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Joint Venture and Equity Method Investment
 6 Months Ended
Jul. 31, 2024
Noncontrolling Interest [Abstract]  
Joint Venture and Equity Method Investment
11. Joint Venture and Equity Method Investment
Joint Venture
In February 2021, the Company along with Sequoia CBC Junyuan (Hubei) Equity Investment Partnership (Limited Partnership) and Suzhou Gaocheng Xinjian Equity Investment Fund Partnership (Limited Partnership) executed an investment agreement (the “Investment Agreement”) to establish GitLab Information Technology (Hubei) Co., LTD (“JiHu”), a legal entity in the People’s Republic of China. 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, 2024, the Company retains control over JiHu with its equity stake at approximately 54%.
Since fiscal year 2023, JiHu has maintained an employee stock option plan (“JiHu 2022 ESOP”) for its employees. In June 2024, the board of directors of JiHu approved a new employee stock option plan (“JiHu 2024 ESOP”) for its employees in order to grant additional shares. The fair value of restricted stock awards (“RSAs”) and stock option awards is measured on the date of grant and compensation costs related to these awards are recognized on a graded attribution method; as the grants include a performance condition for both the JiHu 2022 ESOP and JiHu 2024 ESOP (“JiHu ESOPs”).
As a result of forfeitures triggered by the departure of key executives from JiHu, during the three and six months ended July 31, 2024, the Company reversed stock-based compensation previously recorded which resulted in a $0.1 million stock-based compensation net expense and a $0.2 million net gain, respectively. As a result of forfeitures triggered by the departure of certain executives during the three and six months ended July 31, 2023, the Company reversed stock-based compensation previously recorded for such executives. The Company recorded a $0.2 million stock-based compensation net expense and a $2.7 million net gain for the three and six months ended July 31, 2023, respectively.
As of July 31, 2024, approximately $9.4 million of total unrecognized compensation cost was related to the JiHu ESOPs that is expected to be recognized over 4.1 years.
Operating Leases
JiHu entered into two new operating leases during the six months ended July 31, 2024 and has various non-cancelable long-term operating leases maturing by May 25, 2027 with total lease payments of $0.5 million and a total present value of lease liabilities of $0.5 million. In addition, JiHu has various short-term leases. Lease expense associated with short-term leases was immaterial during the three and six months ended July 31, 2024.
The Company recognized $0.1 million and $0.3 million of operating lease expense during the three and six months ended July 31, 2024, respectively. The Company recognized $0.1 million and $0.3 million of operating lease expense during the three and six months ended July 31, 2023, respectively.
The table below presents supplemental information related to operating leases for the six months ended July 31, 2024 (in thousands, except weighted-average information):
Weighted-average remaining lease term (in years)1.75
Weighted-average discount rate 3.5 %
Right-of-use assets obtained in exchange for new operating lease liabilities$372 
Cash paid for amounts included in the measurement of lease liabilities
$294 
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,
2024202320242023
Revenue$1,775 $1,609 $3,421 $3,073 
Cost of revenue535 560 1,019 1,051 
Gross profit1,240 1,049 2,402 2,022 
Operating expenses:
Sales and marketing1,410 1,960 3,046 4,044 
Research and development578 727 366 2,683 
General and administrative907 1,407 1,745 (37)
Total operating expenses2,895 4,094 5,157 6,690 
Loss from operations(1,655)(3,045)(2,755)(4,668)
Interest income230 240 457 555 
Other income (expense), net(42)293 305 562 
Net loss before income taxes(1,467)(2,512)(1,993)(3,551)
Net loss$(1,467)$(2,512)$(1,993)$(3,551)
Net loss attributable to noncontrolling interest$(675)$(1,128)$(918)$(1,558)
July 31, 2024January 31, 2024
Cash and cash equivalents$40,756 $43,896 
Property and equipment, net277 489 
Operating lease right-of-use assets482 405 
Other assets3,465 2,835 
Total assets$44,980 $47,625 
Total liabilities$6,464 $6,080 
Equity Method Investment
In April 2021, the Company reorganized Meltano Inc. (“Meltano”), now operating as Arch Data, Inc. (“Arch”), which started as an internal project within the Company in July 2018, into a separate legal entity.
The Company recorded an impairment charge of $8.9 million in other income (expense), net in the condensed consolidated statement of operations during the year ended January 31, 2024 which reduced the equity method investment value to zero as of January 31, 2024.
During the three and six months ended July 31, 2024, the Company recorded a loss from equity method investment of zero. During the three and six months ended July 31, 2023, the Company recognized a loss from equity method investment of $0.9 million and $1.7 million, net of tax on the condensed consolidated statements of operations, respectively.