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GitLab spots huge opportunity for DevOps platform as revenue soars
All companies will need to embrace modern software development, says CEO, and we'll be waiting for them
GitLab believes the world is in the midst of a "generational disruption" where all companies will need to embrace modern software development practices, and reckons it can take advantage by positioning itself as the enterprise-grade alternative to homegrown DevOps point solutions.
In a bullish Q1 2023 earnings conference call, GitLab co-founder and CEO Sytse "Sid" Sijbrandij said the business need for digital transformations remains strong despite uncertain economic conditions. He added that GiLab believes all companies are becoming software-driven businesses and this will require an increasing number to build modern software development practices.
"In a world where software defines a speed of innovation, we believe every company has to become great at developing, securing and operating software to remain competitive," Sijbrandij said.
This is a familiar theme to anyone who has followed software development trends or the IT industry in general, but Sijbrandij went on to state that GitLab sees the market for tools to meet these requirements as being both very large and at an early stage in development, such that the company believes that its One DevOps platform is potentially addressing an estimated $40 billion opportunity.
"We're focused on selling a business outcome and a time to value. Thus, our competition is largely to Do-It-Yourself or DIY DevOps solutions that companies have in place today," he claimed.
There is no shortage of tools competing in the DevOps space, of course, but GitLab is pushing its platform as a comprehensive integrated solution that brings together all the relevant DevOps capabilities in one place.
"Most companies are still practicing DIY DevOps, juggling many different tools with homegrown integrations related to co-development, deployment and operations. These integrations take more and more effort and over time it starts looking like digital duct tape," Sijbrandij said.
This is particularly important when trying to solve "a fragmented security experience" with DevSecOps, according to Sijbrandij, who said that GitLab's most recent launch added functionality to help developers address security issues as part of their normal development workflow.
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As far as the numbers go, GitLab exceeded its guidance for Q1 2023 with reported revenue of $87.4 million, which is 75 percent up on the same period last year. The company said that the primary driver of this continues to be existing customers increasing the number of GitLab users within their organizations.
However, despite this growth, GitLab recorded a net loss of $26.1 million, but down from the $27.9 million loss reported for the same quarter last year.
Sijbrandij claimed GitLab is also increasing the rate at which it adds new customers and scores larger strategic commitments, saying it has seen growth in both $1 million deals and $500,000 deals during the quarter.
GitLab chief financial officer Brian Robbins said the company's customer base is "well diversified" across industry verticals, customer sizes, and geographic regions, and that at the end of the quarter had over 5,100 customers with annual recurring revenue (ARR) of at least $5,000 compared to 4,500 customers in the prior quarter, representing a year-on-year growth rate of approximately 64 percent.
In line with the DevOps ethos, GitLab issues monthly updates to its platform, with the most recent being version 15 delivered on May 22. This focused on visibility and observability capabilities following GitLab's acquisition of OpsTrace last year. ®