$GTLB continued the trend of software companies beating lowered expectations with revenue outpacing consensus by 8 points with a 32% Y/Y increase, totaling $150M. Enterprise was the standout with the number of customers over $100,000 in ARR rising by 37% Y/Y, totaling 874 and the Ultimate tier continues to be a significant driver, representing 43% of ARR and accounting for over 50% of bookings. Dollar-based net retention rate came in at 128% (would have been 124% under old methodology) and was flat sequentially. The company also reported its first ever positive non-GAAP operating margin, which came in at 3.7%. and FCF came at -4%. The company experienced a stable Y/Y growth in cRPO of about 34%. RPO growth accelerated to 40% Y/Y, supported by strong sequential growth and impacted by renewals at new price points, and average contract duration has slightly increased to around 15 months. Premium price increases implemented in April will contribute $10-$20M of incremental revenue next year. FY revenue guidance was raised by approximately 3% or $17.5M to $573M-$574M, indicating an expected Y/Y growth of ~35%. Non-GAAP loss is anticipated between $9M to $10M, significantly less than previous forecasts. There was some weakness in net new customer adds in and could indicated the GTM strategy still needs some tweaks. While enterprise showed strength the SMB/mid-market segment continued to be challenged.
Nice, thanks for sharing. I like Gitlab, but NTM "Rule of 40" (revenue growth + profit margin) is pretty soft at 27%. Software companies valued around the same multiples are closer to 40-50% in the NTM.
I only mention because of the increased emphasis on profitability. I tend to think the position is a tad rich where its trading, but I think it'll do quite well over a long time horizon regardless.
Thanks for reading. I like the company as well but not so much the stock at this level. A lot of growth and execution is priced in and any hiccup will send shares much lower.
Appreciate this write up! Just starting to track GTLB. Which firms would you consider comps? TEAM? Trying to get a sense of whether GTLB's growth is stealing share from other firms.
Thank for reading! The most direct competitor is obviously GitHub but MSFT doesn't break out a ton of details on it. TEAM is another and even more so now that GTLB is going after the non developer market and looking to compete with Jira. FROG is another one and there are other point solution providers as well.
Nice, thanks for sharing. I like Gitlab, but NTM "Rule of 40" (revenue growth + profit margin) is pretty soft at 27%. Software companies valued around the same multiples are closer to 40-50% in the NTM.
I only mention because of the increased emphasis on profitability. I tend to think the position is a tad rich where its trading, but I think it'll do quite well over a long time horizon regardless.
Thanks for reading. I like the company as well but not so much the stock at this level. A lot of growth and execution is priced in and any hiccup will send shares much lower.
Agreed!
Appreciate this write up! Just starting to track GTLB. Which firms would you consider comps? TEAM? Trying to get a sense of whether GTLB's growth is stealing share from other firms.
Thank for reading! The most direct competitor is obviously GitHub but MSFT doesn't break out a ton of details on it. TEAM is another and even more so now that GTLB is going after the non developer market and looking to compete with Jira. FROG is another one and there are other point solution providers as well.