I owned GTLB quite a while back. I last wrote about the stock in October 2022 and exited in November 2022.
I decided to take a position again today.
Latest results: https://ir.gitlab.com/financial-information/quarterly-results
Revenue
Yoy revenue was up 33% in Q4 and 36.7% for the year:
| Revenue | Q1 | Q2 | Q3 | Q4 |
|---|---|---|---|---|
| 2021 | 42.2 | 46.2 | ||
| 2022 | 49.9 | 58.1 | 66.8 | 77.8 |
| 2023 | 87.4 | 101.0 | 113 | 122.9 |
| 2024 | 126.9 | 139.6 | 149.7 | 163.8 |
The absolute $ increase in revenue:
| Incr Rev | Q1 | Q2 | Q3 | Q4 |
|---|---|---|---|---|
| 2021 | 4 | |||
| 2022 | 3.7 | 8.2 | 8.7 | 11.0 |
| 2023 | 9.6 | 13.6 | 12.0 | 9.9 |
| 2024 | 4.0 | 12.7 | 10.1 | 14.1 |
→ That is a new record for new quarterly revenue. Compare that with Monday, which is at a higher revenue scale but can’t seem to accelerate that number.
The key other reasons for me re-entering this name are:
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NRR: they calculate NRR on ARR, which makes it a forward-looking metric. This has now shown two q’s of improvement and ended on a very healthy 130%. Last 5 q’s: 133% → 128% → 124% ->128% ->130%
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Margins: GM% up to a record 92%. Second q of op margin positive: from 3% last q to 8% in Q4, up 19%pts yoy. There is definitely leverage kicking in:
| Op Margin% | Q1 | Q2 | Q3 | Q4 |
|---|---|---|---|---|
| 2021 | -103% | -78% | -53% | -48% |
| 2022 | -45% | -42% | -36% | -35% |
| 2023 | -28% | -27% | -19% | -11% |
| 2024 | -12% | -3% | 3% | 8% |
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Large customers. They have 50% of the F100 as customers, and their >$100k ARR customers grew sequentially by 7%, 8% and 9% the last 3 q’s, for 37% growth in all. They now have 96 >$1m ARR customers, up 52% yoy.
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RPO & cRPO: up 55% and 39% respectively, both pointing to acceleration, or at least bigger commitments from customers. This is a similar trend to what we saw with Snowflake’s results.
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Competitive position - it’s basically them, MS and Atlassian, and they seem to be taking share from both as shown in these two graphs from Gartner and Forrester.
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Guidance of 26% for the coming year is also now the consensus analyst view for next year. I don’t buy it…the NRR alone, if maintained, will result in a ±30% revenue growth, all else being equal. All the analysts also questioned this, but still went with the guide for their forecasts.
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Product development. They have greatly improved their product in the last years, and have smartly incorporated AI in just about everything. I thought this was a great slide from their most recent ER presentation:
→ All in all this seems like a company that has a lot of momentum in the actual numbers, vs a slowdown in the guide. I took a position as I think the numbers tell the real story.
Any other takes??
-wsm