With a softer economy, many technology companies like Meta ($META) and even Salesforce ($CRM) are reducing or pausing headcount. Bargaining power when negotiating employment terms is likely to shift in favor of employers again after years of wage inflation. But in the long-run, smaller companies issuing significant equity compensation will likely to remain a feature, not a bug. It is still an effective recruitment tool to conserve cash capital and provide proper incentives to attract or retain risk-takers to fight uphill battles. For smaller players like Coupa ($COUP) and Jfrog ($FROG), it is better to be generous with stock compensation and have the right people share a growing pie, than to withhold upside and end up with a sub-par army fighting a losing battle against establishments.

So, GAAP and non-GAAP numbers reported by tech companies can be in stark contrast. For FY 2022, $ZS GAAP net loss was $390mn, versus a non-GAAP net profit of $101mn. SBC was $430mn, which accounted for 87% of the adjustments.

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