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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 31, 2021
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 001-40895
GITLAB INC.
(Exact name of registrant as specified in its charter)
Delaware47-1861035
(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
Not Applicable
(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
GTLBThe Nasdaq Stock Market LLC
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. ☐ 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). Yes ☐ 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.
Large accelerated filer
 ☐
Accelerated filer
 ☐
Non-accelerated filer
 ☒
Smaller reporting company
 
Emerging growth company
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No
As of November 29, 2021, the number of shares of the registrant’s Class A common stock outstanding was 12.6 million and the number of shares of the registrant’s Class B common stock outstanding was 132.2 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 and Securities Exchange Act of 1934, as amended, 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: reach.gitlab@gitlab.com.


Table of Contents
TABLE OF CONTENTS

Page

1

Table of Contents
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q 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 Form 10-Q 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 on Form 10-Q 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 The DevOps Platform and our ability to increase adoption of The DevOps 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 The DevOps Platform;
our ability to develop new features and bring them to market in a timely manner;
the impact of the COVID-19 pandemic on our operations, financial results, and liquidity and capital resources, including on customers, sales, expenses, and team members;
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;
economic and industry trends, projected growth, or trend analysis;
increased expenses associated with being a public company; and
2

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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 on Form 10-Q. 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 on Form 10-Q 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 on Form 10-Q or to conform these statements to actual results or to changes in our expectations, except as required by law.
You should read this report and the documents that we reference in this report and have filed with the SEC as exhibits to the registration statement of which this report is a part with the understanding that our actual future results, performance, and events and circumstances may be materially different from what we expect.
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
GitLab Inc.
Condensed Consolidated Balance Sheets
(in thousands, except per share data)
(unaudited)
October 31, 2021(1)
January 31, 2021
ASSETS
CURRENT ASSETS:
Cash and cash equivalents$824,714 $282,850 
Short-term investments100,031  
Accounts receivable, net of allowance for doubtful accounts of $697 and $1,022 as of October 31, 2021 and January 31, 2021, respectively
56,976 39,651 
Deferred contract acquisition costs, current19,880 18,700 
Prepaid expenses and other current assets10,749 7,292 
Total current assets1,012,350 348,493 
Deferred contract acquisition costs, long-term11,433 11,776 
Intangible assets, net515 797 
Other long-term assets4,510 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 liabilities9,572 7,348 
Accrued compensation and benefits16,980 13,179 
Deferred revenue, current147,395 103,543 
Total current liabilities178,890 127,181 
Deferred revenue, long-term27,589 30,625 
Other long-term liabilities12,922 11,078 
TOTAL LIABILITIES219,401 168,884 
Commitments and contingencies (Note 17)
CONVERTIBLE PREFERRED STOCK
Convertible preferred stock, $0.0000025 par value; no shares and 79,959 shares authorized as of October 31, 2021 and January 31, 2021, respectively; no shares and 79,551 shares issued and outstanding as of October 31, 2021 and January 31, 2021, respectively
 424,904 
STOCKHOLDERS’ EQUITY (DEFICIT):
Preferred stock, $0.0000025 par value; 50,000 shares and no shares authorized; no shares issued and outstanding as of October 31, 2021 and January 31, 2021
  
Class 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 of October 31, 2021 and January 31, 2021
  
Class B Common stock, $0.0000025 par value; 250,000 and 163,000 shares authorized; 131,955 and 52,468 shares issued and outstanding as of October 31, 2021 and January 31, 2021
  
Additional paid-in capital1,292,710 186,892 
Accumulated deficit(507,552)(398,199)
Accumulated other comprehensive loss(758)(19,915)
Total GitLab stockholders' equity (deficit)784,400 (231,222)
Noncontrolling interests25,007  
TOTAL STOCKHOLDERS’ EQUITY (DEFICIT)809,407 (231,222)
TOTAL LIABILITIES, CONVERTIBLE PREFERRED STOCK, AND STOCKHOLDERS’ EQUITY (DEFICIT)$1,028,808 $362,566 
___________
(1) As of October 31, 2021, the consolidated balance sheet includes assets and liabilities of the consolidated variable interest entity, GitLab Information Technology (Hubei) Co., LTD (“JiHu”), of $20.5 million and $3.0 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 13. Joint Venture and Spin-off” for further discussion.
The accompanying notes are an integral part of these condensed consolidated financial statements.
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GitLab Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
Three Months Ended October 31,Nine Months Ended October 31,
2021202020212020
Revenue:
Subscription—self-managed and SaaS$59,774 $36,665 $156,542 $92,254 
License—self-managed and other7,026 5,487 18,315 13,775 
Total revenue66,800 42,152 174,857 106,029 
Cost of revenue:
Subscription—self-managed and SaaS5,608 3,671 16,366 9,487 
License—self-managed and other1,587 966 4,446 2,751 
Total cost of revenue7,195 4,637 20,812 12,238 
Gross profit59,605 37,515 154,045 93,791 
Operating expenses:
Sales and marketing50,543 34,837 133,562 99,164 
Research and development24,664 19,042 68,607 57,942 
General and administrative16,939 8,090 40,276 22,113 
Total operating expenses92,146 61,969 242,445 179,219 
Loss from operations(32,541)(24,454)(88,400)(85,428)
Interest income127 97 226 1,007 
Other income (expense), net(10,209)(4,005)(21,252)13,447 
Loss before income taxes(42,623)(28,362)(109,426)(70,974)
Provision for (benefit from) income taxes(875)246 1,370 1,182 
Net loss$(41,748)$(28,608)$(110,796)$(72,156)
Net loss attributable to noncontrolling interest(521) (1,443) 
Net loss attributable to GitLab$(41,227)$(28,608)$(109,353)$(72,156)
Net loss per share attributable to GitLab Class A and Class B common stockholders, basic and diluted$(0.62)$(0.57)$(1.89)$(1.45)
Weighted-average shares used to compute net loss per share attributable to GitLab Class A and Class B common stockholders, basic and diluted67,018 50,306 57,789 49,806 
The accompanying notes are an integral part of these condensed consolidated financial statements.
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GitLab Inc.
Condensed Consolidated Statements of Comprehensive Loss
(in thousands)
(unaudited)
Three Months Ended October 31,Nine Months Ended October 31,
2021202020212020
Net loss$(41,748)$(28,608)$(110,796)$(72,156)
Foreign currency translation adjustments9,768 4,082 19,157 (13,300)
Comprehensive loss$(31,980)$(24,526)$(91,639)$(85,456)
Comprehensive loss attributable to noncontrolling interest(521) (1,443) 
Comprehensive loss attributable to GitLab$(31,459)$(24,526)$(90,196)$(85,456)
The accompanying notes are an integral part of these condensed consolidated financial statements.
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GitLab Inc.
Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit)
(in thousands)
(unaudited)
Three Months Ended October 31, 2021
Convertible Preferred StockClass A Common StockClass B Common StockAdditional Paid-in CapitalAccumulated DeficitAccumulated Other Comprehensive (Loss) IncomeNoncontrolling InterestsTotal Stockholders’ (Deficit) Equity
SharesAmountSharesAmountSharesAmount
Balance at July 31, 202179,551 $424,904 1,151 $ 53,893 $ $200,838 $(466,325)$(10,526)$25,528 $(250,485)
Conversion of convertible preferred stock to Class B common stock upon initial public offering(79,551)(424,904)— — 79,551 — 424,904 — — — 424,904 
Conversion of Class B common stock to Class A common stock by the selling stockholder upon initial public offering— — 2,500 — (2,500)— — — — — — 
Issuance of common stock upon initial public offering, net of underwriting discounts and other offering costs— — 8,940 — — — 649,845 — — — 649,845 
Issuance of common stock related to vested exercised stock options— — — — 856 — 4,572 — — — 4,572 
Issuance of common stock related to early exercised stock options, net of repurchases— — — — 155 — — — — — — 
Vesting of early exercised stock options— — — — — — 3,972 — — — 3,972 
Stock-based compensation expense— — — — — — 8,579 — — — 8,579 
Foreign currency translation adjustments— — — — — — — — 9,768 — 9,768 
Net loss— — — — — — — (41,227)— (521)(41,748)
Balances at October 31, 2021
 $ 12,591 $ 131,955 $ $1,292,710 $(507,552)$(758)$25,007 $809,407 
Three Months Ended October 31, 2020
Convertible Preferred StockClass A Common StockClass B Common StockAdditional Paid-in CapitalAccumulated DeficitAccumulated Other Comprehensive (Loss) IncomeTotal Stockholders’ Deficit
SharesAmountSharesAmountSharesAmount
Balances at July 31, 202079,959 $425,146 1,151 $ 49,755 $ $72,486 $(249,553)$(13,292)$(190,359)
Issuance of common stock related to vested exercised stock options— — — — 207 — 503 — — 503 
Issuance of common stock related to early exercised stock options, net of repurchases— — — — 418 — — — — — 
Vesting of early exercised stock options— — — — — — 572 — — 572 
Stock-based compensation expense— — — — — — 2,056 — — 2,056 
Foreign currency translation adjustments— — — — — — — — 4,082 4,082 
Net loss— — — — — — — (28,608)— (28,608)
Balances at October 31, 2020
79,959 $425,146 1,151 $ 50,380 $ $75,617 $(278,161)$(9,210)$(211,754)
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GitLab Inc.
Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit) (Continued)
(in thousands)
(unaudited)
Nine Months Ended October 31, 2021
Convertible Preferred StockClass A Common StockClass B Common StockAdditional Paid-in CapitalAccumulated DeficitAccumulated Other Comprehensive (Loss) IncomeNoncontrolling InterestsTotal Stockholders’ (Deficit) Equity
SharesAmountSharesAmountSharesAmount
Balance at January 31, 2021
79,551 $424,904 1,151 $ 52,468 $ $186,892 $(398,199)$(19,915)$ $(231,222)
Conversion of convertible preferred stock to Class B common stock upon initial public offering(79,551)(424,904)— — 79,551 — 424,904 — — — 424,904 
Conversion of Class B common stock to Class A common stock by the selling stockholder upon initial public offering— — 2,500 — (2,500)— — — — — — 
Issuance of common stock upon initial public offering, net of underwriting discounts and other offering costs— — 8,940 — — — 649,845 — — — 649,845 
Repurchase of common stock— — — — (13)— (590)— — — (590)
Issuance of common stock related to vested exercised stock options— — — — 1,881 — 8,992 — — — 8,992 
Issuance of common stock related to early exercised stock options, net of repurchases— — — — 568 — — — — — — 
Vesting of early exercised stock options— — — — — — 5,425 — — — 5,425 
Stock-based compensation expense— — — — — — 17,242 — — — 17,242 
Foreign currency translation adjustments— — — — — — — — 19,157 — 19,157 
Capital contributions from noncontrolling interest holders— — — — — — — — — 26,450 26,450 
Net loss— — — — — — — (109,353)— (1,443)(110,796)
Balances at October 31, 2021
 $ 12,591 $ 131,955 $ $1,292,710 $(507,552)$(758)$25,007 $809,407 
Nine Months Ended October 31, 2020
Convertible Preferred StockClass A Common StockClass B Common StockAdditional Paid-in CapitalAccumulated DeficitAccumulated Other Comprehensive (Loss) IncomeTotal Stockholders’ Deficit
SharesAmountSharesAmountSharesAmount
Balances at January 31, 2020
79,959 $425,146 1,151 $ 49,338 $ $67,168 $(206,005)$4,090 $(134,747)
Issuance of common stock related to vested exercised stock options— — — — 507 — 889 — — 889 
Issuance of common stock related to early exercised stock options, net of repurchases— — — — 535 — — — — — 
Vesting of early exercised stock options— — — — — — 1,882 — — 1,882 
Stock-based compensation expense— — — — — — 5,678 — — 5,678 
Foreign currency translation adjustments— — — — — — — — (13,300)(13,300)
Net loss— — — — — — — (72,156)— (72,156)
Balances at October 31, 2020
79,959 $425,146 1,151 $ 50,380 $ $75,617 $(278,161)$(9,210)$(211,754)
The accompanying notes are an integral part of these condensed consolidated financial statements.
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GitLab Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Nine Months Ended October 31,
20212020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss, including amounts attributable to noncontrolling interest$(110,796)$(72,156)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense17,242 5,678 
Other non-cash expense (income)(128)293 
Amortization of intangible assets251 137 
Amortization of deferred contract acquisition costs23,555 12,442 
Unrealized foreign exchange (gain) loss19,752 (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 payable1,786 318 
Accrued expenses and other current liabilities1,019 1,683 
Accrued compensation and benefits3,812 632 
Other long-term liabilities1,803 688 
Deferred revenue41,469 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 underwriting discounts654,552  
Proceeds from the issuance of common stock upon exercise of stock options, including early exercises, net of repurchases14,574 6,619 
Repurchase of common stock(590) 
Contributions received from noncontrolling interests26,450  
Payments of deferred offering costs(3,398) 
Net cash provided by financing activities691,588 6,619 
Impact of foreign exchange on cash and cash equivalents(973)485 
Net increase (decrease) in cash541,864 (60,049)
Cash and cash equivalents, beginning of period282,850 343,327 
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 
Conversion of convertible preferred stock to common stock upon initial public offering$424,904 $ 
Unpaid deferred offering costs$1,309 $ 
The accompanying notes are an integral part of these condensed consolidated financial statements.
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GitLab Inc.
Notes to Condensed Consolidated Financial Statements
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. While the Company is headquartered in San Francisco, California, it operates on an all-remote model. The Company is a technology company and its primary offering is “GitLab”, a complete DevOps platform 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.
Stock Split
In January 2019, the Company’s board of directors and stockholders approved an amendment to the Company’s amended and restated certificate of incorporation effecting a four-to-one stock split of the Company’s issued and outstanding shares of common and convertible preferred stock. The split was effected on February 28, 2019. The par values of the common and convertible preferred stock were also adjusted as a result of the stock split. All issued and outstanding share and per share amounts included in the accompanying condensed consolidated financial statements and notes thereto have been adjusted to reflect this stock split for all periods presented.
Initial Public Offering (“IPO”)
On October 18, 2021, the Company closed its IPO of 8,940,000 shares of Class A common stock at an offering price of $77.00 per share, including 520,000 shares pursuant to the exercise of the underwriters’ option to purchase additional shares of Class A common stock, resulting in net proceeds to the Company of $654.6 million, after deducting underwriting discounts of $33.8 million, and before the deferred offering costs discussed below. In addition, an entity affiliated with the Company’s founder and the CEO sold 2,500,000 shares of Class A common stock (upon conversion of shares of Class B common stock) at the IPO. The Company did not receive any proceeds from the sale of shares of its Class A common stock by the selling stockholder.
Prior to the IPO, deferred offering costs, which consist primarily of legal, accounting, consulting, and other fees related to the Company’s IPO, were capitalized in prepaid expense and other current assets on the condensed consolidated balance sheets. During the three and nine months ended October 31, 2021, the Company capitalized $3.4 million and $4.7 million of deferred offering costs, respectively. Upon consummation of the IPO, the deferred offering costs of $4.7 million were reclassified into stockholders’ equity as a reduction of the IPO proceeds on the condensed consolidated balance sheets.
Upon the closing of the IPO, 79.6 million shares of the Company’s outstanding convertible preferred stock were automatically converted into an equal number of shares of Class B common stock.
2. Basis of Presentation and Summary of Significant Accounting Policies
Revision of Previously Issued Financial Statements
During the third quarter of 2021, the Company identified an immaterial error in which $50.0 million of short-term investments were incorrectly reflected within cash and cash equivalents as previously reported for the six months ended July 31, 2021. The third quarter cash and cash equivalents, end of period and purchases of short-term investments reflected in the condensed consolidated statement of cash flows have been revised to correct these amounts as of and for the nine months ended October 31, 2021. The
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Company will update cash and cash equivalents, end of period and purchases of short-term investments to properly reflect these amounts for the six months ended July 31, 2021 in the respective future filing.
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 2022 and 2021 refer to the fiscal year ended January 31, 2022 and January 31, 2021, respectively.
Use of Estimates
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 financial statements, and the reported amounts of revenue and expenses during the reporting period. Such estimates include, but are not limited to, allocation of revenue to the license element in the Company's self-managed subscriptions, estimating the amortization period for capitalized costs to obtain a contract, allowance for doubtful accounts, fair valuation of stock-based compensation, the period of benefit for deferred commissions and valuation allowance for deferred income taxes. The Company bases these estimates on historical and anticipated results, trends, and various other assumptions that it believes are reasonable under the circumstances, including assumptions as to future events. Actual results could differ from those estimates.
Principles of Consolidation
The condensed consolidated financial statements include 100% of the accounts of wholly owned and majority owned subsidiaries as well as a variable interest entity for which our Company is the primary beneficiary, and the ownership interest of other investors is recorded as noncontrolling interest. The results of the variable interest entity are recorded on a one-month lag basis and the activity during the intervening one-month lag is not material. All intercompany accounts and transactions have been eliminated in consolidation.
Summary of Significant Accounting Policies
Notwithstanding the change in the short-term investments policy described below, there were no significant changes to the Company’s significant accounting policies disclosed in “Note 2” of the final prospectus for our IPO dated as of October 13, 2021 and filed with the SEC, pursuant to Rule 424(b)(4) on October 14, 2021 (Final Prospectus).
Short-Term Investments
The Company classifies certificates of deposits with banks with an original maturity of six months at the date of purchase as short-term investments and such investments are carried at amortized cost, which approximates their fair value.
Recently Adopted Accounting Standards
As an “emerging growth company,” the JOBS Act allows the Company to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. The Company has elected to use this extended transition period under
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the JOBS Act, except for Accounting Standards Codification (“ASC”) 606, Revenue From Contracts With Customers and Accounting Standards Update (“ASU”) 2018-07, Compensation—Stock Compensation (Topic 718). The adoption dates discussed below reflect this election.
In March 2016, the Financial Accounting Standards Board (“the FASB”) issued ASU 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”). The Company has elected to account for forfeitures as they occur, rather than estimate expected forfeitures. The impact of the adoption of ASU 2016-09 was not material to the condensed consolidated financial statements.
In June 2018, the FASB issued ASU 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Non-employee Share-Based Payment Accounting (“ASU 2018-07”), which expands the scope of Topic 718 to include share-based payments issued to non-employees for goods or services. The new standard supersedes ASC Subtopic 505-50, Equity - Equity-Based Payments to Non-Employees. The Company has early adopted ASU 2018-07 as of February 1, 2019. The impact of adoption of ASU 2018-07 was not material to the condensed consolidated financial statements.
In August 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (“ASU 2018-15”), which requires a customer in a hosting arrangement that is a service contract to follow the internal-use software guidance in ASC 350-40, Intangibles-Goodwill and Other, to determine which implementation costs to capitalize as assets or expense as incurred. The Company has prospectively adopted ASU 2018-15 as of February 1, 2021 with no material impact.
Recently Issued Accounting Standards Not Yet Adopted
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (“Topic 842”). Topic 842 supersedes the lease requirements in ASC Topic 840, Leases. Under Topic 842, lessees are required to recognize assets and liabilities on the condensed consolidated balance sheet for most leases and provide enhanced disclosures. Leases will continue to be classified as either finance or operating. For public companies, Topic 842 is effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. The Company has elected to use the extended transition period that allows the Company to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies under the JOBS Act. For as long as the Company remains an “emerging growth company,” the new guidance is effective for annual reporting periods beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. Early adoption is permitted. The adoption of ASU 2016-02 will not have a material effect on the Company’s condensed consolidated financial statements.
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses. Since the Company follows private company’s adoption timelines, this new guidance is effective for the Company for its fiscal year beginning February 1, 2023. The Company is currently evaluating the effect of the adoption of ASU 2016-13 on its condensed consolidated financial statements. The effect will largely depend on the composition and credit quality of the Company's portfolio of financial assets and the economic conditions at the time of adoption.
In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which simplifies the accounting for income taxes by eliminating some exceptions to the general approach in ASC 740, Income Taxes in order to reduce cost and complexity of its application. This new guidance is effective for the Company for its fiscal year beginning February 1, 2022 and interim periods within its fiscal year beginning February 1, 2023. Early
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adoption is permitted. The adoption of ASU 2019-12 will not have a material effect on the Company’s condensed consolidated financial statements.
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 October 31,Nine Months Ended October 31,
2021202020212020
Subscription—self-managed and SaaS$59,774 89 %$36,665 87 %$156,542 90 %$92,254 87 %
Subscription—self-managed47,215 70 32,023 76 124,742 72 81,414 77 
SaaS12,559 19 4,642 11 31,800 18 10,840 10 
License—self-managed and other$7,026 11 %$5,487 13 %$18,315 10 %$13,775 13 %
License—self-managed5,314 8 3,778 9 13,757 8 10,322 10 
Professional services and other1,712 3 1,709 4 4,558 2 3,453 3 
Total revenue$66,800 100 %$42,152 100 %$174,857 100 %$106,029 100 %
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 October 31,Nine Months Ended October 31,
2021202020212020
United States$56,706 $34,964 $147,226 $87,937 
Europe9,165 6,186 24,631 15,427 
Asia Pacific929 1,002 3,000 2,665 
Total revenue$66,800 $42,152 $174,857 $106,029 
During the three and nine months ended October 31, 2021 and 2020, the United States accounted for 85% and 84%, 83% and 83% of total revenue, respectively. No other individual country exceeded 10% of total revenue for either period presented.
We operate our business as a single reportable segment.
Deferred Revenue
Revenue recognized during the three months ended October 31, 2021 and 2020, which was included in the deferred revenue balances at the beginning of each such period, was $45.0 million and $28.0 million, respectively. Revenue recognized during the nine months ended October 31, 2021 and 2020, which was included in the deferred revenue balances at the beginning of each such period, was $78.4 million and $53.8 million, respectively. The increase in deferred revenue balances for the periods presented is mainly attributable to the growth of contracts with new as well as existing customers.
Remaining Performance Obligations
As of October 31, 2021 and January 31, 2021, the aggregate amount of the transaction price allocated to billed and unbilled remaining performance obligations for which revenue has not yet been recognized was approximately $242.5 million and $159.9 million, respectively. As of October 31, 2021, we
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expect to recognize approximately 69% of the transaction price as product or services revenue over the next 12 months and the remainder thereafter.
Concentration of Credit Risk and Significant Customers
Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and 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 that hold its cash and cash equivalents and short-term investments are financially sound and, accordingly, minimal credit risk exists with respect to these balances. To minimize credit losses on accounts receivable, the Company extends credit to customers based on an evaluation of their ability to pay amounts due under contractual arrangements.
The Company uses various distribution channels to collect payments from users. There were two distribution channels and no distribution channels or individual customers whose balance represented more than 10% of the accounts receivable balance as of October 31, 2021 and January 31, 2021, respectively.
There were no customers whose revenue represented more than 10% of total revenue during the three months and nine months ended October 31, 2021 and 2020.
4. Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consisted of the following (in thousands):
October 31, 2021January 31, 2021
Prepaid software subscriptions$4,042 $2,185 
Prepaid expenses for Company functions728 673 
Prepaid advertising costs811 784 
Prepaid payroll deposits695 1,125 
Prepaid taxes2,098 785 
Other prepaid expenses1,405 1,240 
Other current assets970 500 
Total prepaid expense and other current assets$