People celebrate the Gitlab IPO on the Nasdaq Stock Exchange, October 14, 2021.
GitLab shares jumped 22% on Thursday’s first trading day after the software provider to collaborate with developers sold shares well above the range expected in its IPO.
Trading on the Nasdaq under the symbol “GTLB,” GitLab priced its stock at $77 late Wednesday, valuing the company at nearly $11 billion. GitLab said it will likely sell shares at $66 to $69 per share. The stock opened at $94.25.
Since its founding nearly a decade ago, GitLab has been chasing GitHub in the source repository market, which also includes Atlassian’s Bitbucket. GitHub was acquired by Microsoft in 2018 for $7.5 billion, and since that time GitLab has rapidly grown as the only large independent player in the market.
Revenue in the second quarter jumped 69% from a year earlier to $58.1 million. However, because GitLab spends the equivalent of three-quarters of its revenue on sales and marketing, largely to build its developer user base, the company posted a net loss of $40.2 million last quarter.
GitLab raised nearly $650 million in bid, and investors bought more than $150 million in additional stock from an entity affiliated with GitLab CEO Sid Sijbrandij.
GitLab offers a free version of what the company calls its DevOps platform, a term referring to a mix of developers and IT operations. The software allows users to work on, encapsulate, edit and monitor the code. Customers can run GitLab in any public cloud, their own data center, or as a service hosted by GitLab.
The company makes money from its premium products. For $19 a month per user, GitLab includes enterprise tools and faster code reviews, and for $99 a month, users get features like security and compliance. About 383 customers spend at least $100,000 annually, GitLab said in its prospectus.
“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 by ramping up additional subscription services,” GitLab said.
GitLab founders, Dmitriy Zaporozhets and Sid Sijbrandij
GitLab said the net revenue retention rate, a key metric for subscription software companies because it shows customer success, rose to 152% in the July period. This would make it among the best publicly traded software companies.
It’s also the main reason, along with GitLab’s growth, that the company commands such a high income. With a market capitalization of $11 billion, GitLab will trade around 47 times annual revenue, just below six of the 58 companies in the Bessemer Cloud Index, and just above Atlassian.
GitLab is widely recognized as a pioneer in remote work. While companies have had to adapt to distributed work during the pandemic, JetLab got started this way and didn’t have to change much of anything for its 1,350 employees in more than 65 countries. In the title of the prospectus, Gitlab says “Title not applicable”.
GitLab, founded in 2012 and established two years later, was valued at $6 billion in secondary funding, confirmed in early 2021, that allowed existing shareholders to sell up to 20% of their acquired shares. That was up from a $2.7 billion valuation in a late 2019 funding round.
In a “team handbook” on its website, GitLab publicly announced its plan to go public by November 2020. After the pandemic hit early last year, disrupting the broader economy, the company canceled the timing of its debut with the noting that the public listing was not Still on the road map.
GitLab co-founder Sijbrandij is the company’s largest shareholder, holding 19% of the ownership before the offering, according to the prospectus. Khosla Ventures owns 14%, followed by ICONIQ with about 12%, August Capital with 11%, and GV (formerly Google Ventures) at less than 7%.
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