@wsm007 - a couple of points to factor into your analysis:
Keep in mind that part of that surge was due to the price increase they introduced for their Premium Tier. Management was asked twice to break-down how much the price increase contributed and they refrained from answering. They did mention that they anticipate the contribution from this price increase to be in the $10M-$20M range for this FY. Not saying its not a valid lever to pull, but worth noting that its not all just a ramp-up in customer momentum.
Without the price increase, I doubt NRR would’ve ticked upwards, as an entire tier of customers had to either churn or accept the higher price. Also makes me wonder the about the proportion of customer adds and RPO that were attributed to this.
Secondly, though Q4 was strong, guide for Q1 points to ~$7M sequential increase. Stronger than Q1’23 but not nearly close to 2H’23.
I don’t think anyone buys it, but I don’t think its flagrantly off. For what it’s worth, I’m penciling in ~33%. Like Samsara, management lowered the expectations regarding expected beats this year too.
The lack of leverage was the biggest story in their latest quarter. The market was expecting a ramp-up in FCF and OpMargin as it had been implied throughout the year; but it seems that management decided to delay profitability by a year. I don’t doubt that they’ll exceed their guide, but this is where I’d like to see some progress.
Headcount actually decreased YoY, and there does seem to be incremental improvements in S&M/Revenue (56% to 45% in a year).
Almost any developer I talk to is using Github copilot, so it will be interesting to see the momentum that Gitlab duo starts picking up…
Tempering my expectations because I’ve been burned by this one before. That said, I definitely think the setup is much better now (at ~10x EV/ntmS with reset expectations) than before their Q4 (at ~15x EV/ntmS with expected profitability).
-RMTZP