Gitlab announced the decision to layoff 7% of FTEs. Management attributed the layoffs to “tough macroeconomic environment and a more conservative approach to software investments.”
In what seems not-so-coincidental, Microsoft announced layoffs of 10% of Github employees.
Understandably, Gitlab’s share price took a massive hit (-14%) given that it foreshadows a troublesome Q4 to be reported next month.
While some companies are being forced to reduce their workforce to weather the difficult economic environment, others are being opportunistic and shaving the low performers. We’ll have to wait and see until Gitlab reports in March to gage what camp these layoffs fall in.
That said, it does rub me the wrong way, because management has boasted about the negligible impact being felt from macro.
“*Despite the volatility in the macroeconomic environment, we have *not seen any impact to our business
**The current environment is not slowing down customer decisions, nor elongating our sales cycles. Buying cycles have actually sped up across all the business, and we continue to see strong win rates.”
“We monitor the key leading indicator metrics of our business and we are not seeing any softening in these indicators.”
“Despite the ongoing volatility in the macroeconomic environment in the third quarter, we see customers continuing to prioritize our mission critical platform”
"We view the uncertainty in the macro economy as a benefit for hiring new team members
"We’re starting to feel some impact with the macro…obviously it didn’t impact us on first order…but we aren’t seeing the sales cycle elongate - that actually shrank again this quarter. But we’re seeing more scrutiny in deals
Now, I understand the economy has shifted quickly, but Gitlab’s Q2 was only reported in September. They must have made the layoff decision 3-4 months from that point. There is no way management didn’t see traces of this coming. After their Q2, I noted:
At that moment, I opted to trust management’s commentary rather than my judgement - and it looks like I will be paying the price for it.
It feels premature to me to make a drastic move from a layoff announcement, but the sudden change in tone leaves me with a bitter taste and a lowered trust towards management.