Equity | 9. Equity Common Stock The Company had shares of common stock reserved for future issuance as follows (in thousands): July 31, 2024 January 31, 2024 Class A and Class B common stock Options issued and outstanding 7,481 8,503 Shares available for issuance under Equity Incentive Plans 29,797 24,868 RSUs and PSUs issued and outstanding 12,405 10,930 Shares reserved for issuance to charitable organizations 1,284 1,404 ESPP 6,722 5,398 Total 57,689 51,103 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 (together the “Plans”). The awards available for grant under the above Plans for the pe riods presented were as follows (in thousands): July 31, 2024 January 31, 2024 Available at beginning of period 24,868 21,483 Awards authorized 7,878 7,557 RSUs and PSUs granted (4,238) (6,258) RSUs and PSUs canceled and forfeited 1,198 1,292 Options canceled and forfeited 91 777 Options repurchased — 17 Available at end of period 29,797 24,868 In the event that shares previously issued u nder the above Plans are reacquire d by the Company, such shares shall be added to the number of shares then available for issuance under the 2021 Plan. In the event that an outstanding stock option for any reason expires or is canceled, the shares allocable to the unexercised portion of su ch stock option will be added to the number of shares then available for issuance under the 2021 Plan. Both Plans allow the grantees to early exercise stock options. 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, 2024 8,503 $ 13.03 5.85 $ 499.2 Options granted — — — Options exercised (931) 10.82 — Options canceled (11) 13.75 — Options forfeited (80) 18.30 — Balances at July 31, 2024 7,481 $ 13.18 5.39 $ 284.7 Options vested at July 31, 2024 6,252 $ 12.18 5.13 $ 244.2 Options vested and expected to vest at July 31, 2024 7,481 $ 13.18 5.39 $ 284.7 During the three and six months ended July 31, 2024, the Company recorded $3.4 million and $6.9 million stock-based compensation expense related to options, respectively. During the three and six months ended July 31, 2023, the Company recorded $4.7 million and $9.5 million stock-based compensation expense related to options, respectively. As of July 31, 2024, approximately $12.9 million of total unrecognized compensation cost was related to stock options granted, that is expected to be recognized over a weighted-average period of 1.2 years. The expected stock compensation expense remaining to be recognized reflects only outstanding stock awards as of the periods presented, and assumes no forfeitures. The following table summarizes the Company’s RSU activity: Number of Shares (in thousands) (1) Weighted- Balances at January 31, 2024 7,701 $ 47.20 Granted 4,238 53.15 Vested (1,565) 48.70 Canceled/forfeited (1,198) 48.44 Balances at July 31, 2024 9,176 $ 49.48 (1) The table above does not include 3 million RSUs granted to the Company’s founder and the Chief Executive Officer (“CEO”) described below. These RSUs are grants of shares of the Company’s common stock, the vesting of which is based on the requisite service requirement. Generally, the Company’s RSUs are subject to forfeiture and are expected to vest over two three and six months ended July 31, 2023, the Company recorded $29.9 million and $53.2 million stock-based compensation expense related to RSUs, respectively. As of July 31, 2024, approximately $450.6 million of total unrecognized compensation cost was related to RSUs granted to team members other than the CEO, that is expected to be recognized over a weighted-average period of 2.9 years. The expected stock compensation expense remaining to be recognized reflects only outstanding stock awards as of the periods presented, and assumes no forfeitures. In June 2022, the Company granted 0.4 million PSUs to senior members of its management team subject to revenue performance condition and service conditions. The number of awards granted represents 100% of the target goal; under the terms of the awards, the recipient may earn between 0% and 200% of the original grant. The performance c ondition is set to be achieved in fiscal year 2025 and the service condition in calendar year 2025. The Company recorded $0.3 million and $0.9 million of stock-based compensation expense related to PSUs during the three and six months ended July 31, 2024 , respectively. The Company recorded a $0.1 million gain and $0.3 million of stock-based compensation expense related to PSUs during the three and six months ended July 31, 2023, respectively. As of July 31, 2024, unrecognized stock-based compensation expense related to these PSUs was $1.7 million to be recognized over a period of 1.4 years. CEO Performance Award In May 2021, the Company granted 3 million RSUs tied to its Class B common stock to Sytse Sijbrandij, the Company’s co-founder and CEO, with an estimated aggregate grant date fair value of $8.8 million. During the three and six months ended July 31, 2024, the Company recorded $0.3 million and $0.7 million of stock-based compensation expense related to the CEO RSU, respectively. During the three and six months ended July 31, 2023, the Company recorded $0.4 million and $0.8 million of stock-based compensation expense related to the CEO RSU, respectively. As measured from the grant date, the derived service period of the respective tranches ranges from 3 to 7 years. As of July 31, 2024, unrecognized stock-based compensation expense related to these RSUs was $3.6 million which will be recognized over 4.3 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, 2024, the Company’s stock price on the purchase date, May 31, 2024, 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 $1.0 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 in effect using the Black-Scholes option-pricing model: Three Months Ended July 31, 2024 2023 Risk-free interest rate 4.70% - 5.25% 4.22% - 5.30% Volatility 50.94% - 60.50% 40.95% - 51.00% Expected term (in years) 0.50 - 2.00 0.50 - 2.00 Dividend yield —% —% The Company rec orded $3.5 million and $6.1 million of stock-based compensation expense related to the ESPP during the three and six months ended July 31, 2024, respectively. The Company rec orded $6.7 million and $11.2 million of stock-based compensation expense related to the ESPP during the three and six months ended July 31, 2023, respectively . As of July 31, 2024, approximately $11.4 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): Three Months Ended July 31, Six Months Ended July 31, 2024 2023 2024 2023 Cost of revenue $ 2,076 $ 1,698 $ 3,931 $ 3,112 Sales and marketing 19,881 21,295 37,278 35,059 Research and development 16,114 12,477 28,450 24,179 General and administrative 10,898 10,898 21,562 16,348 Total stock-based compensation expense (1) $ 48,969 $ 46,368 $ 91,221 $ 78,698 (1) The table above includes stock-based compensation of JiHu. Refer to “Note 11. Joint Venture and Equity Method Investment” for further discussion. The corporate income tax benefit recognized in the condensed consolidated statements of operations for stock-based compensation expense was zero for both the three and six months ended July 31, 2024 , and $3.6 million and $6.4 million for the three and six months ended July 31, 2023, respectively . Charitable Donation of Common Stock In September 2021, the Company’s board of directors approved the reservation of up to 1,635,545 shares of Class A common stock for issuance to charitable organizations. In March 2024 and 2023, the Company’s board of directors approved the donation of $11.8 million and $10.7 million aggregate principal amount of shares of Class A common stock to the GitLab Foundation (the “Foundation”), a California nonprofit public benefit corporation, 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 three and six months ended July 31, 2024, the Company donated 67,015 shares and 120,241 shares of Class A common stock at fair value to the Foundation, respectively. During the three and six months ended July 31, 2023, the Company donated 52,647 shares and 133,389 shares of Class A common stock at fair value to the Foundation, respectively. The fair value of the common stock was determined based on the quoted market price on the grant date. The donation expense of $2.9 million and $5.9 million was recorded in general and administrative expense in the condensed consolidated statements of operations for the three and six months ended July 31, 2024, respectively. The donation expense of $2.7 million and $5.3 million was recorded in general and administrative expense in the condensed consolidated statements of operations for the three and six months ended July 31, 2023, respectively. |