As someone with zero tech background, I’m seeking input from the board on GitLab.
GitLab filed their S1 on Friday. https://www.sec.gov/Archives/edgar/data/0001653482/000162828… I’ve heard of GitHub, owned by Microsoft, which I understand is a competitor. It seems a lot of people do like/prefer GitLab though.
Here’s what I’ve learned so far:
GitLab was incorporated in 2014. It is cofounder led by CEO Sytse Sijbrandij. The company has very positive glassdoor ratings: 4.6 stars, 274 reviews with 97% approve of CEO.
It has 1350 employees in 65 countries and is a 100% remote-only workforce. GitLab has pioneered “The DevOps Platform”, a single application that “brings together development, operations, IT, security, and business teams to deliver desired business outcomes. Having all teams on a single application with a single interface represents a step change in how organizations plan, build, secure, and deliver software.” They aim to reduce software development cycle times from “weeks to minutes.”
Ok, to me that sounds like they should be mission critical to a company. They should be a very sticky platform. The numbers (see further below) mostly looked good to me.
This is a SaaS company. The company believes the total addressable market is $40 billion.
GitLab uses an open core business model.
A free tier with lots of features to encourage use of their platform, solicit contributions, and serve as lead generation for paid customers.
Two paid subscription tiers allow access to ‘more features’ relevant to ‘managers, directors, and executives.’
A typical subscription contract is 1 to 3 years.
As usual, this company like many others, boasts of a virtuous flywheel cycle: more community contributions lead to more features, leading to more users, leading back to more contributions.
They have a land and expand strategy that starts with developers and expands to executive buyers.
GitLab certainly appears to be a hypergrowth company. Their run rate revenue based on last quarter ending 7/31/21 is 233M.
FY20 FY21
Total FY revenue 81.2 152.2
FY growth YoY 87%
GitLab has very high gross margins:
FY20 FY21
Gross margins 88% 88%
They define “base customers” as those generating $5000 or more in annual recurring revenue, which are growing:
1/31/20 7/31/20 1/31/21 7/31/21
Base customers 1662 2126 274 3632
Growth rate YoY: 65% 71%
They are also growing 100K and 1 million ARR customers fast:
1/31/20 7/31/20 1/31/21 7/31/21
$100K ARR customers 173 219 283 383
Growth rate YoY 64% 75%
1/31/20 7/31/20 1/31/21 7/31/21
$1 million ARR customers 11 15 20 27
Growth rate YoY 82% 80%
Low churn (note, their fiscal year end is January 31):
FY20 FY21
Dollar based gross retention rate 97% 97%
However, I have a concern about recent revenue growth…
3 months ending 4/30/20 7/31/20 10/31/20 1/31/21 4/30/21 7/31/21
Revenue (millions) 29.515 34.362 42.152 46.147 49.930 58.127
QoQ rev growth 16.4% 22.7% 9.5% 8.2% 16.4%
YoY quarterly rev growth 92% 73% 69% 69%
QoQ growth appears all over the place, but it looks like they claim there is seasonality: “we typically enter into a higher percentage of subscription agreements with new customers and renewals with existing customers in the third and fourth quarters of each year.”
YoY quarterly growth, however, has decelerated over the last four quarters…but they boast a whopping dollar based net retention rate of 152% as of July 31, 2021.
FY20 FY21 6mo ending 7/31/20 6 mo ending 7/31/21
DBNRR 179% 148% 153% 152%
Improving op cash flow margins:
FY20 FY21 6 mo ending 7/31/21
Operating cash flow margin (74.1%) (48.4%) (35.8%)
They are being very aggressive with sales/marketing, having spent more than their entire fiscal year revenues on it (99.225M in FY20 and 154.1M in FY21 on sales/marketing expense, including SBC). Sales/marketing expense increased 55% YoY, while revenue increased 87% YoY.
Now, I’ve looked at some online comments (https://news.ycombinator.com/item?id=28568101) on GitLab versus GitHub, and many seem very positive:
“Gitlab is one of the pioneers of “remote-first” and “building in public” to the extent of sometimes even live-streaming CEO meetings and sales pitches"
"Yes, Gitlab has been leading the way for a while now, consistently introducing new features that Github eventually copies. It’s a real testament to the power of competition. I first started using Gitlab due to free private repositories, which Github eventually added. Gitlab had free built-in CI/CD first, and Github eventually followed. I’m still on Gitlab these days despite Github catching up, and still enjoying features like organizations with subfolders that Github lacks.
But some negative comments:
“Yeah I absolutely support Gitlab and love seeing new projects use Gitlab over Github.
But to be fair, they have a massive backlog of issues to fix. Basic issues too, like variables not expanding correctly in CI jobs, or Google not being able to index projects on gitlab.com unless there’s another page already linking to it.
"I’ve been using Gitlab.com and Gitlab on-prem since 2013 and over the years I’ve found many of these bugs that I feel should be top priority instead of new features.”
“I really wanted to like gitlab, but have had so many reliability issues. The UI thinking the source branch doesn’t exist, CI jobs not running for hours etc”
“I haven’t personally had a compelling enough reason to move from GitHub to GitLab, so I mostly just use it to mirror a couple of my repos there in case people prefer to browse various open source projects via GitLab.”
What are the thoughts on GitLab, particularly regarding revenue growth decelerating recently but great margins, DBNRR…and anyone who has experience with their product, or comments on GitLab vs GitHub would be helpful (are there other competitors besides GitHub?)
We’ll see their IPO pricing soon. They were valued at $6 billion last year, and I’m sure they’ll come out of the gate much richer than that. I’ll be definitely keeping them on watch (they will list on Nasdaq as ticker GTLB)
