FINANCE

CODE WARS

GitLab goes public at an $11B valuation to support the hybrid work economy.

JAMES FERGUSON

Sid Sijbrandij

Sid Sijbrandij- Co-Founder & CEO

 

While the name GitLab appears to be a scary laboratory, it is not! GitLab is a massive software company, once named "the Facebook of programming." It is a one-stop-shop for developers to create, store, and distribute new software. Instead of sending a "per my last email: code change" to your coworker, you can see and make all changes in one place. San Francisco 49ers legend Joe Montana invested $100K in GitLab through his fund Liquid2 Ventures in 2015 when GitLab's valuation was $12M. On October 14, 2021, the company went public trading on the Nasdaq Global Select Market under the ticker symbol "GTLB."

Shares of GitLab jumped 35% after going public on the Nasdaq. GitLab closed well above its IPO price of $77, giving it a $14B+ valuation, nearly double what it was in January. During the pandemic, they benefited from companies rushing to streamline their operations remotely. It generated $152M in revenue in 2020 — up nearly double from 2019.

GitLab's main competitor, GitHub, has more than 65M developers and was scooped up by Microsoft in 2018 for $7.5B. GitLab has attracted new users by offering its popular DevOps software free. The hope was more nonpaying users would turn into premium paying subscribers, but it hasn't panned out. Less than 1% of GitLab's 30M users converted to a $19.99 or $99.99 a month subscription. For context: Spotify had a 46% conversion rate in 2019. GitLab lost $40M last quarter due to ramping up its marketing budget to attract big spenders.

Developers are the backbone of the hybrid work economy, but they need the tools to keep up with cloud demand. As more companies offer a flexible work-fromhome lifestyle, businesses must make office apps available remotely. Companies like GitLab, whose employees are 100% remote, are gaining steam by trying to make that transition seamless. Still, it could be a while before they make money doing it. As I am writing, "GTLB" is now trading around $126 per share.

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