DevOps software provider GitLab filed its S-1 with the SEC in September 2021. The company went public Thursday via Nasdaq under the “GTLB” symbol. It sold shares in the lead up to the IPO at $77, which was above the target price range of $66 to $69. GitLab’s stock popped even higher on opening day, reaching nearly $97. That pushed its market cap above $13.5 billion. GitLab helped execute the sale of its shares on secondary markets in November 2020 that valued the company at around $6 billion.
WHAT DOES GITLAB DO?
GitLab began in 2011 as an open-source project and converted to a for-profit company in 2014. It describe its application as “a fundamentally new approach to DevOps consisting of a single codebase and interface with a unified data model.” The field of DevOps, a portmanteau containing elements of “software development” and “IT operations,” arose in response to the increasing complexity associated with running software over the internet.
GitLab’s application is intended to support businesses through the software development lifecycle. It includes functionality for collaborating on writing code, verifying that code, uploading it to the cloud, monitoring its performance and embedding it with security best practices. All of these features exist within the same codebase and user interface. GitLab estimates that the total addressable market opportunity for its DevOps Platform stands at $40 billion and will grow to $52 billion by 2024.
GitLab distributes its product under either the self-managed or SaaS models. With self-managed service, customers install the GitLab software in their own private or hybrid cloud. With SaaS, customers access the software through a public cloud managed by GitLab. The self-managed service accounts for the bulk of GitLab’s revenue, but SaaS has grown from accounting for 9% of ARR in fiscal 2020 to 16% in fiscal 2021. GitLab also partners with Google Cloud and AWS — which it calls “strategic hyperscaler partnerships” — to sell to customers on its marketplaces.
There are three tiers of access to GitLab: free, premium and ultimate, sold on a per-user basis with priced tiers ranging from $19 to $99 per month. GitLab says its target persona for premium is managers and directors, whereas ultimate targets executives. Customers can buy into the plans on either annual or multiyear contracts. GitLab disclosed in the S-1 that most of its contracts are invoiced annually with cash provided upfront.
GitLab is losing a lot of money, but it’s still in the growth phase and has a strong overall financial outlook.
For its fiscal year 2021, GitLab lost a whopping $192 million. That was a 47% increase from the $131 million lost in the same period a year prior.
A good sign for GitLab is that its revenues are growing much faster than net losses: GitLab generated $152 million in net revenue for the fiscal 2021, nearly double the $81 million generated in fiscal 2020.
So why the giant net losses? GitLab’s biggest expense by far is its personnel. In particular, it recorded nearly $112 million in total stock-based compensation expense for fiscal 2021; it was nearly $41 million the year prior. Even though GitLab breaks its expenses into different categories — including cost of revenue, sales and marketing, research and development, and general and administrative — it frequently cites “personnel-related expenses” as a primary driver of cost increases across these categories.
WHAT PEOPLE ARE SAYING
“We open-source and share all the ways that we work remotely so that we are a key contributor to the broader workplace community. Now, not every head of remote will be that involved in all of those efforts, but GitLab is a pioneer in this space and we’ve had years of building that foundation that puts us in a great position to be able to advocate and share. We’ve been officially all remote since 2015.” —Darren Murph, head of remote at GitLab, told Protocol’s Amber Burton in an interview.
“From the beginning of GitLab, we have been all-remote as the initial team members lived in the Netherlands, Ukraine, and Serbia. GitLab was founded before remote work was a proven model, so investors were worried about our ability to effectively manage the business and scale.” —GitLab wrote in its S-1.
“Nothing against GitLab, but a risk factor for having a public company handbook?” —Renaissance Capital tweeted in response to the S-1.