Gitlab Inc.GTLB
Gitlab Inc. Income Taxes Disclosure
12. Income Taxes
The components of total loss from continuing operations before income taxes are as follows (in thousands):
| Fiscal Year Ended January 31, | |||||||||||||||||
| 2026 | 2025 | 2024 | |||||||||||||||
| US | $ | (80,282) | $ | (108,336) | $ | 14,328 | |||||||||||
| Foreign | 32,217 | 22,543 | (174,895) | ||||||||||||||
| Loss before income taxes | $ | (48,065) | $ | (85,793) | $ | (160,567) | |||||||||||
The provision for (benefit from) income taxes consisted of the following (in thousands):
| Fiscal Year Ended January 31, | |||||||||||||||||
| 2026 | 2025 | 2024 | |||||||||||||||
| Current: | |||||||||||||||||
| Federal and State | $ | 773 | $ | 2,028 | $ | (1,768) | |||||||||||
| Foreign | 9,325 | (68,021) | 257,384 | ||||||||||||||
| Total current | $ | 10,098 | $ | (65,993) | $ | 255,616 | |||||||||||
| Deferred: | |||||||||||||||||
| Federal and State | $ | — | $ | (3) | $ | (810) | |||||||||||
| Foreign | 401 | (10,678) | 10,339 | ||||||||||||||
| $ | 401 | $ | (10,681) | $ | 9,529 | ||||||||||||
| Provision for (benefit from) income taxes | $ | 10,499 | $ | (76,674) | $ | 265,145 | |||||||||||
Beginning with fiscal year 2026, the Company adopted ASU 2023-09 on a prospective basis. See Note 2. Basis of Presentation and Summary of Significant Accounting Policies — Recently Adopted Accounting Standards section for additional details. A reconciliation of the U.S. federal statutory income tax rate to the Company's effective tax rate for the year ended January 31, 2026 is as follows (in thousands, except percentages):
| Amount | % | ||||||||||
| Tax at federal statutory rate | $ | (10,093) | 21.0 | % | |||||||
State income taxes, net of federal effect (1) | 989 | (2.1) | |||||||||
| Foreign tax effects: | |||||||||||
| Australia: | |||||||||||
| Valuation Allowance | 1,088 | (2.3) | |||||||||
| Other | 105 | (0.2) | |||||||||
| Canada: | (688) | 1.4 | |||||||||
| China: | 1,199 | (2.5) | |||||||||
| Germany: | |||||||||||
| State/provincial tax | 1,275 | (2.6) | |||||||||
| Other | 335 | (0.7) | |||||||||
| Israel: | |||||||||||
| Valuation Allowance | (651) | 1.4 | |||||||||
| Other | 43 | (0.1) | |||||||||
| Netherlands: | |||||||||||
| Valuation Allowance | (1,318) | 2.7 | |||||||||
| Other | 501 | (1.0) | |||||||||
| Singapore: | |||||||||||
| Nondeductible VAT interest and penalties | 798 | (1.6) | |||||||||
| Other | 71 | (0.1) | |||||||||
| UK: | |||||||||||
| Foreign rate differential | 627 | (1.3) | |||||||||
| Tax effect of stock-based compensation | (2,328) | 4.8 | |||||||||
| Other | 74 | (0.1) | |||||||||
| Other foreign jurisdictions: | 44 | (0.1) | |||||||||
| Effect of cross-border tax laws | |||||||||||
| Federal effect of foreign DREs | 8,240 | (17.1) | |||||||||
| Foreign tax credit | (7,414) | 15.4 | |||||||||
| Base Erosion and Anti-Abuse Tax | 2,307 | (4.8) | |||||||||
| Other | 583 | (1.2) | |||||||||
| Tax credits | (3,417) | 7.1 | |||||||||
| Effect of changes in tax laws or rate enacted in the current period | — | — | |||||||||
| Change in valuation allowance | 5,030 | (10.5) | |||||||||
| Non-deductible expenses and other: | |||||||||||
| Non-deductible executive compensation | 9,785 | (20.4) | |||||||||
| Stock-based compensation | (2,292) | 4.8 | |||||||||
| Stock donation | 1,490 | (3.1) | |||||||||
| Other | (74) | 0.2 | |||||||||
| Changes in unrecognized tax benefits | 4,020 | (8.4) | |||||||||
| Other adjustments | 170 | (0.4) | |||||||||
| Total | $ | 10,499 | (21.8) | % | |||||||
(1) The states and local jurisdictions that contribute to the majority (greater than 50%) of the tax effect in this category include New York, Texas, North Carolina, and the District of Columbia.
A reconciliation of the statutory U.S. federal income tax rate to the Company's effective tax rate for years ended January 31, 2025 and 2024, presented under the disclosure requirements in effect prior to the adoption of ASU 2023-09, is as follows:
| Fiscal Year Ended January 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Tax at federal statutory rate | 21.0 | % | 21.0 | % | |||||||
| State, net of federal benefit | (0.1) | (0.1) | |||||||||
| Stock-based compensation | 6.9 | 2.4 | |||||||||
| Non-deductible Executive Compensation | (12.0) | (4.7) | |||||||||
| Research tax credit | 5.5 | 6.2 | |||||||||
| Foreign rate differential | (2.8) | (1.8) | |||||||||
| Change in valuation allowance | (4.5) | (83.3) | |||||||||
| Foreign derived intangible income deduction | 0.2 | — | |||||||||
| Unrecognized tax benefits | 77.5 | (105.3) | |||||||||
| Other | (2.3) | 0.5 | |||||||||
| Total | 89.4 | % | (165.1) | % | |||||||
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts for income tax purposes.
Significant components of the Company's deferred tax assets and liabilities are as follows (in thousands):
| January 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Deferred tax assets: | |||||||||||
| Net operating loss carryforwards | $ | 93,169 | $ | 92,432 | |||||||
| Research tax credits | 23,812 | 14,942 | |||||||||
| Deferred revenue | 13,611 | 12,419 | |||||||||
| Accruals and other assets | 14,906 | 2,024 | |||||||||
| Capitalized R&D | 107,313 | 107,035 | |||||||||
| Intangibles | 83,117 | 98,690 | |||||||||
| Interest expense limitation | 10,220 | 10,379 | |||||||||
| Unrealized FX | 12 | 282 | |||||||||
| Stock-based compensation | 9,542 | 8,829 | |||||||||
| Gross deferred tax assets | 355,702 | 347,032 | |||||||||
| Valuation allowance | (330,146) | (323,710) | |||||||||
| Net deferred tax assets | 25,556 | 23,322 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Deferred contract acquisition costs | (15,478) | (13,628) | |||||||||
| Fixed assets | (336) | (92) | |||||||||
| Federal effects of disregarded entities | (9,747) | (9,277) | |||||||||
| Other | (33) | — | |||||||||
| Net deferred tax assets (liabilities) | $ | (38) | $ | 325 | |||||||
As of January 31, 2026, the Company’s federal, state, and foreign net operating loss (“NOL”) carryforwards for income tax purposes were approximately $284.8 million, $265.0 million, and $38.3 million respectively. The federal NOL carryforwards do not expire as they were generated post Tax Cuts and Jobs Act, where NOLs generated after December 31, 2017 do not expire. The U.S. state NOL carryforwards, if not utilized, will begin to expire beginning in fiscal year 2031. The foreign NOL carryforwards, if not utilized, will begin to expire in 2032.
As of January 31, 2026, the Company had federal foreign tax credit carryforwards of approximately $7.4 million. If not utilized, these foreign tax credit carryforwards will begin to expire in 2035. There were no foreign tax credit carryforwards as of January 31, 2025.
In addition, the Company had research tax credit carryforwards of approximately $22.7 million for federal purposes. The U.S. Federal Research & Experimentation (“R&E”) credit, if not utilized, will begin to expire in 2036. The Company also has research tax credit carryforwards of approximately $5.0 million for U.S. state purposes, which if not utilized, will begin to expire in 2028. Pursuant to the U.S. Internal Revenue Code, the NOL and R&E credit could be subject to limitation should the Company experience an owner shift of greater than 50 percent over a 3 year period.
On July 4, 2025, the United States enacted the One Big Beautiful Bill Act (“OBBBA”) which extended or modified certain corporate tax provisions under the 2017 Tax Cuts and Jobs Act (“TCJA”). The OBBBA modified certain business deductions, including allowing for immediate expensing of U.S. research & development (“R&D”) expenditures, effective in the Company’s current fiscal year. The OBBBA also modified various international tax provisions which were set to change or expire after 2025 under the TCJA. Such modifications, including U.S. taxation of profits derived from foreign operations and associated foreign tax credit limitations, are effective in the Company’s next fiscal year. The immediate expensing of U.S. R&D expenditures had a favorable impact to the Company’s domestic tax liability. The Company will continue to evaluate the impact of the OBBBA on the Company’s consolidated financial statements.
The Company executed the BAPA agreements with the IRS and the DTA on October 10, 2024, and October 22, 2024, respectively. On October 28, 2024, the Company paid $187.7 million to satisfy the tax assessment issued by the DTA, including accrued interest, which reflected the BAPA negotiations and the agreement to reduce the rate of tax on the gain from the transfer of economic IP rights. As a result of the BAPA and the DTA assessment, the 2015 through 2017 tax years are closed for GitLab B.V., the Company’s Netherlands subsidiary. Pursuant to the terms of the BAPA, the Company has filed amended returns for the 2018 through 2023 fiscal years.
Under the provisions of ASC 740, Income Taxes, the determination of the Company’s ability to recognize its deferred tax asset requires an assessment of both negative and positive evidence when determining the Company’s ability to recognize its deferred tax assets. As in prior years, the Company maintained that it was not more likely than not that the Company could recognize deferred tax assets in certain jurisdictions. All attributes agreed upon in the BAPA, including U.S. federal and state tax NOLs and credits, as well as Netherlands NOLs, are not yet recognized due to the determination that 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. More weight was given to historical results than to expectations of future profitability, which are inherently uncertain. Certain entities’ net losses in recent periods represented sufficient negative evidence to require a valuation allowance against its net deferred tax assets. This valuation allowance will be evaluated periodically and could be
reversed partially or totally if business results have sufficiently improved to support realization of deferred tax assets.
Cash paid for income taxes, net of refunds, by jurisdiction pursuant to the disclosure requirements of ASU 2023-09 for the year ended January 31, 2026 were as follows (in thousands):
| January 31, | |||||
| 2026 | |||||
| Federal | $ | (859) | |||
| State and local: | |||||
Illinois | (132) | ||||
Maryland | 168 | ||||
All other state and local | 470 | ||||
| Foreign: | |||||
Canada | 125 | ||||
France | 226 | ||||
Germany | 1,175 | ||||
India | 194 | ||||
Netherlands | (1,963) | ||||
United Kingdom | 2,869 | ||||
All other foreign | 13 | ||||
| Income taxes, net of amounts refunded | $ | 2,286 | |||
Uncertain Tax Positions
As of January 31, 2026, unrecognized tax benefits were $31.3 million, of which $10.6 million would affect the effective tax rate if recognized. As of January 31, 2025, the unrecognized tax benefits were $25.6 million, of which $9.5 million would affect the effective tax rate if recognized. The Company is unable to reasonably estimate the timing of future settlements or the amount by which the remaining unrecognized tax benefits will increase or decrease within the next twelve months.
The reconciliation of the Company's unrecognized tax benefits is as follows (in thousands):
| January 31, | |||||||||||
| 2026 | 2025(1) | ||||||||||
| Beginning balance | $ | 25,570 | $ | 402,728 | |||||||
| Gross increases due to tax positions taken in prior periods | 3,356 | 10,788 | |||||||||
| Gross decreases due to tax positions taken in prior periods | (553) | (980) | |||||||||
| Gross increases due to tax position taken in current period | 1,203 | 3,510 | |||||||||
| Gross decreases due to settlement tax payment | — | (137,262) | |||||||||
| Gross decreases due to settlements with taxing authorities | — | (198,066) | |||||||||
| Gross decreases due to lapses in applicable statutes of limitations | (200) | — | |||||||||
| Effect of foreign exchange gains and losses | 1,957 | (55,148) | |||||||||
| Ending balance | $ | 31,333 | $ | 25,570 | |||||||
(1) The prior period unrecognized tax benefit tabular reconciliation has been updated to reflect reclassifications between certain line items to conform to the current period presentation, which had no impact on the total unrecognized tax benefit balance.
It is the Company's policy to classify accrued interest and penalties related to unrecognized tax benefits in the provision for income taxes. For the years ended January 31, 2026, 2025 and 2024, the Company recognized interest and penalties expense (benefit) of $1.7 million, $(48.2) million and $53.0 million, respectively, in the provision for income taxes in the consolidated statements of operations. As of January 31, 2026 and 2025, the accrued interest and penalties were $7.2 million and $5.3 million, respectively, in the consolidated balance sheets. These amounts are not included in the unrecognized tax benefit rollforward table above.
As of January 31, 2026, the Company’s U.S. federal 2018 through 2025 tax years were open and subject to potential examination in one or more jurisdictions. In addition, in the United States, any NOLs or credits that were generated in prior years but not yet fully utilized in a year that is closed under the statute of limitations may also be subject to examination. The Company’s Netherlands tax years are currently open from tax years 2019 to 2025, subject to adjustments as a result of the recently negotiated BAPA. The Company believes that it has adequately reserved for the outcome of the BAPA. The Company regularly assesses the likelihood of adverse outcomes resulting from all existing and potential examinations to determine the adequacy of its provision for income taxes. The Company continues to monitor the progress of ongoing discussions with tax authorities and the effect, if any, of the expected expiration of the statute of limitations in various taxing jurisdictions.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2026 | Mar 17, 2026 | Showing above |
| 2025 | Mar 21, 2025 | |
| 2024 | Mar 26, 2024 | |
| 2023 | Mar 30, 2023 | |
| 2022 | Apr 8, 2022 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.