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GitLab debuts on Nasdaq after pricing IPO above expected range

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GitLab shares jumped 22% on their first trading day Thursday after the developer collaboration software provider sold shares well above its expected range when it went public.

Trading on the Nasdaq under the ticker symbol “GTLB”, GitLab valued its stock at $ 77 on Wednesday night, valuing the company at around $ 11 billion. GitLab had said it would likely sell shares for between $ 66 and $ 69 each. The stock opened at $ 94.25, bringing GitLab’s market cap to $ 13.5 billion

Since its inception almost ten years ago, GitLab has pursued 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 rapidly grown as the only major independent player in the market.

Second-quarter revenue jumped 69% from a year ago to $ 58.1 million. However, given that GitLab spends the equivalent of three-quarters of its revenue on sales and marketing, largely to grow its developer user base, the company recorded a net loss of $ 40.2 million last year. trimester.

People celebrate the Gitlab IPO on the Nasdaq on October 14, 2021.

Source: Nasdaq

GitLab raised nearly $ 650 million in the offer, and investors purchased more than $ 150 million of additional shares 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 the combination of developers and IT operations. The software allows users to work on code, package it, publish it and monitor it. Customers can run GitLab in any public cloud, their own data center, or as a service hosted by GitLab.

The company makes money with its high-end products. For $ 19 per month per user, GitLab includes business tools and faster code reviews, and for $ 99 per month, users get features like security and compliance. Some 383 customers spend at least $ 100,000 a year, 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 selling additional subscription services,” said GitLab.

GitLab said its net revenue retention rate, a key metric for subscription software companies as it shows customer success, climbed to 152% during the July period. This would place it among the best publicly traded software companies.

This is also the main reason, along with the growth of GitLab, that the company has such a high revenue multiple. With a market cap of $ 13.5 billion, GitLab is trading for roughly 58 times annualized revenue, below just four of 58 companies in the Bessemer Cloud Index and above Atlassian.

GitLab is widely known as a pioneer in remote working. While businesses have been forced to adapt to distributed work during the pandemic, GitLab started out that way and hasn’t had to change much for its 1,350 employees operating in more than 65 countries. In the header of its prospectus, Gitlab indicates “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 equity. This was an increase from a valuation of $ 2.7 billion in a fundraising round in late 2019.

In its “team manual” on its website, GitLab had openly announced its intention to go public by November 2020. After the pandemic struck early last year, disrupting the economy at large, the company canceled the schedule for its debut while indicating that a public list was still on the roadmap.

GitLab co-founder Sijbrandij is the largest stakeholder in the company, with 19% of the stake before the offer, according to the prospectus. Khosla Ventures owns 14%, followed by ICONIQ at around 12%, August Capital at 11% and GV (formerly Google Ventures) at just under 7%.

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