Software version control is a very important element of the lifecycle of development. Developers share the latest version of code they are working on in a repository that helps all team members be on the same page.
Gitlab $GTLB filed to go public today and the S1 provides their overview, strategy and growth plans with financial background, which I will breakdown. This is an important software category so I am keen to seek a position in the fast growing company.
$GTLB helps multiple developers work on the same code without stepping on each others code or hindering the other’s progress. Each developer works on their own “branch” or copy of the main code and after making changes will “commit” changes via a “merge request”.
$GTLB Gitlab is an online hosted platform built on open source Git to help organizations manage their code repositories and the entire software development lifecycle.
$GTLB now has a complete platform for DevOps (Developer + Operations) which helps companies deliver software faster, securely and with fewer bugs. This helps them have an archive of previous changes and versions.
$GTLB The complete lifecycle of Devops spans project planning, or Plan, to source code management, or Create, to continuous integration, or Verify, to static and dynamic application security testing, or Secure.
$GTLB allows packaging artifacts, or Package to continuous delivery and deployment, or Release, to configuring infrastructure for optimal deployment, or Configure, to monitoring it for incidents, or Monitor.
Finally $GTLB helps to protect the production deployment, or Protect, and managing the whole cycle with value stream analytics, or Manage.
$GTLB was founded in 2014, a few years after the founders started their open source project, by Sytse “Sid” Sijbrandij (CEO), Dmitriy Zaporozhets and Valery Sizov.
In 2015 $GTLB raised series A funding from Khosla ventures and has raised over $400M to date. Gitlab was last valued at $6B in a private market transaction in Jan 2021.
$GTLB Revenues in CY Q2 rose by 69% to $58.1M ($230M annualized), with losses at $40M. The company has over 1345 “fully remote” employees in 65 countries. They have a net retention rate of 152% – which is among the best in the industry.
$GTLB gross margins are a very healthy 88% (industry leading) and 52% operating margins, which are terrific as well. They have over 3600 customers and over 2600 contributors to their open source projects. 383 customers spend over $100K annually.
From a few friends who use $GTLB in the valley they are a very sticky application. Once a customer decides to implement Gitlab they rarely leave.
$GTLB competes with $TEAM Atlassian (BitBucket) and $MSFT (GitHub) and many other source code repository solutions. The market opportunity for the DevOps Platform is approximately $40 billion according to Gartner, which makes this a large TAM.
My analysis: I like $GTLB a lot and will be interested in a position, but I suspect given market conditions the company will be public at $10B to $15B valuation, which implies a 43X to 65X NTM revenue multiple for a company growing at 69%. If I am able to get in under $9B valuation, which I doubt, then I could consider sizing up to 2% of my portfolio.
