People celebrate the Gitlab IPO on the Nasdaq on October 14, 2021.
GitLab shares rose 22% on its first day of trading on Thursday after the developer collaboration software provider sold shares well above its expected range on its IPO.
Trading on the Nasdaq under the ticker symbol “GTLB,” GitLab priced its stock at $ 77 on Wednesday night, valuing the company at about $ 11 billion. GitLab had said that it would likely sell shares for between $ 66 and $ 69 each. The stock opened at $ 94.25.
Since its founding nearly a decade ago, GitLab has been pursuing GitHub in the source repository market, which also includes Atlassian’s Bitbucket. Microsoft acquired GitHub in 2018 for $ 7.5 billion, and since then GitLab has grown rapidly as the only major independent player in the market.
Revenues in the second quarter increased 69% from the prior year to $ 58.1 million. However, because GitLab spends the equivalent of three-quarters of its revenue on sales and marketing, primarily to build its developer user base, the company posted a net loss of $ 40.2 million in the latest quarter.
GitLab raised close to $ 650 million on the offering, and investors bought more than $ 150 million in additional shares of an entity affiliated with GitLab CEO Sid Sijbrandij.
GitLab offers a free version of what the company calls its DevOps platform, a term that refers to the combination of developers and IT operations. The software allows users to work on the code, package it, publish it, and monitor it. Customers can run GitLab on any public cloud, their own data center, or as a GitLab-hosted service.
The company makes money with its Premium products. For $ 19 / month per user, GitLab includes faster code reviews and enterprise tools, and for $ 99 / month, users get features like security and compliance. Some 383 customers spend at least $ 100,000 a year, GitLab said in its user information.
“Our future success depends, in part, on our ability to convert users of our free product offering into paying customers by selling additional products and selling additional subscription services,” said GitLab.
GitLab founders Dmitriy Zaporozhets and Sid Sijbrandij
GitLab said its net revenue retention rate, a key metric for subscription software companies because it shows customer success, rose to 152% in the July period. That would place it among the top publicly traded software companies.
It is also the main reason, along with the growth of GitLab, why the company has such a high revenue multiple. With a market capitalization of $ 11 billion, GitLab would trade for roughly 47 times annual revenue, below just six of the 58 companies on the Bessemer Cloud Index, and just above Atlassian.
GitLab is widely known as a pioneer in remote work. While companies were forced to adapt to distributed work during the pandemic, GitLab started out that way and didn’t have to modify much for its 1,350 employees operating in more than 65 countries. In the header of your prospectus, Gitlab says “address not applicable.”
GitLab, which was founded in 2012 and incorporated two years later, was last valued at $ 6 billion in secondary financing, confirmed in early 2021, which allowed existing shareholders to sell up to 20% of their acquired capital. . That was up from a $ 2.7 billion valuation in a funding round in late 2019.
In its “equipment manual” on its website, GitLab had openly declared its plan to go public in November 2020. After the pandemic struck early last year, which shook the overall economy, the company dismissed the timing of its debut, stating that a public listing was still on the waybill.
GitLab co-founder Sijbrandij is the company’s largest shareholder, owning 19% before the offering, according to the prospectus. Khosla Ventures owns 14%, followed by ICONIQ at about 12%, August Capital at 11%, and GV (formerly Google Ventures) at just under 7%.
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