For a primer on Gitlab, including some great replies on pros/cons of Gitlab, it’s competitors, and DevOps in general, I’d check out the full thread from John Wayne’s original post here - https://discussion.fool.com/gtlb-gitlab-s1-filing-34938395.aspx
THE QUICK SKINNY ON GITLABs NUMBERS
Revenue $77.8M, 69% YoY
Gross Margin 89% (adj)
Customer Growth $1M(TTM) 95% YoY to 39 total customers, $100k(TTM) 74% YoY to 492 customers, and $5k(TTM) 67% to 4,593 customers
DBNRR 152%
ON THE NOTABLE TRENDS
Operating leverage is improving (though choppy). R&D is down to 37% of revenue, lowest yet. S&M spend is 74% of revenue, also lowest yet, but still in line with where they want to be for the near term to capture market share.
Gross Margins have been pretty consistent for the last 2 years, hovering at a hyper-growth standout of 88-90%.
The YoY growth on revenue hasn’t necessarily shown a consistent upward trend, but this quarter is back pointing up. Last 4 quarters of YoY growth have gone 69%, 69%, 58%, 69%.
Taking guidance with a HEAVY grain of salt since this is a new company, they went with $78M on the Q1 top end. They beat the top end of the Q4 $70.5M guide by 10.35%, so take that for what you will going forward.
DBNRR is a stellar number at 152%, but it’s not unprecedented for them. Gitlab bounces around a bit more than most other companies here, but generally they’ve been between 130% and 155%
To my knowledge, this is the first quarter they’ve reported $1M TTM customers, but I’ll take the 95% YoY number they reported any day of the week. The other explicit tracking they do is against $100k TTM and $5k TTM customers, and both were up (by 1% point) on a YoY basis from last quarter.
Their last 5 quarters of QoQ growth are 9%, 8%, 16%, 15%, and 16% respectively. To put some framing around next Q, if they do $85M next quarter (a 9% beat off their top line guide, lower than their beat this Q), they’d be at an accelerated YoY of 70%, and QoQ of 9%. Again, take that with a serious grain of salt, since Gitlab has very little historical reporting to go off of.
AN INTERESTING COMPARISON
I find this company and this report pretty compelling. I know the industry compare is apples to oranges, but I still find it interesting to compare GTLB to MNDY for several reasons.
First MNDY and GTLB trade at similar valuations, though after market today, GTLB is slightly more expensive on a TTM basis, trading at P/S(TTM)~=20 vs MNDY P/S(TTM)~=17. Depending on your (subjective) FWD P/S calculation, MNDY may stretch out the advantage here as well.
Second, they both have identical gross margin profiles, with scorching hot ~90% non-GAPP GM’s.
Third, they both are in hyper-competitive environments. MNDY has stiff competition from ASAN as well as ClickUp in the private markets (among others). GTLB has stiff competition with Github (MS owned), JFrog (FROG), Atlassian (TEAM) and others.
Fourth, they both spend a S*** ton of money on OpEx, but MNDY has been improving this number 4 quarters in a row, whereas GTLB has been choppy with no consistent operating leverage trend seen yet, and greater losses as a % of revenue overall on an absolute basis at this point in time.
Fifth, GTLB has a stellar 152% DBNRR, I can only think of SNOW that has higher. MDNY is pretty great too at 135% but 150+ is pretty elite.
Sixth, MNDY is growing their customers at a torrid pace, with their $50k (TTM) cohort growing 203% YoY and 31% QoQ last quarter. GTLB, while still impressive and accelerating, is nowhere close to matching that customer growth.
So you’d think MNDY is a better buy right? For me personally, I don’t trust a solid winner (or assumption of winner(s)) in either the Productivity Software or DevOps space necessarily, but call me crazy, it’s completely anecdotal, but I like the DevOps space for Gitlab and the potential there for future TAM growth more than I do the Productivity Software space.
FlixFool mentioned this in the John Wayne thread I posted above, but it’s worth highlighting - “GitLab’s strength and moat, in my opinion, is its pipeline implementation.“. I tend to agree with this, but also think Gitlab has created a software platform that is much more robust than any competitor, in a way that I don’t think MNDY has relative to ASAN and ClickUp.
Regrettably, I wasn’t able to listen to the Conference Call, so I’ll reserve further judgment on how I position until I have a chance to fully consume that transcript. I will also reply to this post and add conference call notes when I have the opportunity (unless someone else gets to it before I do)
Hope this helps, and as always, happy to hear any critical feedback/thoughts on this report.
-Chris (Long MNDY 1.4%, about to be long GTLB)