Maximize GitLab's long-term valuation by enabling eGroup and FP&A to plan, prioritize, and execute effectively
FP&A comprises five different sub-teams to support our FP&A goals:
The LRO is refreshed on an annual basis, occurring shortly after the fiscal year plan is finalized. After the LRO is refreshed, there may be additional updates throughout the remainder of the year, on a quarterly and ad-hoc basis to determine whether near-term priorities and funding are needed in order to achieve long-term goals and financial targets.
As part of the quarterly and ad-hoc updates to LRO, the following are included:
The following are inputs in the LRO refresh and subsequent LRO updates:
The Corporate Finance team leads the LRO refresh and updates in collaboration with: eGroup members to determine key investments, capabilities, and dependencies; GTM Finance team for sales productivity/capacity models, CTB, and bookings attainment; G&A Finance team for total rewards strategy, benefit assumptions; and the R&D Finance team to help inform on allocations, hosting/infrastructure expenses.
GitLab’s FP&A team participates in a rigorous monthly close process.
FYyyyy-mmFYyyyy-mm is approved by the Head of FP&A and reviewed with the CFO.FYyy-QxFYyy-Qx is a dynamic assessment based on current expectations of financial performance. The (3+9), (6+6), and (9+3) quarterly forecasts include revenue driven by bookings and other key inputs and expenses driven by headcount and vendors.These dates are based on an 8-day accounting close. Corporate FP&A will confirm the close date with the accounting team and update the FP&A Close calendar in Google accordingly. For FY23, the target is to close by WD 5 with full consolidation (including tax entries, eliminations) by WD 10.
The Accounting close calendar can be found here.
Each month after the financials have been published, GitLab reviews all aspects of the business including Corporate Metrics, Bookings, Revenue, Gross Margins, Expenses. The goal of this meeting is to do a comprehensive review so that finance leadership has a pulse on the business and signs off on the financials. Based on insights from variance analysis, the FP&A team makes actionable recommendations to the CFO and eGroup to ensure continued performance to Plan/Forecast.
The variance analysis will compare department budgets with actual results and examine any material differences between budgeted and actual costs. Additionally, the actuals for expenses will be compared to the quarterly rolling forecast. The expenses are reviewed at the divisional department level, allowing GitLab to measure progress in meeting its Plan or rolling forecast. The team also evaluates the accuracy of forecasts and will make adjustments to the next rolling forecast.
The study of differences between actuals and the Plan or Forecast. During the variance analysis processes the GitLab FP&A team analyzes and isolates any variance in question to the lowest level possible. The team reviews detailed items in order to identify the root cause of the variance. This could include transaction date, cost center, vendor, location, department or additional low level details.
The FP&A team takes the following into consideration while evaluating variances in relation to materiality thresholds:
The FP&A team delivers an FP&A expense flux review document at each monthly close, documenting and quantifying business drivers for variance. The goal is two-fold:
We measure our team performance based on our forecast accuracy, also known as variance percentage. Variance percentage is defined as the difference between actuals and Plan or rolling forecast. We calculate it as follows:
Variance analysis should address any inputs or additional requests from the last Variance meeting, as applicable.
Generally accepted accounting principles (GAAP) does not provide definitive guidance in distinguishing material information from immaterial information. Therefore, GitLab uses a percentage based approach for defining materiality thresholds and can be found below. The Plan vs Actuals vs Forecast Sisense dashboard provides the data for the threshold analysis via a color coded legend.
Our goal is to have revenue and EBIT variance percentage within +/- 2% on a quarterly basis. Key accounts and expenses by division should be within +/- 2% versus Plan or rolling quarterly forecast every quarter.
Each finance business partner will run a meeting with their Finance leader and the EVP to review the past month. The information should be presented as timely as possible. Given the accounting close is 8 days, the team is asked to use pre-close numbers for the review to increase the speed of information. During the meeting, the Finance Business Partners will review GitLab results in addition to a detailed overview. Each division can expect to review the following during the monthly meetings:
Following the month-end close, the Finance Business Partners will create a variance deck and distribute department income statements to the related budget owners and the e-group members. Each department is then responsible for comparing these reports, which contain actual costs, to the budget. Departments, with guidance from the Finance Business Partners, should analyze their data and if necessary, discuss items of interest and take appropriate action. Any questions regarding the cost data should be discussed with the Finance Business Partner.
The close timeline for each quarter follows the timeline above for monthly close and includes additional key dates and processes:
As a public company we share financial results publicly after the close of each fiscal quarter or fiscal year. The purpose, timeline, and deliverables can be found on our Investor Relations page here.
The Finance team is the owner of SSOT for GitLab’s hiring plan which ties to our quarterly expense forecast. The hiring plan is a live forecast that exists in Adaptive and is maintained by the Finance Business Partners (FBPs). Finance owns the SSOT to ensure there is one hiring plan for the year. This increases our predictability as a company and streamlines the hiring process.
When a hiring manager comes to you to open a role please work with the appropriate FBP to get a GHP ID.
On a weekly basis FBPs will update their department’s hiring forecasts in Adaptive. FBPs may update their headcount forecast on a more frequent basis depending on their individual department’s business needs, but at a minimum it must be done on a weekly basis. This could require adding new roles, deleting roles, trading out roles, or adding backfills. Every vacancy requires a GHP ID once it is ready to be opened in Greenhouse. A vacancy could be for a net new hire, a backfill due to leaving the company or a backfill due to internal movement.
To determine what GHP ID to use the FBP references the appropriate GHP ID numbering for their department. The numbering for the GHP IDs are similar to a credit card. The first two digits of the unique GHP ID represent the FBP’s division, the next two numbers represent the department. Then there are seven digits that start with 0000001 that sequentially grow from there for every role.
Once a number has been used in Greenhouse for a job, it can not be reused. If the role is a future role and has been deleted, but was never input into Greenhouse, the FBP can use that number for it’s replacement or a different role since it was not used yet.
When a job is opened in Greenhouse it is routed for approvals. The second required approval is from Finance. This allows the FBPs another opportunity to check the GHP ID on open jobs and ensure everything reconciles. If something does not reconcile to what is in the forecast, the FBP will reach out to the hiring manager to discuss. Ideally conversations with hiring managers and leaders will occur when the initial request for a GHP ID occurs from Talent Acquisition. But if the conversations do not occur then, they will occur at this time to ensure that everyone is in agreement and that if tradeoffs need to be made for financial reasons, they can be made then.
Finance is also a required approval on all job offers. This allows Finance to see the financial details of the job offer before any offer is sent, so that they are enabled to have conversations with their leaders about implications to their Plan if needed.
For more detail on the headcount process for R&D, refer to the page here.
For more detail on the headcount process for Sales, refer to the page here.
The FP&A team and Talent Acquisition Managers collaborate to ensure understanding and implementation of the most up-to-date view of forecasted headcount-related expenses. This interlock enables GitLab to respond quickly and make live decisions through a weekly P&L forecast in Month 2 and Month 3 of each quarter. This process also ensures alignment and accuracy of headcount forecasts when FP&A locks its annual plan and monthly rolling forecasts. This process also tracks company metrics against Wall Street expectations related to non-GAAP operating income and non-GAAP earnings per share. Please see the Headcount Metrics and Processes page for definitions and key metrics.
The interlock process occurs during the following weeks:
Unless otherwise noted in the HC Forecast calendar or communicated via Slack (see Communication below), the interlock takes place on a Thursday through Monday interval.
By noon (PST) Thursday, the Finance Business Partners update Adaptive with their best estimates of the start dates and salaries of all planned personnel (including backfills) for the forecast period. This reflects a 50/50 “most-realistic” view of headcount expenses/timing. The Finance Business Partners indicate the completion of their updates in Adaptive by signing off in the headcount forecast template with their initial and time stamp.
At noon (PST) Thursday, the Corp FP&A team downloads the planned personnel data from Adaptive and prepares the headcount forecast template to share with Talent Acquisition. The planned personnel data is divided into two headcount forecast templates: “Mgr-” which includes all Individual Contributor, Manager, and Senior Manager roles and “Dir+” which includes all Director, Senior Director, Vice President, and E-Group roles.
Prior to noon (PST) Friday, the Talent Acquisition Managers review their respective roles line by line and make adjustments and comments related to expected start dates and salaries provided by the Finance Business Partners. If no indication is made for a specific role in the headcount forecast template, the Talent Acquisition Manager signals that the current indication is reasonable and indicative of a 50/50 “most-realistic” forecast. The Talent Acquisition Managers also pay close attention to any recruiting capacity restraints within any given quarter. In order to maximize transparency and understanding of any changes, the Talent Acquisition Managers provide comments (e.g., rejection of an offer, adjustment to salary due to location factor, etc.) for specific roles. After reviewing all roles for which they are responsible, the Talent Acquisition Managers sign off in the headcount forecast template with their initials and time stamp. Note: the recruiter responsible for director and above hires performs the same procedure in the “Dir+” template. Following sign off from the Talent Acquisition Manager, the Corp FP&A team sends a Headcount Snapshot to the head of recruiting with a summary of the interlock and hiring outlook for the quarter. The head of recruiting reviews and provides a wholistic view for the Talent Acquisition team to ensure that the start numbers are reasonable with respect to progress through the quarter. If the numbers are unrealistic, the head of recruiting works with the Talent Acquisition team to adjust future starts to an attainable level.
By end of day (PST) Friday, the Finance Business Partners review any adjustments or comments made by Talent Acquisition, follow up with any questions, and load the updated headcount information into Adaptive to prepare for the P&L snapshot. Often a meeting with each respective area may be required to better understand recruiting dynamics and ensure the forecast reflects a 50/50 “most-realistic” view.
The following Monday, the Corp FP&A team downloads the updated information from Adaptive and provides a P&L snapshot to the CFO detailing any material week-over-week changes as well as tracking vs. guidance and consensus metrics. Prior to any forecast lock, the Finance Business Partners review headcount assumptions with the E-Group members with whom they partner and receive sign off from each E-Group member.
Communication related to the interlock takes place in the #fpa-ta_headcount_forecast Slack channel. All parties involved in the interlock are also granted access to the HC Forecast Google Calendar.
The Finance Business Partners and Talent Acquisition Managers collaborate to provide the most current and 50/50 “most-realistic” view of headcount-related expenses. This is done through the interlock process in the headcount forecast template and is ultimately uploaded into the Planned Personnel sheet in Adaptive.
The inputs loaded into Adaptive are then used to provide the CFO a weekly P&L snapshot in order to facilitate in-quarter spending decisions and ensure the company tracks vs. guidance and consensus expectations.
The primary mechanism to ensure efficient spend of company assets is the Procure to Pay process, and specifically completion of the vendor and contract approval workflow prior to authorization. The procurement team or your finance business partner can assist with questions related to this process.
The second mechanism is the budget vs actual review to determine reasons for variances vs plan. See the section on Variance Meeting with CFO and Variance Analysis.
A manual on how to update and maintain Adaptive integration can be found here. This document is maintained by the Corporate FP&A team.
Adaptive Quarterly Roadmap
Note: WD is defined as Working Days, which are Mondays through Fridays, excluding Federal holidays.