GTLB - Earnings call transcript Q2 2023

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Operator

[Abrupt Start] … Quarter of Fiscal Year 2023 Financial Results Presentation. GitLab's Co-Founder and CEO, Sid Sijbrandij; and GitLab’s Chief Financial Officer, Brian Robins will provide commentary on the quarter and fiscal year. Please note, we will be opening up the call for panelists’ questions. To ask a question, please use the chat feature and post your question directly to IR questions using the drop down menu.

Before we begin, I'll cover the Safe Harbor statement.

we federal forward-looking securities call, meaning within conference the of laws. this may statements make the During These statements actual involve and materially unknown assumptions those and are and from that subject uncertainties could or cause discussed results differ risks to anticipated. to known

discussion today complete with associated filings, recent our in business, our risk in to our quarterly these to most Form encourage SEC you of refer statements XX-Q. report earnings our a For forward-looking we release on distributed including

information we currently release to or the reflect upon or to undertake Our us. reliance statement, you unanticipated forward-looking based of update any occurrence statements duty caution available not forward-looking events, any circumstances on or We are or or any to to events. obligation forward-looking do to to undue revisions future place report statements, and not any

financial website. most this financial will release GAAP Officer, and not to discussed be be SEC. our GitLab's release. as of by our with during referred Accounting press today's reconciliation in over call A are of measures section Investor for now our posted investors replay addition, turn the reconciliations available contained substitute Sid comparable Co-Founder call on non-GAAP that is statements a are believe Principles management our the earnings be to differ call, supplemental information our supplemental the with greater Executive website, comparing These detail intended results. Relations U.S. and prepared results of in at certain the will assist Sijbrandij. performance schedules additional in to Exchange Chief comparable I Commission in also the in Securities accordance and the of measures to Accepted financial financial these may included submitted measures discussed These In period-to-period as Generally the together from measures. earnings performance We measures measures in our a these GAAP non-GAAP that evaluating to and operations non-GAAP non-GAAP financial measures to

Sid Sijbrandij

for presentation. year us joining for earnings our you second quarter XXXX fiscal Thank

We results business, market indicate our in continue DevOps position. leadership we second the quarter our is to see believe embracing platform strong that our momentum that and

demonstrating high increasing while In fiscal to of executed XXXX, This in growth second ability exceeded with $XXX our with quarter achieve the represents operating revenue growth the million. also quarter, we revenue leverage. our guidance XX% year-over-year. of We of

of our as dollar consistent Our net our XXX%. retention and record based own threshold remains track rate company. public with best-in-class exceeded reporting This a

also economics results the underlying unit business. continue demonstrate Our to attractive second our quarter

basis environment. to operating in in macroeconomic Enterprises remain points great cloud disrupted. non-GAAP margin and or must improved they DevOps Every Our navigating by XXXX capability year-over-year, to be still company is uncertainty imperatives app matter. a growing responsible and called securing core needs operating have any software, developing, we while This committed will are digital be needing at and migration transformation, modernization. the economic a embrace what's of to

in more a Our people way essential have. fast efficiently secure with software already GitLab they customers the Delivering choose is and accomplish success. for that to

today. This mission-critical when business technology in do captivating and combination platform release allows also and work and point building, using software will helps create more drives There a everything that are strengthening them software security it the deploying, from user create resides experience. one and data solutions, costly you three compliance. and companies faster to while have I transformation. GitLab, eliminate main a empowers single planning, exactly software integration interface, topics cover a monitoring to application. we and one and DevOps Our model them efficient all software, that. With single With securing, This

approach. of DevOps enable will promise a platform to realize we how moving the all of First, customers explain types to I by

discuss will GitLab we highlight XX the I launch. the our in from leading how major innovation product recent industry are enhancements and Second,

how to proposition I of value GitLab's are we view well-positioned our succeed. will share Third, and

pace Our GitLab innovation. the new far Every this with turn differentiation comprehensiveness is its we GitLab in We've ahead XXnd, with improvements. version starts our months in the platform. of core a rapid drives iteration, DevOps which XXX of and of row. of new month, for value in on features ship many our done a

by hundreds the our Our means contribute customers of driven all of innovation also core for which of us that by to drive and contributed are the value even to improvements of and customers. our customers. Every more platform, nature is quarter, users GitLab, enabling open differentiation capabilities our

a to the today's comprehensive in market, practices. compliance. extends also we enabling DevSecOps believe We differentiation adopt security business In software have process. and throughout truly GitLab, to security security companies development the integrated offering is Our imperative. most environment, and is security With deployment the

requirements create to believe need process. automation. different requires future the efficiency the and We to within among solutions, the chain the find Organizations modern into vulnerability libraries find. cannot software managers and platform. capabilities other productivity dependency switch testing, vulnerabilities compliance and of having enables and compliance their automated code Our which bundled software you to perform like point developers leave processes you This with of testing, supply have first are compliance and static shouldn't source resides workflow. of to dynamic dependencies trade-off When should code able to contact for without to open the losing QA management, their development. include speed the coverage you GitLab, of scanning compliance In innovation. in Developers compliance that write a is verify external their removes a customers that require don't be yourself. today, to guided have easily container visibility of Instead, all

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release. to across cycle. areas latest the of focused We Next, I three advancements in innovation like would on new GitLab life DevOps the discuss main XX, major our

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of continuous security area is second The innovation compliance. and

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scientists machine with step of multiple The scientists, Data significant and is have to cases it yet for find broaden need bespoke better, development a our even DevOps feature Today, manual the exciting the and review to been modern invite engineers benefits ways processes as from traditionally, next and and have code. we training, will more should historically who platform to toolchain quality, of like cycle version see platform deploying. data the They benefits involves and particularly because sprints, To go can they an us a provide more in collaboration enables is project platform we integrating use AI critical to of automation, in leveraging or developers models to now scientists the code. separate we life appeal use cloud Every infrastructure We excluded planning area it as simplified and providers. Those are and This a the essential consolidating how machine The streamline application product efficiency an and more intelligence efficiency and GitLab illustrate models. workflows. improve also engineers DevOps includes other managing our will development. teams, feedback, of which code and part themselves, area expert process, across learning To third innovation automated this in management application our going to product, the more workflows, maintain. as and testing where of the makes both artificial collaboration process relying with secure personas. on data creates higher validation learning. either our is big can testing better are this of and their have number from they MLOps to well help of process. personas stakeholders suggest that control which through who are

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give me a win, example a logo an Now up-tier you an customer new of expansion. and let

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previous they GitLab replacing implementation. As a a customer, SaaS result, became a Ultimate vendor's

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the professionals of success with approach now see clear. many GitLab to clearly cloud survey migration show together DevOps together DevSecOps of critical quarter, X,XXX is cloud team's the modernization consolidate Ultimate including market standardized thousands I'm needs. their around to recently across transformation Report, their need These the Among purchase XX% significantly threshold our They a The their in towards this a and combination like development of over growth see type toolchains embraced downtime and used continuous AWS their $X Their and reduce world. AWS. of digital of toolchains. saying and and of integration key critical DevOps development a moving us sixth other XX% users GitLab hundred teams software the second customer. tool their for quarter. close addition with participants between providers, for for now help They risk the stories deployment they'd very platform crossed industry calls consolidation. DevOps we from of is and alignment are with In need findings, app summary, chose employees DevOps. to making We alliances manufacturer the continuous success. business this pleased their and In the that process, continued research customer to of is required million of as which was several airline platform effort, published a have We developer study parts In model, partnerships goals. Annual to with to a licenses. bring an development DevSecOps a worked CICD. customer's that major GitLab loss our State of landmark the initial

innovate an expanded capabilities We customers. continue for and set to create new of

are is GitLab platform to demonstrate show in and of growing a approach, early that we to the and believe continue large mission-critical. continue that to We continue we over market. point promise solution a And we

XXXX. adviser Brian stay members, five He Chief GitLab Robins, wish well-positioned with Johnson, also has Eric turn results. October Eric demonstrate with on I'll last luck. as resigned been our partners, to QX thank months. an and to of GitLab six partnership community GitLab's the will for unit want I'm has contributed our I for to improving who Officer. Our since to X all over And and drive effective years durable call results the that thank our the growth to I best Eric now wider him Financial to our economics. CTO. want And the and grateful over customers we're team

Brian Robins

joining again the with and characteristics our and second quarter environment. our today. guidance. results Then, we're I'd business everyone conclude you moment recap macro the I will quickly key our Sid to like spend what us model to a in and key operating you, financial and of reviewing Thank thank seeing metrics

Our platform business delivers us and a positive strong continually ROI that model. support outcomes. they tell strongly Customers pricing our

paid tiers, Premium call Our and subscription platform Ultimate. a is two and free we offered version with which

understand. and user transparent to helps business per priced are on tiers different is user features paid our same per tier. the an to easy model with keep Our within organization which plan, Every

ability Our model to improving These business Fueling number I our a visibility; solution briefly. rather incremental an model a second of results quarter the and include: a sale; results our with sale margins. and high of ROI. customer are continued well would high-growth these across aspects cycle demonstrate short and drive geographic diversified like industry than discuss provides predictability to to subscription key established sizes implementation base regions; of customer that a verticals, documented a platform a that point

price U.S. we platform dollars. in our addition, In

recognize quarter, cycles. decisions, not customer Buying slowing to impact So, we we seven multiyear still customer results expanding the environment impact. have contribute second any sales need environment in the today. have ago have macroeconomic The to current cycles transformation elongating down the seen the currency illustrate seeing. no not business. this, is are digital increasingly Despite nor from to as new To address a are added business team our up in see cohorts volatility the a we years Customers We our attributes These sped experienced We're uncertainty executed we with we're and have happy of rates. hiring we on economy strong also and in XQ, members as across fill. the did we similarly over and we XXX the in strong win We members, for to that looking team attrition. benefit the new open continue positions actually lower number currently macro hiring. how actively to view we challenges.

with of approximately XX% X,XXX year. of at Next, rate the the increase X,XXX to a ARR ever XQ in number the over in with with single turning over in ended ARR. from year-over-year represent quarter. We numbers. We This $X,XXX customers base of an least Currently, of and than XX%. organically the to prior quarter the X,XXX this $XXX represents million Revenue customers XX% largest total added customers over customers in customers a ARR of approximately compared our prior prior year. $X,XXX represents quarter growth greater of

We the had of performance growth with customers larger XXX spending ARR measure define also $XXX,XXX our with FY XXXX, compared XXXX. quarter represents a and $XXX,XXX who growth at rate quarter customers more year-over-year to prior end of as quarter customers we in and ARR second us. At the XXX of customers, of of second in the than least approximately in FY the XXX of the XX%. those This we

of many to calculated good a indicator do be billings you business. As of believe our know, not we

period of number Given a factors, of history most large deals. by our notably that comparisons prior impacted be can multiyear prepaid

The be reporting quarter This for and rate XX% XX% XXXX XXX%. immediate with representing to the gross the RPO second which XXXX of ended with ARR best-in-class our XXXX. were quarter to fastest consistent with for the second continue quarter quarter, the a net continues track compares FY This public Non-GAAP quarter, in with in to grew our grow of compared threshold second growing margins our consistent retention XX% Ultimate remains quarter. FY year-over-year XX% the to of of previous XX% of tier, based dollar in $XXX quarter the FY as million. tier company. record We of which of excess XX% and preceding quarter and XXX%, second exceeded total the ARR a for

event. or We due improved As our QX revenue growth forward, rapid the to operating performance a or by are $X.X of compared second Contribute, We across of of of was GitLab saw in FY result expenses Operating largely million subsidiary. year-over-year XXXX loss quarter metric in of up our outperformance. we moderate million revenue used revenue during we're FY XXXX top $XX continued fee in includes business leverage of the used as our XX% in cash postpone we cancellation majority a quarter same a and of million owned second estimating business in million operating rate XX% QX strength. pleased believe $XX.X incurred Non-GAAP to both million to the on of FY move and to SaaS operating our for quarter year. driven In last reduction this quarter, $XX.X $X $XX.X is bottom to our summary, decision this of offering. related XXXX. QX annual loss team million FY JV and was XXXX compared line a the with the set our the

continue are underlying see We leading indicators. softening key we our rapid in to economics the the of in unit metrics business the and growth indicator monitor improving not while seeing business. We these any

to Now, turn guidance. let's

quarter of to $XXX of rate third we million to a XXXX, revenue expect growth XX% representing XX% of million, year-over-year. For $XXX the total FY

We expect to non-GAAP average a million, weighted non-GAAP million outstanding. net $X.XX operating and a assuming we share $XX.X to of per expect million of XXX shares loss $X.XX, $XX.X loss

to XX% $XXX now rate we a XXXX, FY year year-over-year. XX% full million, the of million expect growth of total $XXX revenue For representing to

not that of estimate company approximately million three and expenses will were as on that quarters A our the resumption public non-GAAP year-over-year $X.XX, average model. FY first $XXX.X events, new of implies non-GAAP net of of a XXXX. margin $XX shares expect loss and and basis, $X.XX points non-GAAP marketing expect midpoint as million few customer related and a to share incur our million travel outstanding. X,XXX weighted XXXX new operating loss incremental assuming of FY per approximately We with basis our now in-person to details guidance we well ranges. the annual XXX $XXX.X operating improvement to in we percentage costs more On a guidance incurred million, We of of guidance the

China venture. note Meltano we approximately our like JiHu million in related costs I'd subsidiary. we $XX joint combined majority our $XX with JiHu, million deconsolidated addition, of to owned to have and compares In This of expenses XXXX. Meltano, forecast FY

On shared three of year. his all has Dale transition. our Brown, thank I the to retiring over his contributions and finance team Officer, last years allowing for Principal for the next a front, intentions want Accounting Dale smooth

Sid mentioned we're we we're market very As over our business the opportunity earlier, addressing we is has that it. long-term. philosophical the underpenetrated a to that believe outsized There value of been no currently and portion well-positioned substantial capture shareholder how maximize run change to in

We the improvements while the Q&A. that, To continue on to economics for question, the growth move directly questions. your feature ask unit be use ready We're business. to question. focused Session driving question post the in our now and first to of chat Question-and-Answer we'll please IR With

Operator

Sid by at you, We'll Brian. Goldman Thank will question? to and Kash verbalize your going begin you Sachs. Kash, please

Kash Rangan

you operating big great Congrats quarter improvement. mean, and office Sid, the behind -- to. Happy teams. much. when Microsoft talking just I so the is a developers, at you been the not how workers about it's Sure. on margin with look among trust collaboration competition, collaboration has about Thank landscape,

amongst has persona. see also chosen through and [indiscernible] developers have They transition. going cloud made priority. key a non-developers, You a Atlassian And collaboration developer

and how awareness be natural Brian, XXXX the cycle? software or domain what of joint does landscape? life you, for so you for competitive the much. an focus change? venture of inroads So, productivity through year with into can the everybody respect of that have and you with be cetera, and may statement, And as the the development one apparent? improvements this efficiencies should trajectory there's does do Thank calendar that And underlying the you accelerant takes thinking your is expenses, you otherwise trying change one-time How operating make more the Is not of next develop because competitive cash how puts not go change position flow, some concentration. a we income to in there et to about

Sid Sijbrandij

questions. Kash much those for Thanks so

collaborate, you do can just hey, getting then if It's because the at this, feedback. not team. get the it's from, and there, hands look them of for customers, part getting your getting people well, to getting So, it developers. developers, to plan you essential GitLab, for And to in security that's we it out operations

about So, closing we think have really the DevSecOps security. It's leading is that that's loop opinion. important spectacular the big platform And really market. most our And a thing. in because

are replacing Checkmarx, Synopsys whole thing. the we Veracode, because like vendors have We

static have We dynamic analysis. and

have We scanning. container independency

have in the We the to not And compelling dev it our we best offering, security link tools do with market. able in only we're solution. the comprehensive really a processing most have opinion

operations. We are expanding into

the people entire the the power in So, that attractive can do cycle. one That's really of market. is we believe platform, and

business like the do And but so, that, we're have or not in we DevSecOps most a chat-tool comprehensive solution. something

Kash Rangan

it. Got

Brian Robins

that to so we really to the around of do, show that one responsibly. business and want that with pleased that The articulated really the fact a ratable business, number Kash, do the it's have we is visibility. the And seeing. to but the I'll growth road one as I'm as thing happy answer I We're a Yeah. we'll forth. number the question just the we're cash flow trends and lot thing Sid that have with got on and bases, investor well so

look you non-GAAP If the loss at second operating with a delivered we million. $XXX of $XX in revenue quarter, million

added year, quarter incremental we the loss million the of you $XX that last If JiHu. same compare of you extract operating at if to second revenue

through. away over this you year of at million went an loss approximately take If JiHu some additional at the guidance we're revenue we than going and improved we you midpoint, one-time $XXX what the year year, deliver to that at our operating of last if absolute events look did last

that improving unit really I'm economics. So, happy making been the on the improvements we've and incremental

Kash Rangan

Thank you so much.

Operator

next is at question Karl UBS. Our from

Brian Robins

Karl, talking. you are

move next are You Charlene, muted. one. onto

Operator

have at we Matt Next, RBC.

MattHedberg

see the Thanks Sid, questions. cloud all Hey, this customers your there a update of asked I'm curious, curious wanted I'm remarks of deployment? you win. Sort for but guys. of I SaaS ago, you out you. they increased -- that called do is start in an happening learnings And with quarter. you I your effect from here. prepared on your from couple Congrats years SaaS taking Do what's a with benefit for cloud my to a or adoption? a network

Sid Sijbrandij

there is you're more think results. see and experiments detailed I something gradual With able to level a that. run more able SaaS, on to you're to

the we are our get features performing from services improve everyone. the on So, for helps new SaaS how like data us product

that So, increased SaaS customers our self-managed improves means and how we what should we and product both they customers. the users platform, better are features improve, what enjoy, SaaS know using the for

Matt Hedberg

love the then just Just increased macro pressure. it anything We Brian, embedding like any linearity Yeah. not one granularity into seeing more it feel of sort was -- it real helpful. business side. of for nature you. on guide. that you're sounds doesn't It mean, traction Super as of you're little usual seeing your like like I And there. there back-end Was more sort loaded any you maybe quarter? guys? the question, bit for a Was a

Brian Robins

are We're of we cycles, in Absolutely. happy largest actually cycles add to with back and quarter base When compressing number then at XX% quarter. and the the the sales Yeah. went company super grow to also customers year-over-year this the the sales history. looked

elongation. So didn't any we see

and this that a for earnings CFOs things the listened applications point are preparing mission-critical moving with really People solutions -- platform. the and of and as seeing a One CEOs into other to number from was of call away software. talk I the

quarter really and the lot a that happy with that we saw we of results delivered. so, this And

Matt Hedberg

Congrats again.

Brian Robins

you. Thank

Operator

on from KeyBanc. Michael Next, to we move

Michael Turits

are -- in both first, at cutting to some Sid, I'm it's back. I an done guys. it's once. including fantastic Hi, going reports But what where of cutting developer there think people back, environment and you've hiring ask

that making what's high and developer at of is question even at continue cutting level, a are And back there some then are sort work these that to hiring rates for you So, it a while quick grow some being question that I probably Brian. cut. -- housekeeping have projects

Sid Sijbrandij

to seeing have. are freeze. do on the do developers, you they faced they to with to cutting have that integration Michael. sometimes that Thank instituting more they're GitLab effort. much, companies We're the they with When are people they back that. very that And And GitLab, them is the hiring on already move they save hiring a definitely enables situation

of who the the before business people directly. that DevOps the adds were start tools to something doing can value doing So integration

more point to to efficient to more point all Second, in point day. to work existing from people don't GitLab done because solution you get with a solution go solution their get have

hiring, they not least, they certainly to feels can like faster. it -- helps So, without more GitLab go And development them kind but capacity. of last have

free move they're their to their to faster, those add to up data to directly the centers So, close business. able and people cloud

undergo that's levels, for why So, cloud. is moving transformation. to do to Companies on the to to willing a digital their this environment, option And platform They And budget They in have free mission-critical. not to helps. the not GitLab it. are three move to this. an it's have

Michael Turits

rec of somewhat change rev a in have like so couple then and the of that And account you million was boost strong that last would the it Thanks. from accounting something been? forward Brian, Great. did a I of we're what year-over-year quarter, a it there time, looking license -- side selling the the little dollars. business. pushed upside you any on Last Was there have think standalone for bit. boost your way

Brian Robins

Yeah.

on me comments answer to I little. let Sid's that, add just just Before a

with Our cohorts are ago seven years still today. us from expanding

hiring. were you asking So, about developer

we One internally of is the TAM. things at that look landed

an with been years say when ago still are account, expanding so, seven we from has us, cohorts cohort land single doing that. quarterly every And

And they lot with so accounts and And departments. within of Eventually, today. forth. expand Ultimate to all so, vision upgrade that they they of have Premium, there is a these currently upsell start we to

And address. to there's despite of hiring things, of us a some we that -- lot for feel landed the there's TAM so,

We do side, quarter what the of we I And record impacted base ASC talked XXX, quarter. the and had annual assessment. With a great do just customer of adds. about small an upfront, revenue. the license license a that's revenue the On recognize portion you

we'll the percentage and the assessment and where year we And then we so, remainder used this And first quarter that year, of for will last this that year. annual next do into as every versus we slightly go quarter another of year, that's use at. see higher,

Michael Turits

Brian. Thanks Sid. Thanks

Brian Robins

Thanks Michael.

Operator

is from Piper Our Sandler. next question Rob from

Unidentified Analyst

of a quarter customer platform? bit to base Is maturity the the record the economic? more I'd drill relative this Sid, taking Thanks for Great. just is question. And of such it this now to of adds. us little love environment follow-up Is And for right you're this channel? why to then rank have success net do adds? for Can in stack seeing relative a those you kind down I new Brian.

Sid Sijbrandij

that the Yeah. a market. anymore people. XX% less platform And fewer spend opportunity. a billion to Gartner competitor of market afford $XX to Thanks years. only consolidate, of we're is solve adoption said more everything together, Companies couple accelerating. over the X% tools, for a is anything, that. XX% biggest growing than can't need We have now, believe efforts to and integration that we're hiring and big very by our DevOps early need if less Us to in

macroeconomic embrace more cloud the the platforms go company and GitLab. faces challenges to that of consolidate, makes only like it imperative So, to faster to an to

Unidentified Analyst

And question little a Hedberg's Brian, around on building linearity. Great. then, bit Matt

creep AR up. see did You

if so, And outstanding, billings quarters. we higher days previous a of match than kind that

this big Are economic? out should bit is Can on levels us forward? front? Is new linearity? be Is So, this moving a sustained this deals? Thanks. little help you that these

Brian Robins

Yeah. we'll any just invoices, billing, I that one one had -- get on now. two collected, the say that's that been day the would we

has of in quarter for little. And So DSOs that's the a tick that happened really you've say on in that seen quarters. there just anything the happened that outside sort quarter, would wasn't billing I the other up the

contribution. quarter And GCP as landed record had we so, a with well AWS -- we and a

large so, the again, what as another once company quarter contributed largest in And history -- well. of they quarter

Unidentified Analyst

tend payments? lag to to those relative And do

Brian Robins

not. terms. They're relatively same payment They do

Unidentified Analyst

Thanks. All right.

Sid Sijbrandij

they company every to to airline us budget maybe global security of it save needs for imperative less development, example. customer signed money. business became this not manufacturer business though which maybe money using And Rob, operations. get to lot with add ways the But had in you They're previously more And spending the from to there's in customer better is free. become in a a of give they quarter. to a and And this spending of a even that, We an quarter the are at now. GitLab an make available money. right They

Unidentified Analyst

for Great. the color. Thanks

Operator

to move on Joel Truist. at Next, we'll

Joel Fishbein

Thank you Brian. taking one for questions. Sid, my for for One

major to get the your Brian, are you on follow-up to that positioned for on really value just some partnerships of that outperformance. know driven are going some Just Thank them. right leverage operating And what the was to of love forward. driving to Sid, that, take operating now I down drivers leverage leverage. you talked would double operating revenue I love But and of know by how on the I'd other with you're you. about

Sid Sijbrandij

partnerships add. and more I'll happening let the for accounts. because And us the they're ones in purchasing is and Brian hyperclouds. so people. important C-level Thanks have They much. more by most important the They're are to go The with the for hyperclouds. access important influential these of us first

get way the We in move then GCP mentioned We fastest are award different different move, they is speeds. GCP. The on platform cloud to the cloud GitLab faster. important try at solutions move hassle. migration first we know XX That they the if not more to to to to won do AWS, a is because and is point to account, way one

opportunities that's additional So, big that to super love it's like the a in like hyperclouds work partners with very we're and that we that And symbiotic. are excited about IBM partnering partnership with.

Brian Robins

example XQ year. across gross give all leverage seeing this operating was the aspects. versus margin in and year operating of of XX%. we're the on last I non-GAAP mean, is was XQ XX% quarter Last leverage Joel, side, And this One I'll business great quarter

fast us with deliver, So, still our putting though operational as costs. and to we're SaaS costs growing in efficiencies to as it more improve delivery even is

the Most is that layer. continue to improve we're and R&D in much that the built -- adds have to we the we've pretty doing company, enhancements capacity done. net Within for and out the the releases of management

the so And seeing operating business, model. across business the in entire leverage we're

Joel Fishbein

Thank you very much.

Operator

Koji Next, of we Bank from America. have

Koji Ikeda

Hey, Sid. Hey, Thanks Brian. for questions. the taking

are of they customer record land great in a I there. here ASP net land now, about kind Really you thinking wanted the Are the out follow-up on customer the a the future, same bigger historical the coming on those or all to that And ask average adds. going kind are they new customers. factors are there? on for about coming in of how in ASPs from Just given number perspective? macro

Brian Robins

happy in business. we've segments seen to Thank that take ASPs we've Yeah. the trends you. that, I'm seen, increasing The Koji. across all

have the of about haven't seen decline, And we haven't seen a in see you on talked that so, you expect people -- would we industry that some that. the reports may

consistent And the board quarters. an been we've with so, uptick across and seen other that's all the

Koji Ikeda

feature, one Dynatrace just partnership you the release, Got it. then follow-up with Brian. noticed announced companies LaunchDarkly to this Brian. Sid in maybe and or And for bunch like press a launch a Thanks of here OpenFeature. I

is could Thanks does I maybe this what from GitLab? explain guess, So, of And a you sort opportunity high what level, for OpenFeature? unlock guys.

Sid Sijbrandij

for Thanks question. Yeah. the

the hook whole excited order part better a we're as Dynatrace, believe LaunchDarkly, to companies And we them this. to something Google, to We Feature really out company quickly. that time. to is OpenFeature already today, you and And It of can a with Flags. if put over much your but Flags in platform. GitLab with Feature a great is that to standardize to in release we box. source off your remediate gets a way make Feature to functionality to they code, Feature new Flags that into while mostly to Flags on allows faster partner helps we Feature standardized of observability, quickly and better broken. and more of want offer right Flags being that bunch into are able the hook GitLab need work turn make functionality make So, frequently

Koji Ikeda

Thanks guys. Thanks it. questions. taking Got for the

Brian Robins

you. Thank

Operator

please you will your question? Cowen, at verbalize Derrick

Derrick Wood

are bigger has legacy that there of trend the or for verticals accelerated bigger last environment say say rate you? tailwind you macro the two? displacements strategy see Great. well Obviously, Thanks. very you priority. that it the a -- certainly driver. from your guys. sounds consolidation lot in we've mean quarter certain heard like Good Would is a is CIOs vendor consolidation a would to I consolidation, and actually that been so that of a you or caters to And a that's

Sid Sijbrandij

Yeah.

we're need GitLab." to tailwind. have "Look, and save macroeconomic We this and considering more you that's we that are to money, fewer fewer with tools, a people be customers that seeing is certainly consolidate, to In say, people. able do move we to to why environment, want So, this with

So a that's thing. great been

Companies cutting the more all more verticals We more they believe going projects also we to more projects. it attractive more to more consolidate future, is across back see their going you're in. of kind software of right? want But almost the need, kind to compliance, and are consolidate. are verticals. more have have, are need the complexity exponentially. that and the the that that's grows compliance have industry whatever tools and do to they are We Companies All because seeing just companies future

So, it's been consistent across verticals.

Derrick Wood

versus you Thanks. about Last could what you're EMEA Clearly, like record headwinds. you're Great. having Europe macro a you, seeing talked seeing quarter, the contrast U.S.? sound it for out Maybe compare of Brian. doesn't But one and any you pipeline. just

Brian Robins

with tailwinds are transformation quarter seeing have we pushed. being company not rates last macro the it's threat Yeah. been. I we landscape. The security would growing and ever strong pretty been just and across say deals Win strongest have digital entire is the the pipeline around consistent

Derrick Wood

to Thanks. hear. Great

Brian Robins

Thank you.

Operator

we on William from to Jason move Blair. Now

Jason Ader

Thank Hi, guys. you.

First one for Sid.

them, almost a call your feeling how worse. you linkage reflecting real-time as earnings based macro are their getting how My to close in talked about contrast MongoDB last the impact to to and is relative confidence guys their Mongo view which real-time? On according where week, utilization sit and consumption to environment, you of compare model of macro in and question would is, terms you application

Sid Sijbrandij

per us different still. charge that year seeing We're a of a and we're Yeah. lot for model. per upside there's user We

having to free Premium ways at, there's also grow of of the kind a users companies near like we're lot to we So, have room from we're paid, already but grow nowhere their to within in and uptiering of Ultimate. all from lot to a

Brian, talked seeing despite your make save a So, companies you as money people GitLab hiring stop. do money, those more to and way existing is before, need we're to effective not in more add? having we headwinds. And a anything consumption to save and fact, to about now want

Brian Robins

same thing. great we I -- have would visibility. mean, I

we is haven't into macro to and a the see But One a having we the pipeline, of being can then able things the visibility And great XXX great ratable over seen perspective. recs from open anything being have about revenue. adjust anything. with model we

And dollar so, retention the adds super having customer we're happy base business. the net operating leverage rate, or the we're in with that

across the so with pleased trends. board, very the And we're

Jason Ader

next quick year, one both level revenue then And for expectations on Can Brian. OpEx contribution? follow-up for at remind high us terms a you, for you JiHu in and of

Brian Robins

yet We JiHu. year anything out for haven't given on next

Jason Ader

point, going some Okay. you're contribution, to But some at get revenue correct?

Brian Robins

That is correct.

Jason Ader

Okay. Thank you.

Brian Robins

Thank you.

Operator

at have Karl we Next, UBS.

Karl Keirstead

question. Great. for the taking Thanks Okay.

Brian, Hey, about maybe Sorry is for before. this you.

On XX% a XX-point an pretty it's is decel revs the XQ But guide, easier phenomenal. optically, on XX-point compare.

stuff. or called in might quarter with ago one-time Any there to So, period to share I October Thank wanted the be last either the related is to comparison. distorting anything the you. year all us? the SSP coming you press in you, of that that Maybe issue period anything just

Brian Robins

XX% question. have guidance in the a year-over-year million. revenue Yeah. but our then to by exposure, your our guiding with impact we and U.S. where to beat by raised year dollars. guidance. to XX% bill We growth. the $XX.X We're midpoint. Thanks Russia, $X FX true-ups, collect We're currently And happy performance million for super full we don't includes We of and

the there currency out them companies who, devaluation, to it's for other buy. so, there's expensive more And on based

million business. that able to all guidance. I get been in to look really operating of doing the happy the from guidance guidance at our put XQ we've we're that midpoint non-GAAP operating If income. we've the beginning And raise I'm less the $XX at so by this in and we've leverage annual and million into the of increased $XX continue year, guidance the for

Karl Keirstead

you Thank Brian. Agreed. Yeah.

Brian Robins

it. Appreciate Karl. Thanks

Operator

Morgan. we Next, have JP Pinjalim at

Pinjalim Bora

that taking that Is October -- to I you for in the from free next putting should or year? change user well you that for go that do Thank material? believe. should -- seems quarter. Great. business wanted going how of this to it think the users about as in of impact place it's be quantify will the fantastic the Or you possible to say the of of number elements kind into congrats to be fiscal I QX ask will like question. we me we the about year, impacted? you And Or

Sid Sijbrandij

for Thanks that. Yeah.

that make plan and instituted So, user sure sustainable, we limits and become our more is us so going stores want that's we've efficient. free to help to

a our to And and guidance. them some will will usage users is leave paid baked customer, or that of some reduce become into of the to their and opt opt

Pinjalim Bora

it rate number one up gross gross it's like terms in down quarter? that understand maybe or net And possible retention of number seems Okay. The Understood. or expansion the directionally if it last good. particular is churn Is the XXX%, directionally that versus for within to pretty Brian.

Brian Robins

Yeah.

clarification. We of as than threshold it's quarters. XXX%, remarks, prior said not And I report me Let a -- XXX%. just prepared it was actually that point greater so in with a consistent my

net you so then And and from indication to give that retention rate uptiering seats should some two where at. is dollar number Number Ultimate. thing that's additional one a is

Pinjalim Bora

Thank it. you. Got

Operator

Scotiabank. Our question comes Nick from next at

Unidentified Analyst

Yeah. Great. Thanks guys.

around I color motion for it approvals? you think are you allowing Because called any kind guys recently. increasing. mature just a times have Can I is about You budget guys can give shortening, -- quicker would driving that? what's have that, more it Like mentioned land that top-down think is helpful. motion ASPs be you cycles the now? more Is sales it's that something just go-to-market guys talk of out sales more Just you several are

Brian Robins

Yeah. so about talked motions. to. a a of channel to direct go bunch and company When of one And things program we until whole forth. we public, then, for since new sales a go-to-market. was go-to-market hyperscalers, I Happy the getting alliances, primarily we're the that were the time, added was Thanks question. ready adding Up

number new They're with very go-to-market And the added so, but relatively motions. still a happy progress seen. we've early, of we've we're

us and mentioned, come AWS we're that had history GCP, more in their largest combined company lot channel. deals hyperscalers, and seeing the As I quarter with through a

of We And made. that were so, comments really lot happy to other be across aware wanted the of board. a

deal so looked better, rid earlier, goes, faster, We software such secure, as a Sid get that's I that. at and alluded to platform platform move and at more develop what our cycles people point at we looked does. so solutions we're and think wanting ASPs. it went on and looked a of early just And market. big in to And And are

you'll And so, the as results publishing. get we penetration, we're see greater that

Unidentified Analyst

then XX% Any And of color there just is helpful. give that another year's side given closing? of be that Can that the one. that Was from around The federal revenue. just you business would into How just roughly Great. there sector fiscal XQ? that an fell any update looking? quick is pipeline contribution

Sid Sijbrandij

We're that public in happy we're increased into sector market. doing the what the we're super in and how that's is we're happy seeing -- baked guidance, but government how doing adoption and And our is very with with developing. we're

Unidentified Analyst

Thank you. Great.

Operator

Our final question Needham. comes from Mike at

Unidentified Analyst

squeezing on guys. great. Hey, for Thanks me

a I up it just bit Thank C-suite? engagement which what thinking have really a a would Or delta these slice to of elevated view And the conversations you I of seeing? today, here. data shortening question these we're in as said, guess, wanted are way First What calling shortened better sale with give the sense your And see that to. much little with just sales sales then, as you. or far not respect Is you I had cycles? a those I talking when point differently yet shorter attribute if the Or magnitude was there cycles? for as cycles could to follow-up how we guys to it the trend is cycles is having these we're to the a is through well. a durability

Brian Robins

Yeah.

on wanted to data out. just right you're think point I that. point that It's we a

this other look these across all about of and on something or calls a the that asked was we at data As mentioned prepare the board, for was lot calls.

awareness point a of that cycles. we're contribute shortening helps and think driving on I GitLab a of get all and think of to these a I just DevOps number then that the characteristics the efficiency. people of for to rid the platform solutions, sales to also of value key get are the and And business wanting platform so, and time outcomes And

Unidentified Analyst

appreciate that. other for you could that about. I follow-up vXX GitLab guys Thank I And the It was if around with spoke one it. you more launch question. just

to we've goes TAM. want are of DevSecOps, probably take guys one think a to billion from If both since this them think about broad You XXXX I to how and earlier you like early we with the some very, things, just talking maybe it those $XX the highlighted three being are of XXXX now this and And back brushstrokes like But to I AI/ML. of respect comments for say I in timeframe, I been still XXXX, here DevOps, about timeframe XXXX, very second. want early.

frame Now, a early But we're DevOps the MLOps, how is stage sense wanted the world get is about all would two we? in combine talking intuitive, just to plus those way, on could again I I parameters that the of it. to all are makes -- world out to the me. sense which have appreciate to based definitely you if decision any feedback. imagine workflows But customer those

Sid Sijbrandij

that for person make We're we reviewers. GitLab be to that making using a for If suggests, the person to now great this DevSecOps Yeah. might it everyone. two your code." that's So there's example And better. GitLab best "hey, AI/ML, the of things look at GitLab Thanks question. better review happening. is code

completely of -- kind in stack they benefit scientists would features is We're data of tips. do thing now that We'll after a the to really stack. prevalent usage other there add their practices of from starting already notebooks Today, in we've Jupyter The are continue tool work. Jupyter to notebook kind that different like tool we better increased. And launching that, the GitLab helping that. with And seen DevOps. have

we're our fruit while long period over to will in a we investments time. that, we're These looking adding a will the that's is planning We're considering very do at. future. that example, For fluid, sure not but bear registry, model of GitLab something

the see in AI/ML the and seeds we're vice collaborate together need community, going not to DevSecOps significant that but both. with convergence with we we're be it's great versa, happening because great the So, the people wider tomorrow, and a to future sowing application where have will every engineers the

Unidentified Analyst

I Thank and the great Thank how thinking totally of evolution for and product the appreciate here color you are this to very looking all is the how picture to you. that. seeing respect you to platform. the early. more guys I But see appreciate with about forward

Sid Sijbrandij

much. so Thanks

Operator

Q&A Sid to remarks. closing back I'll things that, turn over for End With of

Sid Sijbrandij

time for GitLab to all today. and team your all like thank Thank you of our wider I'd members also to our for I'd customers trusting community for thank GitLab. and like their partners our contributions. of GitLab the

in a continued all success. you You part our much. have Thank big very

Operator

for everyone Good again Have day. a great joining us. bye. Thanks

GitLab (GTLB) 7 Sep 222023 Q2 Earnings call transcript