GitLab’s stake soared 22% early Thursday after software providers for developer collaboration sold their stake in the IPO beyond what was expected.
GitLab, which trades on the Nasdaq under the ticker symbol GTLB, set its share price at $77 at the end of Wednesday with a valuation of about $11 billion. GitLab said it could sell its shares for $66 to $69 per share. Shares opened at $94.25, bringing GitLab’s market capitalization to $13.5 billion.
GitLab has been following GitHub in the source repository market since its inception nearly 10 years ago. This includes Atlassian’s Bitbucket. Microsoft acquired GitHub in 2018 for $7.5 billion, and GitLab has since grown rapidly into the only large independent player in the market.
Second quarter revenue was $58.1 million, up 69% from last year. However, GitLab reported a net loss of $40.2 million last quarter, as it spends three-quarters of its revenue on sales and marketing, primarily to build a user base for developers.
People celebrate Gitlab IPO on NASDAQ on October 14, 2021.
GitLab has raised approximately $650 million in the offering, and investors have purchased more than $150 million in additional shares from an entity affiliated with GitLab CEO Sid Sijbrandies.
GitLab offers a free version of what the company calls the DevOps Platform. It is a term that refers to a combination of developers and IT operations. This software allows users to manipulate, package, release and monitor code. You can run GitLab in any public cloud, your own data center, or as a service hosted by GitLab.
The company makes money from premium products. For $19 per user per month, GitLab includes enterprise tools and fast code reviews, and for $99 per user, users can take advantage of features such as security and compliance. GitLab states in its prospectus that approximately 383 customers spend at least $100,000 annually.
“Our future success depends in part on our ability to convert free product offering users into paid customers by selling additional products and additional subscription services.” GitLab said.
According to GitLab, net revenue retention, a key indicator of customer success for subscription software companies, increased to 152% over the July period. This will place it among the top listed software companies.
This is also the main reason why GitLab is leading in these high revenue multiples as it grows. With a market capitalization of $13.5 billion, GitLab trades at nearly 58 times its annual revenue, below four of the 58 Bessemer Cloud Index companies and above Atlassian.
GitLab is widely known as a pioneer in remote working. Companies were forced to adapt to decentralized work during the pandemic, but GitLab started that way and nothing had to change for its 1,350 employees working in more than 65 countries. Was. In the prospectus header, GitLab states that “addresses do not apply.”
Founded in 2012 and two years later, GitLab has a secondary loan confirmed in early 2021 and finally worth $6 billion, allowing existing shareholders to sell up to 20% of their stake. It’s gone. This is up from the $2.7 billion valuation in the funding round at the end of 2019.
GitLab has publicly stated in its website “Team Handbook” that it plans to publish it by November 2020. After the outbreak of a pandemic and the expansion of the economy early last year, the company skipped its launch showing its listings. It was still on the roadmap.
According to the prospectus, GitLab co-founder Sijbrandies is the company’s largest stakeholder and owned 19% prior to the offering. Khosla Ventures owns 14%, followed by ICONIQ 12%, August Capital 11% and GV (formerly Google Ventures) less than 7%.
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