minimization, data localization, and purpose limitation requirements, and obligations to provide certain notices and rights to citizens of China. Accordingly, any adverse change in the Chinese economy, the Chinese legal system or Chinese governmental, economic or other policies could have a material adverse effect on our business and operations in China and our prospects generally.
We face additional risks in China due to China’s historically limited recognition and enforcement of contractual and intellectual property rights. We may experience difficulty enforcing our intellectual property rights in China. Unauthorized use of our technologies and intellectual property rights by Chinese partners or competitors may dilute or undermine the strength of our brands. If we cannot adequately monitor the use of our technologies and products, or enforce our intellectual property rights in China or contractual restrictions relating to use of our intellectual property by Chinese companies, our revenue from JiHu could be adversely affected.
Our joint venture is subject to laws and regulations applicable to foreign investment in China. There are uncertainties regarding the interpretation and enforcement of laws, rules and policies in China. Because many laws and regulations are relatively new, the interpretations of many laws, regulations and rules are not always uniform. Moreover, the interpretation of statutes and regulations may be subject to government policies reflecting domestic political agendas. Enforcement of existing laws or contracts based on existing law may be uncertain and sporadic. As a result of the foregoing, it may be difficult for us to obtain swift or equitable enforcement of laws ostensibly designed to protect companies like ours, which could have a material adverse effect on our business and results of operations. Our ability to monetize our joint venture in China may also be limited. Although the joint venture entity is an autonomous company, it is the exclusive seller of GitLab in mainland China, Hong Kong and Macau and is therefore the public face of GitLab in those areas. Additionally, under U.S. GAAP, we currently consolidate the joint venture’s financials within our own and rely on the joint venture’s management for accurate and timely delivery of the joint venture’s financials. Therefore, we face reputational and brand
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risk as a result of any negative publicity faced by the joint venture entity. Any such reputational and brand risk can harm our business and operating results.
We are exposed to fluctuations in currency exchange rates and interest rates, which could negatively affect our results of operations and our ability to invest and hold our cash.
Revenue generated is primarily billed in U.S. dollars while expenses incurred by our international subsidiaries and activities are often denominated in the currencies of the local countries. As a result, our consolidated U.S. dollar financial statements are subject to fluctuations due to changes in exchange rates as the financial results of our international subsidiaries are translated from local currencies into U.S. dollars. Our financial results are also subject to changes in exchange rates that impact the settlement of transactions in non-local currencies. To date, we have not engaged in currency hedging activities to limit the risk of exchange fluctuations and, as a result, our financial condition and operating results could be adversely affected by such fluctuations.
Our fixed-income investment portfolio is subject to fluctuations in fair value due to change in interest rates, which could adversely affect our results of operations due to any rise in interest rates in the future.
Risks Related to Financial and Accounting Matters
Failure to maintain effective systems of internal controls and disclosure controls could have a material adverse effect on our business, operating results, and financial condition.
As a public company, we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, and the rules and regulations of the applicable listing standards of the Nasdaq Global Select Market.
The Sarbanes-Oxley Act requires, among other things, that we maintain effective internal control over financial reporting, or ICFR, and disclosure controls and procedures, or DC&P. In order to maintain and improve the effectiveness of our ICFR and DC&P, we have expended, and anticipate that we will continue to expend, significant resources, including accounting related costs and significant management oversight.
Maintaining effective ICFR and DC&P requires ongoing attention and resources. Our current controls may become inadequate because of changes in conditions in our business, personnel, IT systems and applications, or other factors. If we identify material weaknesses or fail to maintain effective controls, it could adversely affect our operating results, cause us to fail to meet our reporting obligations, result in a restatement of our financial statements, or adversely affect the results of periodic management evaluations and annual independent registered public accounting firm attestation reports.
As a public company that is a large accelerated filer, our independent registered public accounting firm is required to provide an annual attestation report on the effectiveness of our ICFR, which has required, and will continue to require, increased costs, expenses, and management resources.
We incur significant costs and devote management resources as a result of operating as a public company.
As a public company, we incur significant legal, accounting, compliance and other expenses. Our management and other personnel devote a substantial amount of time and incur significant expense in connection with compliance initiatives. As a public company, we bear all of the internal and external costs of preparing and distributing periodic public reports in compliance with our obligations under the securities laws.
In addition, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act, and the related rules and regulations implemented by the SEC, have increased legal and financial compliance costs and will make some compliance activities more time consuming. We intend to continue to invest resources to comply with evolving laws, regulations and
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standards, and this investment will result in increased general and administrative expenses and may divert management’s time and attention from our other business activities. If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to practice, regulatory authorities may initiate legal proceedings against us, and our business may be harmed. While we believe we currently have sufficient directors’ and officers’ insurance coverage, it may in the future, be more expensive or more difficult for us to obtain director and officer liability insurance. We may also be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These factors would also make it more difficult for us to attract and retain qualified members of our board of directors, particularly to serve on our audit committee and compensation and leadership development committee, and qualified executive officers.
We may in the future need to raise additional capital to grow our business, and we may not be able to raise capital on terms acceptable to us or at all. In addition, any inability to generate or obtain such capital may adversely affect our operating results and financial condition.
In order to support our growth and respond to business challenges, such as developing new features or enhancements to our services to stay competitive, acquiring new technologies, and improving our infrastructure, we have made significant financial investments in our business and we intend to continue to make such investments. As a result, we may need to engage in additional equity or debt financings to provide the funds required for these investments and other business endeavors. If we need to engage in such additional equity or debt financings, we may not be able to raise needed cash on terms acceptable to us or at all. Financing may be on terms that are dilutive or potentially dilutive to our stockholders, and the prices at which new investors would be willing to purchase our securities may be significantly lower than the current price per share of our Class A common stock. The holders of new debt or equity securities may also have rights, preferences, or privileges that are senior to those of existing holders of our common stock. If new sources of financing are required, but are insufficient or unavailable, we will be required to modify our growth and operating plans based on available funding, if any, which would harm our ability to grow our business.
If we raise additional funds through equity or convertible debt issuances, our existing stockholders may suffer significant dilution and these securities could have rights, preferences, and privileges that are superior to those of holders of our common stock. If we obtain additional funds through debt financing, we may not be able to obtain such financing on terms favorable to us. Such terms may involve restrictive covenants making it difficult to engage in capital raising activities and pursue business opportunities, including potential acquisitions. The trading prices of technology companies have been highly volatile as a result of recent global events, including volatile interest rates, inflation, tariffs and the ongoing armed conflicts in different regions of the world, which may reduce our ability to access capital on favorable terms or at all. In addition, a sustained adverse market event resulting from such global events could adversely affect our business and the value of our Class A common stock. If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to continue to support our business growth and to respond to business challenges could be significantly impaired and our business may be adversely affected, requiring us to delay, reduce, or eliminate some or all of our operations.
Changes in tax laws or other tax guidance could adversely affect our effective tax rates, financial condition, and results of operations.
We are a U.S.-based multinational company subject to taxes in multiple U.S. and foreign tax jurisdictions. In the United States and other countries where we conduct business and in jurisdictions in which we are subject to taxes, including those covered by governing bodies that enact tax laws applicable to us, we are subject to potential changes in relevant tax, accounting and other laws, regulations, guidance, and interpretations, including changes to tax laws applicable to corporate multinationals such as GitLab. These countries, governmental bodies, and intergovernmental economic organizations such as the Organization for Economic Cooperation and Development, have or could make unprecedented assertions about how taxation is determined in their jurisdictions that are contrary to the way in which we
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have interpreted and historically applied the rules and regulations described above in such jurisdictions. In the current global tax policy environment, any changes in laws, regulations, guidance and/or interpretations related to these assertions could adversely affect our effective tax rates, cause us to respond by making changes to our business structure, or result in other costs to us which could adversely affect our operations and financial results.
In July 2025, the U.S. federal government enacted the One Big Beautiful Bill Act, or OBBBA, implementing significant corporate tax reforms. OBBBA increased the tax rate associated with international operations and reduced the tax benefit associated with certain foreign-derived deduction eligible income of United States-domiciled corporations. OBBBA also increased the Base Erosion and Anti-Abuse Tax rate associated with payments from United States corporations to foreign subsidiaries treated as Controlled Foreign Corporations.
The Treasury Department is expected to issue extensive guidance addressing implementation and transition rules. From time to time, the United States Congress may enact technical corrections to OBBBA. The outcome of such guidance and technical corrections and their impact on us is uncertain at this time.
The Organization for Economic Cooperation and Development, or the OECD, implemented a model treaty framework which includes a global minimum corporate tax of 15% for companies with global revenues and profits above certain thresholds (referred to as Pillar 2), with certain aspects of Pillar 2 effective January 1, 2024 and other aspects effective January 1, 2025. While the United States has withdrawn support for Pillar 2, certain countries in which we operate have adopted legislation. As of the filing of this Form 10-Q, over 60 countries have enacted or drafted legislation to adopt a minimum “Top Up” tax which allows international jurisdictions to tax their domestic income if the worldwide tax on such income is less than a minimum threshold. While the OECD has recommended that the worldwide system of taxation implemented by the United States is compliant under its framework, certain OECD member countries may implement laws which nevertheless impose top-up taxes. Similarly, the European Union and several countries have issued proposals that would apply to various aspects of the current tax framework under which we are taxed. These include proposals to change or impose new types of non-income taxes, including taxes based on a percentage of revenue. For example, several jurisdictions have proposed or enacted taxes applicable to digital services, which include business activities on digital advertising and online marketplaces, and which apply to our business.
Due to the large and expanding scale of our international business activities, many of these types of changes to the taxation of our activities described above could increase our worldwide effective tax rate, increase the amount of non-income taxes imposed on our business, and harm our financial position, results of operations, and cash flows. Such changes may also apply retroactively to our historical operations and result in taxes greater than the amounts estimated and recorded in our financial statements. There can be no assurance that future tax law changes will not increase the rate of the corporate income tax, impose new limitations on deductions, credits or other tax benefits, or make other changes that may adversely affect our business, cash flows or financial performance. Among other considerations, the applicability and impact of these tax provisions, and of other U.S. or international tax law changes could adversely affect our effective income tax rate and cash flows in future years.
We may have exposure to greater than anticipated tax liabilities.
The tax laws applicable to our business, including the laws of the United States and other jurisdictions, are subject to interpretation and certain jurisdictions are aggressively interpreting their laws to expand the tax bases. Our existing corporate structure has been implemented in a manner we believe is in compliance with current tax laws. However, the taxing authorities of the jurisdictions in which we operate may challenge our methodologies, including for valuing developed technology or classifying the nature of intercompany arrangements, which could impact our worldwide effective tax rate and adversely affect our financial condition and results of operations, possibly with retroactive effect. Moreover, changes
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to our corporate structure could impact our worldwide effective tax rate and adversely affect our financial condition and results of operations.
Furthermore, U.S. and OECD Transfer Pricing Guidelines require us to analyze the functions performed by our entities, the risks incurred, and the assets owned. This functional analysis is a control to sustain the operating margins of our entities and confirm arm’s length pricing for intercompany transactions. Competent authorities could interpret, change, modify or apply adversely, existing tax laws, statutes, rules, regulations or ordinances to us (possibly with retroactive effect); which could require us to make transfer pricing corrections or to pay fines, penalties or interest for past amounts. If we are unable to make corresponding adjustments with our related entities, we would effectively be liable for additional tax, thereby adversely impacting our operating results and cash flows.
Significant judgment is required in evaluating our tax positions and our worldwide provision for taxes. During the ordinary course of business, there are many activities and transactions for which the ultimate tax determination is uncertain. Our tax obligations and effective tax rates could be adversely affected by changes in the relevant tax, accounting and other laws, regulations, principles and interpretations, including those relating to income tax nexus. The relevant taxing authorities may disagree with our determinations as to the income and expenses attributable to specific jurisdictions. If such a disagreement were to occur, and our position was not sustained, we could be required to pay additional taxes, interest and penalties, which could result in one-time tax charges, higher effective tax rates, reduced cash flows and lower overall profitability of our business, with some changes possibly affecting our tax obligations in future or past years. We regularly assess the likelihood of outcomes resulting from possible examinations to determine the adequacy of our provision for income taxes and have reserved for potential adjustments that may result from these examinations. We cannot provide assurance that the final determination of any of these examinations will not have an adverse effect on our financial position and results of operations.
Our cash and cash equivalents could be adversely affected if the financial institutions in which we hold our cash and cash equivalents fail.
We regularly maintain cash balances at third-party financial institutions in excess of the FDIC insurance limit and similar regulatory insurance limits outside the United States. If a depository institution where we maintain deposits fails or is subject to adverse conditions in the financial or credit markets, we may not be able to recover all, if any, of our deposits, which could adversely impact our operating liquidity and financial performance.
Risks Related to Ownership of Our Class A Common Stock
The market price of our Class A common stock may be volatile, and you could lose all or part of your investment.
Technology stocks historically have experienced high levels of volatility. The market price of our Class A common stock depends on a number of factors, including those described in this “Risk Factors” section, many of which are beyond our control and may not be related to our operating performance. In addition, the limited public float of our Class A common stock may increase the volatility of the trading price of our Class A common stock. These fluctuations could cause you to lose all or part of your investment in our Class A common stock, since you might not be able to sell your shares at or above the price initially paid for the stock. Factors that could cause fluctuations in the market price of our Class A common stock include the following:
•actual or anticipated changes or fluctuations in our operating results;
•the financial projections we may provide to the public, any changes in these projections or our failure to meet these projections;
•announcements by us or our competitors of new products or new or terminated significant contracts, commercial relationships or capital commitments;
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•industry or financial analyst or investor reaction to our press releases, other public announcements and filings with the SEC;
•rumors and market speculation involving us or other companies in our industry;
•price and volume fluctuations in the overall stock market from time to time;
•changes in operating performance and stock market valuations of other technology companies generally, or those in our industry in particular;
•failure of industry or financial analysts to maintain coverage of us, changes in financial estimates by any analysts who follow our company, or our failure to meet these estimates or the expectations of investors;
•actual or anticipated developments in our business or our competitors’ businesses or the competitive landscape generally;
•litigation involving us, our industry or both, or investigations by regulators into our operations or those of our competitors;
•developments or disputes concerning our intellectual property rights or our solutions, or third-party proprietary rights;
•announced or completed acquisitions of businesses or technologies by us or our competitors;
•new laws or regulations or new interpretations of existing laws or regulations applicable to our business;
•the impact of interest rate volatility on the overall stock market and the market for technology company stocks;
•any major changes in our management or our board of directors;
•effects of public health crises, pandemics, and epidemics;
•general economic conditions, changes in the capital markets generally, inflation, tariffs, and slow or negative growth of our markets and instability in the global banking sector; and
•other events or factors, including those resulting from political instability, regulatory uncertainty, war, incidents of terrorism or responses to these events, including those related to the ongoing armed conflicts in different regions of the world.
In addition, the stock market in general, and the market for technology companies in particular, has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies. Broad market and industry factors may seriously affect the market price of our Class A common stock, regardless of our actual operating performance. In addition, in the past, following periods of volatility in the overall market and the market prices of a particular company’s securities, companies have been subject to increased stockholder activism or securities class action litigation. Any stockholder activism or securities litigation, if instituted against us, could result in substantial costs and divert our management’s attention and resources from our business. This could have an adverse effect on our business, operating results and financial condition.
Sales of substantial amounts of our Class A common stock in the public markets, or the perception that they might occur, could cause the market price of our Class A common stock to decline.
Sales of a substantial number of shares of our Class A common stock into the public market, particularly sales by our directors, executive officers, and greater than 5% stockholders, or the perception that these sales might occur, could cause the market price of our Class A common stock to decline or
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make it more difficult for you to sell your Class A common stock at a time and price that you deem appropriate.
Moreover, the holders of a significant portion of shares of our capital stock also have rights, subject to some conditions, to require us to file registration statements for the public resale of such capital stock or to include such shares in registration statements that we may file for us or other stockholders.
We may also issue our shares of our capital stock or securities convertible into shares of our capital stock from time to time in connection with a financing, acquisition, investment, or otherwise.
We cannot guarantee that our stock repurchase program will be fully consummated or that it will preserve or enhance long-term stockholder value.
Although our Board has authorized a stock repurchase program, the program does not require us to repurchase any specific dollar amount or to acquire any specific number of shares of our Class A common stock and may be modified, suspended, or terminated at any time. We cannot guarantee that the program will be fully consummated or that it will preserve or enhance long-term stockholder value. Any failure to repurchase stock after we have announced our intention to do so may negatively impact our reputation, investor confidence in us, or our stock price. The program could also affect the trading price of our Class A common stock, increase volatility, and reduce the market liquidity of our Class A common stock, and any announcement of a termination or change of this program may result in a decrease in the trading price of our Class A common stock. In addition, any repurchases made under this program will reduce the amount of cash we have available to fund working capital, capital expenditures, strategic transactions, and other general corporate requirements.
The shares of our Class A common stock are concentrated in our directors, executive officers, and beneficial owners of 5% or greater of our outstanding capital stock, which may limit or preclude your ability to influence corporate matters, including the election of directors and the approval of any change of control transaction.
On August 21, 2026, all of our Class B common stock converted into Class A common stock, due to Class B common stock representing less than 5% of our aggregate outstanding common stock (the “Sunset Date”). Following the Sunset Date, outstanding shares of our Class A common stock remain concentrated in our directors, executive officers, and beneficial owners of 5% or greater of our outstanding capital stock, which may limit or preclude your ability to influence corporate matters for the foreseeable future, including the election of directors, amendments of our organizational documents, and any merger, consolidation, sale of all or substantially all of our assets, or other major corporate transaction requiring stockholder approval.
We cannot predict what effect, if any, the elimination of our dual class structure will have on the trading market for, or market price of, our common stock. Because we no longer have a dual class structure, we may become eligible for inclusion in certain stock indices from which we were previously excluded or restricted, which could increase demand for our common stock; however, we cannot assure you that any such inclusion will occur, or, if it does occur, that it will have a positive effect on the trading price of our common stock. Conversely, to the extent investors, stockholder advisory firms, or institutional investors continue to view our historical dual class structure, or the concentration of ownership and influence retained by our former Class B stockholders as a result of their historical voting control, unfavorably, this could continue to affect the market price of our common stock or the manner in which such parties evaluate our corporate governance practices.
If industry or financial analysts do not continue to publish research or reports about our business, or if they issue inaccurate or unfavorable research regarding our Class A common stock, our stock price and trading volume could decline.
The trading market for our Class A common stock will depend in part on the research and reports that industry or financial analysts publish about us or our business. We do not control these analysts or the
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content and opinions included in their reports. If any of the analysts who cover us issues an inaccurate or unfavorable opinion regarding our stock price, our stock price may decline. In addition, if our financial results fail to meet, or exceed, our announced guidance or the expectations of analysts or public investors, analysts could downgrade our Class A common stock or publish unfavorable research about us.
We do not intend to pay dividends in the foreseeable future. As a result, your ability to achieve a return on your investment will depend on appreciation in the price of our Class A common stock.
We have never declared or paid any cash dividends on our capital stock. We currently intend to retain all available funds and any future earnings for use in the operation of our business and do not anticipate paying any dividends in the foreseeable future. Any determination to pay dividends in the future will be at the discretion of our board of directors. Accordingly, investors must for the foreseeable future rely on sales of their Class A common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investments.
Provisions in our organizational documents and under Delaware law could make an acquisition of us, which could be beneficial to our stockholders, more difficult and may limit attempts by our stockholders to replace or remove our current management.
Provisions in our restated certificate of incorporation and amended and restated bylaws may have the effect of delaying or preventing a merger, acquisition or other change of control of our company that our stockholders may consider favorable. In addition, because our board of directors is responsible for appointing the members of our management team, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors. Among other things, our restated certificate of incorporation and amended and restated bylaws include provisions that:
•provide that our board of directors is classified into three classes of directors with staggered three-year terms;
•permit our board of directors to establish the number of directors and fill any vacancies and newly created directorships;
•require supermajority voting to amend some provisions in our restated certificate of incorporation and amended and restated bylaws;
•authorize the issuance of “blank check” preferred stock that our board of directors could use to implement a stockholder rights plan;
•provide that only our chief executive officer or a majority of our board of directors will be authorized to call a special meeting of stockholders;
•eliminate the ability of our stockholders to call special meetings of stockholders;
•do not provide for cumulative voting;
•provide that directors may only be removed “for cause” and only with the approval of two-thirds of our stockholders;
•prohibit stockholder action by written consent, which requires all stockholder actions to be taken at a meeting of our stockholders;
•provide that our board of directors is expressly authorized to make, alter, or repeal our amended and restated bylaws; and
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•establish advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon by stockholders at annual stockholder meetings.
Moreover, Section 203 of the Delaware General Corporation Law, or DGCL, may discourage, delay, or prevent a change in control of our company. Section 203 imposes certain restrictions on mergers, business combinations, and other transactions between us and holders of 15% or more of our common stock.
Our restated certificate of incorporation and amended and restated bylaws contain exclusive forum provisions for certain claims, which may limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or team members.
Our restated certificate of incorporation provides that the Court of Chancery of the State of Delaware, to the fullest extent permitted by law, will be the exclusive forum for any derivative action or proceeding brought on our behalf, any action asserting a breach of fiduciary duty, any action asserting a claim against us arising pursuant to the DGCL, our restated certificate of incorporation, or our amended and restated bylaws, or any action asserting a claim against us that is governed by the internal affairs doctrine.
Moreover, Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all claims brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. Our restated certificate of incorporation and amended and restated bylaws provide that the federal district courts of the United States will, to the fullest extent permitted by law, be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act, such provision, the Federal Forum Provision. Our decision to adopt a Federal Forum Provision followed a decision by the Supreme Court of the State of Delaware holding that such provisions are facially valid under Delaware law. While there can be no assurance that federal or state courts will follow the holding of the Delaware Supreme Court or determine that the Federal Forum Provision should be enforced in a particular case, application of the Federal Forum Provision means that suits brought by our stockholders to enforce any duty or liability created by the Securities Act must be brought in federal court and cannot be brought in state court.
Section 27 of the Exchange Act creates exclusive federal jurisdiction over all claims brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder. In addition, the Federal Forum Provision applies to suits brought to enforce any duty or liability created by the Exchange Act. Accordingly, actions by our stockholders to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder must be brought in federal court.
Our stockholders will not be deemed to have waived our compliance with the federal securities laws and the regulations promulgated thereunder.
Any person or entity purchasing or otherwise acquiring or holding any interest in any of our securities shall be deemed to have notice of and consented to our exclusive forum provisions, including the Federal Forum Provision. These provisions may limit a stockholders’ ability to bring a claim in a judicial forum of their choosing for disputes with us or our directors, officers, or team members, which may discourage lawsuits against us and our directors, officers, and team members. Alternatively, if a court were to find the choice of forum provisions contained in our restated certificate of incorporation or amended and restated bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, financial condition, and operating results.
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General Risk Factors
We may be adversely affected by natural disasters, pandemics and other catastrophic events, and by man-made problems such as acts of war, terrorism, that could disrupt our business operations and our business continuity and disaster recovery plans may not adequately protect us from a serious disaster.
Natural disasters, pandemics, and epidemics, or other catastrophic events such as fire or power shortages, along with man-made problems such as acts of war and terrorism, and other events beyond our control may cause damage or disruption to our operations, international commerce, and the global economy, and could have an adverse effect on our business, operating results, and financial condition. While we do not have a corporate headquarters, we have team members around the world, and any such catastrophic event could occur in areas where significant portions of our team members are located. Moreover, these conditions can affect the rate of software development operations solutions spending and could adversely affect our customers’ ability or willingness to attend our events or to purchase our services, delay prospective customers’ purchasing decisions or project implementation timing, reduce the value or duration of their subscription contracts, affect attrition rates, or result in requests from customers for payment or pricing concessions, all of which could adversely affect our future sales and operating results. As a result, we may experience extended sales cycles; our ability to close transactions with new and existing customers and partners may be negatively impacted; our ability to recognize revenue from software transactions we do close may be negatively impacted due to implementation delays or other factors; our demand generation activities, and the efficiency and effect of those activities, may be negatively affected. Recent macroeconomic conditions, including inflation, tariffs and volatile interest rates, have, and may continue to, put pressure on overall spending for our products and services, and may cause our customers to modify spending priorities or delay or abandon purchasing decisions, thereby lengthening sales cycles, and may make it difficult for us to forecast our sales and operating results and to make decisions about future investments. These and other potential effects on our business may be significant and could materially harm our business, operating results and financial condition.
In the event of a natural disaster, including a major earthquake, blizzard, or hurricane, or a catastrophic event such as a fire, power loss, or telecommunications failure, we may be unable to continue our operations and may endure system interruptions, reputational harm, delays in development of our solutions, lengthy interruptions in service, breaches of data security, and loss of critical data, all of which could have an adverse effect on our future operating results. Additionally, all of the aforementioned risks may be further increased if we do not implement a disaster recovery plan or the disaster recovery plans we or our partners implement prove to be inadequate.
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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES
(a) Recent Sales of Unregistered Equity Securities
There have been no sales of unregistered securities by the Company in the quarter ended July 31, 2026.
(b) Use of Proceeds
None.
(c) Issuer Purchases of Equity Securities
The following table sets forth information regarding repurchases of our Class A common stock during the three months ended July 31, 2026:
Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in millions) | |||||||||||||||||||
May 1 – 31, 2026 | 0 | $ | — | 0 | $ | 350.0 | |||||||||||||||||
June 1 – 30, 2026 | 1,878,389 | $ | 28.22 | 1,878,389 | $ | 296.9 | |||||||||||||||||
July 1 – 31, 2026 | 1,583,016 | $ | 32.59 | 1,583,016 | $ | 245.3 | |||||||||||||||||
Total | 3,461,405 | $ | 30.21 | 3,461,405 | |||||||||||||||||||
(1) On March 2, 2026, our Board of Directors authorized the repurchase of up to $400.0 million of our Class A common stock (the "2026 Repurchase Program"). Repurchases of our Class A common stock may be effected, from time to time, either on the open market (including pre-set trading plans), in privately negotiated transactions, and other transactions in accordance with applicable securities laws. The 2026 Repurchase Program does not obligate us to acquire any particular amount of Class A common stock, and the 2026 Repurchase Program may be suspended or discontinued at any time at our discretion. All repurchased shares were immediately retired upon settlement. Average price paid per share includes broker commissions; no excise tax is included in the average price per share. As of July 31, 2026, $245.3 million remained available for repurchase under the 2026 Repurchase Program. See “Note 9. Equity” of this Quarterly Report on Form 10-Q for additional information related to share repurchases
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
None.
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ITEM 5. OTHER INFORMATION
Sytse Sijbrandij 10b5-1 Plan
On June 25, 2026 Sytse Sijbrandij Co-Founder and Executive Chair of the Board of Directors of the Company termination of an existing plan (the “Terminated Sijbrandij 10b5-1 Plan”) and an adoption of a new plan (the “New Sijbrandij 10b5-1 Plan”).
Each of the Terminated Sijbrandij 10b5-1 Plan and the New Sijbrandij 10b5-1 Plan was entered into and, in the case of the Terminated Sijbrandij 10b5-1 Plan, modified or terminated, during an open trading window in accordance with the Company’s policies regarding transactions in the Company’s securities and was or is intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Exchange Act, as applicable. The New Sijbrandij 10b5-1 Plan provides for the potential sale of approximately 6,292,736 shares so long as the market price of the Company’s Class A common stock is higher than certain minimum threshold prices specified in the New Sijbrandij 10b5-1 Plan, between September 24, 2026 and August 18, 2027 .
The New Sijbrandij 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 New Sijbrandij 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 New Sijbrandij 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 New Sijbrandij 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.
Simon Mundy 10b5-1 Plan
On June 30, 2026 , Simon Mundy , the Company’s Chief Accounting Officer , entered into a new pre-arranged written stock sale plan in accordance with Rule 10b5-1 (the “New Mundy Rule 10b5-1 Plan”) under the Exchange Act for the sale of shares of the Company’s Class A common stock. The New Mundy Rule 10b5-1 Plan will take effect on October 1, 2026 and on September 30, 2026 Mr. Mundy’s existing Rule 10b5-1 Plan will terminate according to its terms. The New Mundy 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 New Mundy Rule 10b5-1 Plan provides for the potential sale of shares of the Company’s Class A common stock, including upon the vesting and settlement of restricted stock units, so long as the market price of the Company’s Class A common stock is higher than certain minimum threshold prices specified in the New Mundy Rule 10b5-1 Plan, between October 1, 2026 and September 30, 2027 . The aggregate number of shares of Class A common stock that will be available for sale under the New Mundy Rule 10b5-1 Plan is not yet determinable because the shares available will be net of certain shares sold under Mr. Mundy’s prior pre-arranged written stock sale plan (the “Prior Mundy Rule 10b5-1 Plan”) and net of shares sold to satisfy tax withholding obligations that arise in connection with the settlement of such restricted stock unit 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 56,647 shares, which reflects the maximum number of shares of Class A common stock held by Mr. Mundy that may be sold under the plan, without excluding certain shares that may be sold under the Prior Mundy Rule 10b5-1 Plan, and the maximum number of shares underlying Mr. Mundy’s restricted stock units which may be sold, without excluding the shares that will be sold to satisfy the tax withholding obligations,
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in each case so long as the market price of the Company’s Class A common stock is higher than certain minimum threshold prices specified in the New Mundy Rule 10b5-1 Plan.
The New Mundy Rule 10b5-1 Plan includes a representation from Mr. Mundy 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 New Mundy 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 New Mundy 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 New Mundy 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. Mundy was unaware, or with respect to any material nonpublic information acquired by Mr. Mundy or the Company after the date of the representation.
Sivaprasad Padisetty 10b5-1 Plan
On June 29, 2026 , Sivaprasad Padisetty , the Company’s Chief Technology Officer , entered into a new pre-arranged written stock sale plan in accordance with Rule 10b5-1 (the “Padisetty Rule 10b5-1 Plan”) under the Exchange Act for the sale of shares of the Company’s Class A common stock, including such shares resulting from the vesting and settlement of restricted stock units. The Padisetty 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 Padisetty 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 vesting and settlement of such restricted stock unit awards and will include shares to be acquired through the Company’s Employee Stock Purchase Plan (the “ESPP”). As such, for purposes of this disclosure, the aggregate number of shares of Class A common stock available for sale is approximately 351,924 shares, which reflects the aggregate maximum number of shares underlying Mr. Padisetty’s restricted stock units which may be sold, without excluding the shares that will be sold to satisfy the tax withholding obligations or including the shares to be acquired through the ESPP. The Padisetty Rule 10b5-1 Plan provides for an approximate selling start date of September 10, 2026 with an end date of September 30, 2027 .
The Padisetty Rule 10b5-1 Plan includes a representation from Mr. Padisetty 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 Padisetty 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 Padisetty 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 Padisetty 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. Padisetty was unaware, or with respect to any material nonpublic information acquired by Mr. Padisetty or the Company after the date of the representation.
Once executed, transactions under each of the New Sijbrandij 10b5-1 Plan, New Mundy Rule 10b5-1 Plan and the Padisetty 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. Mundy, Mr. Padisetty or other officers or directors of the Company.
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ITEM 6. EXHIBITS
| Incorporated by Reference | Filed or Furnished Herewith | |||||||||||||||||||||||||||||||||||||
| Exhibit Number | Description | Form | File Number | Exhibit | Filing Date | |||||||||||||||||||||||||||||||||
| 31.1 | X | |||||||||||||||||||||||||||||||||||||
| 31.2 | X | |||||||||||||||||||||||||||||||||||||
| 32.1* | X | |||||||||||||||||||||||||||||||||||||
| 32.2* | 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 | ||||||||||||||||||||||||||||||||||||
* The certifications furnished in Exhibits 32.1 and 32.2 hereto are deemed to accompany this Quarterly Report on Form 10-Q 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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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| GITLAB INC. | ||||||||
Date: September 1, 2026 | ||||||||
| By: | /s/ William Staples | |||||||
| Name: William Staples | ||||||||
| Title: Chief Executive Officer | ||||||||
Date: September 1, 2026 | ||||||||
| By: | /s/ Jessica Ross | |||||||
| Name: Jessica Ross | ||||||||
| Title: Chief Financial Officer | ||||||||
Date: September 1, 2026 | ||||||||
| By: | /s/ Simon Mundy | |||||||
| Name: Simon Mundy | ||||||||
| Title: Chief Accounting Officer | ||||||||
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