GlobeNewswire Inc | Dec 6, 2021 04:05PM EST

December 06, 2021

Quarterly revenue of $66.8 million, up 58% year-over-yearStrong Dollar-Based Net Retention Rate at over 130%

SAN FRANCISCO, Dec. 06, 2021 (GLOBE NEWSWIRE) -- ALL REMOTE--GitLab Inc. (NASDAQ: GTLB), The DevOps Platform, today reported financial results for its third quarter of fiscal 2022, ended October31, 2021.

We are seeing viral adoption and expanded use of The DevOps Platform, growing our revenue by 58% year-over-year this quarter, said Sid Sijbrandij, GitLab CEO. Customers use GitLab for their most immediate needs and then expand usage over time. This enables them to quickly modernize their software development to meet the demands of digital acceleration. As we look to the fourth quarter and fiscal 2023, we see continued strong momentum toward our large addressable market.

We performed well during the quarter and believe our business is set up for continued strength, said Brian Robins, GitLab CFO. We are pleased with our Dollar-Based Net Retention of over 130% and the positive business outcomes we continue to drive for our customers across all verticals around the world. The market for DevOps platforms is underpenetrated, and as a pioneer of The DevOps Platform, GitLab is well positioned to make the most of the substantial market opportunity before us.

Third Quarter Fiscal 2022 Financial Highlights (in millions, except per share data and percentages):

Q3 FY 2022 Q3 FY 2021 Y/Y ChangeRevenue $ 66.8 $ 42.2 58 %GAAP Gross margin 89 % 89 % Non-GAAP Gross margin 90 % 89 % GAAP Operating loss $ (32.5 ) $ (24.5 ) $ (8.0 )Non-GAAP Operating loss $ (23.9 ) $ (22.3 ) $ (1.6 )GAAP Net loss attributable to GitLab $ (41.2 ) $ (28.6 ) $ (12.6 )Non-GAAP Net loss attributable to GitLab $ (22.7 ) $ (22.3 ) $ (0.4 )GAAP Net loss per share attributable to $ (0.62 ) $ (0.57 ) $ (0.05 )GitLabNon-GAAP Net loss per share attributable $ (0.34 ) $ (0.44 ) $ 0.10 to GitLab

A reconciliation between GAAP and non-GAAP financial measures is contained in this release under the section titled Non-GAAP Financial Measures.

Recent Business Highlights:

-- Customers with more than $5,000 of ARR increased to 4,057, up 66% from Q3 of fiscal 2021. -- Customers with more than $100,000 of ARR increased to 427, up 73% from Q3 of fiscal 2021. -- Dollar-Based Net Retention Rate, which we report on a threshold basis, remained above 130%. -- New and expansion customers included Suzuki Motor Corporation, Smartsheet, and Lockheed Martin. -- GitLab ranked #11 on the Forbes Cloud 100. -- Released GitLab versions 14.2, 14.3 and 14.4, marking 121 consecutive months of innovation. -- Appointed Sunny Bedi, chief information and chief data officer of Snowflake, to GitLabs Board of Directors. -- GitLab completed its initial public offering. GitLab is listed on the NASDAQ under the ticker symbol GTLB.

Financial Outlook

For the fourth quarter of fiscal year 2022, GitLab Inc. expects (in millions, except per share data)

Q4 FY 2022 FY 2022 Guidance GuidanceRevenue $69.5 - $244.0 - $70.5 $245.0Non-GAAP operating loss $(33) - $ $(104) - $ (32) (103)Non-GAAP net loss per share assuming approximately144 million and $(0.26) - $ $(1.43) -80 million weighted average shares outstanding as of (0.25) $(1.42)Q4 FY2022 and FY22, respectively

These statements are forward-looking and actual results may differ materially as a result of many factors. Refer to the Forward-Looking Statements safe harbor below for information on the factors that could cause our actual results to differ materially from these forward-looking statements.

Guidance for non-GAAP financial measures excludes stock-based compensation expense, amortization of acquired intangible assets, and non-cash unrealized foreign exchange (gain) loss. We have not provided the most directly comparable GAAP financial guidance measures because certain items are out of our control or cannot be reasonably predicted. Accordingly, a reconciliation of non-GAAP guidance for operating loss and net loss per share to the corresponding GAAP measures is not available.

Conference Call Information

GitLab will host a conference call today, December6, 2021, at 1:30 p.m. (PT) / 4:30 p.m. (ET) to discuss its third quarter fiscal 2022 financial results. Investors and analysts should register for the call in advance by visiting https://gitlab.zoom.us/webinar/register/WN_t35sex9aQjyTCTMS0t4Alw. A replay of the call will be available on the investor relations website (ir.gitlab.com).

About GitLab

GitLab is The DevOps Platform that empowers organizations to maximize the overall return on software development by delivering software faster and efficiently, while strengthening security and compliance. GitLabs single application is easier to use, leads to faster cycle time and allows visibility throughout and control over all stages of the DevOps lifecycle. With GitLab, every team in your organization can collaboratively plan, build, secure, and deploy software to drive business outcomes faster with complete transparency, consistency and traceability.

Non-GAAP Financial Measures

GitLab believes non-GAAP measures are useful in evaluating its operating performance. GitLab uses this supplemental information to evaluate its ongoing operations and for internal planning and forecasting purposes. GitLab believes that non-GAAP financial information, when taken collectively with its GAAP financial information, may be helpful to investors because it provides consistency and comparability with past financial performance. However, non-GAAP financial information is presented for supplemental informational purposes only, has limitations as an analytical tool, and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP. Reconciliations of non-GAAP financial measures to the most directly comparable financial results as determined in accordance with GAAP are included at the end of this press release following the accompanying financial data. We define non-GAAP financial measures as GAAP measures, excluding stock-based compensation expense, amortization of acquired intangible assets, and non-cash unrealized foreign exchange (gain) loss. A reconciliation of non-GAAP guidance measures to corresponding GAAP measures is not available on a forward-looking basis without unreasonable effort due to the uncertainty of expenses that may be incurred in the future. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures and not rely on any single financial measure to evaluate our business.

Forward-Looking Statements

This press release and the accompanying earnings call contain forward-looking statements as that term is defined under the U.S. federal securities laws. Although we believe that the expectations reflected in the forward-looking statements contained in this release and the accompanying earnings call are reasonable, they are subject to known and unknown risks, uncertainties, assumptions and other factors that may cause actual results or outcomes to be materially different from any future results or outcomes expressed or implied by the forward-looking statements. These risks, uncertainties, assumptions, and other factors include, but are not limited to the following:

-- our ability to appropriately manage future growth; -- our revenue growth rate in the future; -- our ability to achieve and sustain profitability, our business, financial condition, and operating results; -- our intense competition and loss of market share to our competitors; -- the market for our services may not grow; -- a decline in our customer renewals and expansions; -- our transparency; -- our publicly available company Handbook; -- security and privacy breaches; -- customers staying on our open-source or free SaaS product offering; -- fluctuations in our operating results; -- our limited operating history; -- our ability to manage our growth effectively; -- our ability to respond to rapid technological changes; -- our ability to accurately predict the long-term rate of customer subscription renewals or adoption, or the impact of these renewals and adoption; and -- our hiring model.

Further information on these and additional risks, uncertainties, and other factors that could cause actual outcomes and results to differ materially from those included in or contemplated by the forward-looking statements contained in this release are included under the caption Risk Factors and elsewhere in the filings and reports we make with the Securities and Exchange Commission. We do not undertake any obligation to update or release any revisions to any forward-looking statement or to report any events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events, except as required by law.

Operating Metrics

Annual Recurring Revenue (ARR): We define annual recurring revenue as the annual run-rate revenue of subscription agreements, including our self-managed and SaaS offerings but excluding professional services, from all customers as measured on the last day of a given month. We calculate ARR by taking the monthly recurring revenue (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 self-managed license, self-managed subscription, and SaaS subscription offerings but excluding professional services.

Dollar-Based Net Retention Rate: 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 (Prior Period ARR). We then calculate the ARR from these customers as of the current period end (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.

GitLab Inc.Condensed Consolidated Balance Sheets(in thousands, except per share data)(unaudited)

October 31, January 31, 2021^(1) 2021ASSETS CURRENT ASSETS: Cash and cash equivalents $ 824,714 $ 282,850 Short-term investments 100,031 ? Accounts receivable, net of allowance for doubtfulaccounts of $697 and $1,022 as of October31, 2021 56,976 39,651 and January31, 2021, respectivelyDeferred contract acquisition costs, current 19,880 18,700 Prepaid expenses and other current assets 10,749 7,292 Total current assets 1,012,350 348,493 Deferred contract acquisition costs, long-term 11,433 11,776 Intangible assets, net 515 797 Other long-term assets 4,510 1,500 TOTAL ASSETS $ 1,028,808 $ 362,566 LIABILITIES, CONVERTIBLE PREFERRED STOCK, AND STOCKHOLDERS? EQUITY (DEFICIT)CURRENT LIABILITIES: Accounts payable $ 4,943 $ 3,111 Accrued expenses and other current liabilities 9,572 7,348 Accrued compensation and benefits 16,980 13,179 Deferred revenue, current 147,395 103,543 Total current liabilities 178,890 127,181 Deferred revenue, long-term 27,589 30,625 Other long-term liabilities 12,922 11,078 TOTAL LIABILITIES 219,401 168,884 Commitments and contingencies CONVERTIBLE PREFERRED STOCK Convertible preferred stock, $0.0000025 par value;no shares and 79,959 shares authorized as ofOctober31, 2021 and January31, 2021, ? 424,904 respectively; no shares and 79,551 shares issuedand outstanding as of October31, 2021 andJanuary31, 2021, respectivelySTOCKHOLDERS? EQUITY (DEFICIT): Preferred stock, $0.0000025 par value;50,000shares and no shares authorized; no shares ? ? issued and outstanding as of October31, 2021 andJanuary31, 2021Class A Common stock, $0.0000025 par value;1,500,000 and 163,000 shares authorized; 12,591 and ? ? 1,151 shares issued and outstanding as ofOctober31, 2021 and January31, 2021Class B Common stock, $0.0000025 par value; 250,000and 163,000 shares authorized; 131,955 and 52,468 ? ? shares issued and outstanding as of October31,2021 and January31, 2021Additional paid-in capital 1,292,710 186,892 Accumulated deficit (507,552 ) (398,199 )Accumulated other comprehensive loss (758 ) (19,915 )Total GitLab stockholders' equity (deficit) 784,400 (231,222 )Noncontrolling interests 25,007 ? TOTAL STOCKHOLDERS? EQUITY (DEFICIT) 809,407 (231,222 )TOTAL LIABILITIES, CONVERTIBLE PREFERRED STOCK, AND $ 1,028,808 $ 362,566 STOCKHOLDERS? EQUITY (DEFICIT)

__________ (1) As of October31, 2021, the consolidated balance sheet includes assets and liabilities of the consolidated variable interest entity, GitLab Information Technology (Hubei) Co., LTD (JiHu), of $20.5million and $3.0million, 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.

GitLab Inc.Condensed Consolidated Statements of Operations(in thousands, except per share data)(unaudited)

Three Months Ended Nine Months Ended October October 31, 31, 2021 2020 2021 2020Revenue: Subscription?self-managed $ 59,774 $ 36,665 $ 156,542 $ 92,254 and SaaSLicense?self-managed and 7,026 5,487 18,315 13,775 otherTotal revenue 66,800 42,152 174,857 106,029 Cost of revenue: Subscription?self-managed 5,608 3,671 16,366 9,487 and SaaSLicense?self-managed and 1,587 966 4,446 2,751 otherTotal cost of revenue 7,195 4,637 20,812 12,238 Gross profit 59,605 37,515 154,045 93,791 Operating expenses: Sales and marketing 50,543 34,837 133,562 99,164 Research and development 24,664 19,042 68,607 57,942 General and 16,939 8,090 40,276 22,113 administrativeTotal operating expenses 92,146 61,969 242,445 179,219 Loss from operations (32,541 ) (24,454 ) (88,400 ) (85,428 )Interest income 127 97 226 1,007 Other income (expense), (10,209 ) (4,005 ) (21,252 ) 13,447 netLoss before income taxes (42,623 ) (28,362 ) (109,426 ) (70,974 )Provision for (benefit (875 ) 246 1,370 1,182 from) income taxesNet loss $ (41,748 ) $ (28,608 ) $ (110,796 ) $ (72,156 )Net loss attributable to (521 ) ? (1,443 ) ? noncontrolling interestNet loss attributable to $ (41,227 ) $ (28,608 ) $ (109,353 ) $ (72,156 )GitLabNet loss per shareattributable to GitLabClass A and Class B $ (0.62 ) $ (0.57 ) $ (1.89 ) $ (1.45 )common stockholders,basic and dilutedWeighted-average sharesused to compute net lossper share attributable to 67,018 50,306 57,789 49,806 GitLab Class A and ClassB common stockholders,basic and diluted

GitLab Inc.Condensed Consolidated Statements of Cash Flows(in thousands)(unaudited)

Nine Months Ended October 31, 2021 2020CASH FLOWS FROM OPERATING ACTIVITIES: Net loss, including amounts attributable to $ (110,796 ) $ (72,156 )noncontrolling interestAdjustments to reconcile net loss to net cash used in operating activities:Stock-based compensation expense 17,242 5,678 Other non-cash expense (income) (128 ) 293 Amortization of intangible assets 251 137 Amortization of deferred contract acquisition costs 23,555 12,442 Unrealized foreign exchange (gain) loss 19,752 (13,614 )Changes in assets and liabilities: Accounts receivable (17,350 ) (18,511 )Prepaid expenses and other current assets (3,373 ) (1,952 )Other long-term assets (3,120 ) (536 )Costs deferred related to contract acquisition (24,642 ) (21,582 )Accounts payable 1,786 318 Accrued expenses and other current liabilities 1,019 1,683 Accrued compensation and benefits 3,812 632 Other long-term liabilities 1,803 688 Deferred revenue 41,469 40,260 Net cash used in operating activities (48,720 ) (66,220 )CASH FLOWS FROM INVESTING ACTIVITIES: Intangible assets acquisitions, net of cash acquired ? (933 )Purchases of short-term investments (100,031 ) ? Net cash used in investing activities (100,031 ) (933 )CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from initial public offering, net of 654,552 ? underwriting discountsProceeds from the issuance of common stock uponexercise of stock options, including early 14,574 6,619 exercises, net of repurchasesRepurchase of common stock (590 ) ? Contributions received from noncontrolling interests 26,450 ? Payments of deferred offering costs (3,398 ) ? Net cash provided by financing activities 691,588 6,619 Impact of foreign exchange on cash and cash (973 ) 485 equivalentsNet increase (decrease) in cash 541,864 (60,049 )Cash and cash equivalents, beginning of period 282,850 343,327 Cash and cash equivalents, end of period $ 824,714 $ 283,278 Supplemental disclosure of cash flow information: Cash paid for income taxes $ 1,111 $ 1,921 Cash donations $ 1,000 $ ? Supplemental disclosure of non-cash investing and financing activities:Vesting of early exercised stock options $ 5,425 $ 1,882 Issuance of common stock upon conversion of $ 424,904 $ ? preferred stockUnpaid deferred offering costs $ 1,309 $ ?

GitLab Inc.Reconciliation of GAAP to Non-GAAP(in thousands, except per share data)(unaudited)

Three Months Ended October Nine Months Ended October 31, 31, 2021 2020 2021 2020Gross profit on $ 59,605 $ 37,515 $ 154,045 $ 93,791 GAAP basisGross margin on 89 % 89 % 88 % 88 %GAAP basisStock-basedcompensation 331 74 722 206 expenseGross profit on $ 59,936 $ 37,589 $ 154,767 $ 93,997 non-GAAP basisGross margin on 90 % 89 % 89 % 89 %non-GAAP basis Sales andmarketing on $ 50,543 $ 34,837 $ 133,562 $ 99,164 GAAP basisStock-basedcompensation (2,562 ) (813 ) (5,688 ) (2,319 )expenseSales andmarketing on $ 47,981 $ 34,024 $ 127,874 $ 96,845 non-GAAP basis Research anddevelopment on $ 24,664 $ 19,042 $ 68,607 $ 57,942 GAAP basisStock-basedcompensation (2,147 ) (635 ) (4,653 ) (1,902 )expenseResearch anddevelopment on $ 22,517 $ 18,407 $ 63,954 $ 56,040 non-GAAP basis General andadministrative $ 16,939 $ 8,090 $ 40,276 $ 22,113 on GAAP basisAmortization ofacquired (82 ) (83 ) (251 ) (137 )intangiblesStock-basedcompensation (3,539 ) (534 ) (6,179 ) (1,251 )expenseGeneral andadministrative $ 13,318 $ 7,473 $ 33,846 $ 20,725 on non-GAAPbasis Loss fromoperations on $ (32,541 ) $ (24,454 ) $ (88,400 ) $ (85,428 )GAAP basisStock-basedcompensation 8,579 2,056 17,242 5,678 expenseAmortization ofacquired 82 83 251 137 intangiblesLoss fromoperations on $ (23,880 ) $ (22,315 ) $ (70,907 ) $ (79,613 )non-GAAP basis Other income(expense), net $ (10,209 ) $ (4,005 ) $ (21,252 ) $ 13,447 on GAAP basisUnrealizedforeign 9,913 4,147 19,752 (13,614 )exchange (gain)lossOther income(expense), net $ (296 ) $ 142 $ (1,500 ) $ (167 )on non-GAAPbasis Net lossattributable toGitLab common $ (41,227 ) $ (28,608 ) $ (109,353 ) $ (72,156 )stockholders onGAAP basisStock-basedcompensation 8,579 2,056 17,242 5,678 expenseAmortization ofacquired 82 83 251 137 intangiblesUnrealizedforeign 9,913 4,147 19,752 (13,614 )exchange (gain)lossNet lossattributable toGitLab common $ (22,653 ) $ (22,322 ) $ (72,108 ) $ (79,955 )stockholders onnon-GAAP basis Net loss pershare on GAAP $ (0.62 ) $ (0.57 ) $ (1.89 ) $ (1.45 )basisNon-GAAPadjustments to 0.28 0.13 0.64 (0.16 )net loss pershareNet loss pershare on $ (0.34 ) $ (0.44 ) $ (1.25 ) $ (1.61 )non-GAAP basisShares used inper sharecalculation - 67,018 50,306 57,789 49,806 diluted on GAAPand non-GAAPbasis

Media Contact: Rachel Romoff GitLab Inc. press@gitlab.com

Investor Contact: Willa McManmon The Blueshirt Group ir@gitlab.com