The integrity of Gitlab's accounting is questionable, as its auditor KPMG has been expressing serious concerns about the company's accounting for some time.
Is there something wrong with the company's meteoric growth? Sales have doubled in two years, but so has the number of shares; at the same time, the operating loss of roughly $200 million remains unchanged.
The latter is almost exclusively linked to stock option compensation. As is customary in the American tech landscape, stock options account for a third of sales - sales, not profit. You'd think you were dreaming.
Gitlab maintains a $1 billion cash surplus. At this rate, the company could last another five years. Perhaps this is the insiders' plan - to collect as many stock options as possible until the music stops. All at the shareholders' expense, of course.
These excesses do not explain the precautions taken by KPMG, which we have known to be more conciliatory. The auditing firm points to inadequate internal control procedures. For example, there may be something wrong with the revenue recognition policy. This is often where the trouble starts.
There's no denying that Gitlab has resorted to fraudulent methods, of course, although the behavior of members of the management team certainly doesn't invalidate suspicions: they're all quick to sell the shares they receive free of charge.
Paid a whopping $27 million in options last year, managing director Sid Sijbrandij, for example, got rid of these shares as soon as he could.