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Want a piece of GitLab? It's going to cost you: IPO price per share settles at $77
One-stop shop all the way to the bank
The one-stop shop approach by DevOps darling GitLab appears to have attracted an Initial Public Offering price of $77, giving the loss-making biz a potential valuation of $11bn
GitLab finally filed for an IPO in September and this week upped the estimated price per share to between $66 and $69. The eventual price has turned out to be $77, well above the initial $55 to $60 first estimated.
8.42 million shares of Class A common stock are being sold. Founder and CEO Sytse Sijbrandij is selling another 1.98 million shares, according to the filing. Should that $77 price survive the start of trading today, GitLab's market value will nudge past $11bn.
GitLab has continued to burn cash over the years. Net loss for the six months ended 31 July 2021 was $69m, up from $43.5m for the same period last year. Despite predicting a jump in quarterly run rate to $233m in its IPO prospectus for Q2 FY22 (up from $137m in Q2 FY21), GitLab faces stiff competition in the DevOps arena. It noted that Microsoft (thanks to its acquisition of GitHub) was a principal competitor but reckoned its one-stop shop offer covering the whole of an average DevOps lifecycle would be sufficient to fend off rivals.
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Some assessments of the software development company have been scathing, with one observer reckoning it was "overpriced" and suggesting that even a valuation at the lower end – $8bn – would still imply the achievement of some "very optimistic milestones."
GitLab lays claim to 3,632 base customers (those with more than $5,000 of annual recurring revenue) and 383 customers with annual recurring revenue of $100,000, according to the IPO documentation. It also said that its experience has been one of rapid growth but admitted it depended on converting non-paying users to paying users and had "limited historical data with respect to the number of current and previous free users and the rates in which customers convert to paying customers."
Still, the firm noted that attempts to nudge customers toward its paid-for products through the discontinuation of the starter and bronze tiers. GitLab will need to accelerate that trend if it is to justify what looks like some very ambitious pricing. ®