Earnings call transcript Q1 2024

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Darci Tadich

Thank you for joining us today for GitLab's First Quarter of Fiscal Year 2024 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 panelist questions. [Operator Instructions]

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 SEC complete with associated report most on quarterly filings, business, including risks in release distributed Form these our report our annual refer our on to of earnings statements most XX-Q today our a For forward-looking please XX-K. in recent and our Form recent

Our are occurrence events, We any and revise obligation statements circumstances, or unanticipated on place based forward-looking or available upon reflect or future events. statements, to caution undue forward-looking or to information statement us. we forward-looking of not duty update currently undertake or no you the to to to any reliance report

may call comparable from reconciliation substitute in non-GAAP that ir.gitlab.com. posted be in replay the intended discuss supplemental measures statements to of included financial with measures information is to and contained which earnings measures available US We performance prepared measures results. A financial These our GAAP GAAP. not accordance these press our GAAP on differ these also release, are are for in ir.gitlab.com. at financial measures most along today's additional be comparable of with non-GAAP will our also reconciliations A a

over call Chief and Co-Founder turn Executive Sijbrandij. GitLab's now to Sid will the I Officer,

Sid Sijbrandij

to I health. start committed want well by GitLab ever well-wishes doing of I Thank so joining received for to off I've I'm today. you success. remain my us for and as the you thanking regarding many

AI-powered own non-GAAP for FY'XX. platform. performed of executed in towards profitability. both our our on We our revenue how exceeded first the with our and successful business quarter customers pleased making well DevSecOps goal We growth of guidance our I'm

we $XXX.X growth generated year-over-year. revenue million. XX% quarter of represents of This This

rate net was based dollar retention Our XXX%.

improving quarter first leverage business. our results Our operating in continued to demonstrate

and the one improved time. manner. we points by developments to with in our technology almost remain committed exciting XXXX want operating growing year-over-year of a responsible most basis to call I non-GAAP margin of Our this start

AI It fast on fundamentally that make and the throughout will to new AI DevSecOps I'm innovation, and help excited and our developed, we focus software ML. shift our incorporating to our for accelerate platform. way wave it about software of believe represents organizations at major AI industry. a ability We're we a changes faster. is innovating continue this technology pace.

five XQ, AI first in features. five we of additional new and features the we alone, half delivered delivered In May

customers Suggestions gitlab.com on Suggestions. Code will Suggestions code to these by they available and of allows for while are year. efficiently Code receiving beta, developers users, all on continue we as to now expect iterate we in Code Suggestions generally later is type. write available All This this Code be feature more to available

the make accessible available of to Code principles all and One guiding it everywhere. with Suggestions is developers to

we the also that of support, from languages We languages. now to on benefits the can realize language our developers language support six more XQ, platform. In initial extended XX so increased AI

as first privacy a with built uniquely critical is Suggestions Code foundation.

that source This proprietary customers their infrastructure. Our leaves code stays cloud GitLab's code means secure. never source

In data. training as and not addition, is not model output stored used

mainstream a software category changing we're is DevSecOps it's AI the also phase. seeing we developed, of value and DevSecOps how it adoption only created amplifying is not having that a a is platform. enter

XXXX. was I'm the that software Wave We Forrester to recognized pleased recognizing the GitLab leader platforms recently only share for delivery this. analysts are seeing industry integrated as in

followed from see the the and We recognize GitLab excited integrated an of the to a market strategy that mature value software platform, start. are delivery has

a of with senior out. with many can bank that our a At first, focused provide. but really customers, conversations a only level from one we many stands European on platform had CTO top DevSecOps differentiated we quarter features This five

For example, and benefits on a stream platform. of value metrics about talked DORA we compliance single the dashboards,

interesting. optimize is and development something including moved downstream the said can't CTO up. everything said, operations He from in If AI, because cogeneration software only other cogeneration, we security the only team, into else the development breaks, QA one When these the teams conversation extremely breaks development aspect cycle. keep involved of

This customers vulnerability this AI predicting the future point, suggested value co-creation, the team for life stream of remediation, code throughout use more. forecasting incorporating and have to ability our Today, Suggestions strategy. development for Code at review. vulnerability Explain core software for the cycle is reviewers efficiency much for AI our

almost times We AI believe available for Applying done GitLab. development customers competition. features something full compelling that AI the can than the single We're to to creates outcomes. a store is software be this three with only lifecycle proud ten that more business have also today, to data

We level. of see a surrounding excitement lot at the AI executive

level a in to companies have We them their not new who motivating may software XXXX are secure customers hearing operate been from how XXXX, market XXXX, AI are assess re-evaluating through a is that strategies. they Enterprise and lens. until develop,

of On mix. top that, the new entering personas there's

new to several and officers apply governance, security appropriate total AI working from they to compliance and benefit AI will increase reasons. information the are addressable we powered market empower In that AI navigate these world, chief believe auditability. As security for all, their teams

junior writing expand such software. as build code make and the developers will we easier, will who which audience believe of citizen people AI First,

fuel build as developers to to this into to developers additional models needed these and customers even more more expensive We More be And learning productive, will this as software. demand. create. we applications. increasingly see third, their expect AI software meet they machine will turn become demand GitLab less believe for we Second, will becoming

teams. create to development for We supporting to the ModelOps this allow teams and Expanding greater introduce science these to their platform, add-on GitLab. new our focused we opportunity a year, to add DevSecOps invite capabilities as market addressable data this personas Later also big capture will alongside we AI value. opportunity will an on plan see DevSecOps will an as As work ModelOps teams counterparts.

Code available across year functionality. will add-on user add-on all anticipate month Suggestions at our We billed tiers. per be this include will This per later this annually. $X This will new priced be

All of our that Dev the incomplete. believe for this between and is is AI-powered The essential We solely security business. accentuates developer a a persona a missing platform differentiation and on functionality. It broader an DevSecOps focused theme platform. enterprise operations innovation

structural only is spend their developers time this creation. a fraction GitLab of code. advantage. code promise of has real Remember, small AI far And The beyond extends where a developing

in most like Suggestions We comprehensive are DevSecOps are developer Remote the efficiency. Development market. Code the for and important accelerants Features platform

AI geared today, features has developers competitors. than more towards our And GitLab

faster enterprises need that an software on achieve projects, a cycle. end-to-end times works cycle time across the However, that platform isn't enough. In entire order to life ten development

key me Let of differentiators. some GitLab's describe operations and enterprise security

security scanning, API, application management. security management testing, For security GitLab only policy security, and has container compliance dynamic

operations, management. and Management, GitLab has value And management, portfolio flags, In management. infrastructure only DORA enterprises and stream code, incident only has GitLab OKR feature service metrics as tracking, for desk error management, design

Let DevSecOps a of Martin. me Lockheed illustrate with customers, of platform the value our one

also engineering mission and technologically Lockheed expertise to emerging and help flexibility shared overcome Lockheed depend their the to Martin's on infrastructure specific require needs to affordability. most threats. speed of to need customers most them the them ensure They and require customers teams solutions. complex stay Their each Martin's advanced customers. meet of challenges ahead

go Lockheed DevOps retired their practices to has security to with chain improve of of system a time automation, and tools and Martin standardize while needed has GitLab, Jenkins cutting on a variety and They times team Pipeline spent and builds thousands costs history of Lockheed less workload. greatly They've wide tool choose big faster maintenance. collaboration. using complexity reducing Martin reported CI servers. eighty XX% reducing

to looking even continues platform. with to Martin Lockheed to and GitLab DevSecOps grow is their more migrate projects

have automating from to GitLab monthly deliveries. by daily or One weekly multiple switching teams of executives their moved deployment strategy software or said daily to and deliveries

in such compliance. way They platform from best see other the example power Ultimate is Lockheed cases well, care features. a specific for large purchased we a DevSecOps to meet They is to In of that health compliance GitLab a platform great achieve auditors. the their determined needed and objectives. use quarter, their GitLab as the as a provider of requirements this

for Another customer in business NatWest relationship QX expanded digital we bank the a Group, with is world.

better, results He to experience Last use to deliver a sustainable a dedicated. a chose wanted engineers and year, NatWest platform common cloud Group better focused and for GitLab banking NatWest fostering growth colleagues. Group their on experience. enable is to delivering of customers simpler engineering

globally. DevSecOps period on accelerate into their training months positive strong provides to transformation program, comprehensive In that the that proposition to we're investment, supporting onboarding has GitLab well-documented This value platform. most gains. is reported in shorter summary, payback Five we NatWest GitLab are enterprise to the productivity by are developer times business outcomes services resonating customers. confident and AI-powered significant professional return NatWest The days. a and quick certifications choosing pleased GitLab led and

protect secure assets. XX% We're more by trusted and their to of most Fortune than valuable the XXX

We will the aspects seen an also up from market, solutions DevOps to DIY believe $XX that early from we're stages of DevSecOps a speed we've development. a And in billion evolve to estimated of platform market a addressable and point platform. capturing AI software different creation

In robust This truly and GitLab the planning to platform of power times for of security rapid a in enable compliance today's shines. more a need the faster capabilities. innovation, cycle turn creates like era

Officer. Brian Chief it turn Financial to now I'll over Robins, GitLab's

Brian Robins

the today. macro recap insights I'd will and key financial everyone like results and quickly the impact financial change environment, Sid, guidance. our some for implemented with our AI Then quarter impact you, discussing into financial and products. to spend recently Thank thank the premium first you moment conclude provide and us our of operating our of metrics pricing a I again joining

I calls. of touch Let the some prior me on discussed on points watch first

involved quarters. We lower see minimal due by XQ, than driven counts more XQ, tearing. but deal at cycles to down almost Contraction Like people XQ is levels entirely over higher continue prior improved remaining approvals. seat sales contraction to is in with

in I with the better pleased It XQ. predictability bookings than much was XQ. was

call, a a frame, platform transitioned years. prior platform. we we added skew over to on for raised the our Over from new five time in that As time premium DevSecOps features, first the price we the XXX mentioned Dev of

April the that planned. impact with increase price the We and the premium FY'XX is in premium with effect only as renewals in who for price going churn of impacted The our average had on customers line minimum FY'XX shared renewed impact price quarter. which increased customer April in customer we is Xrd in and increase greater month of We expected ARR expectations. took in our unchanged by per To-date, increase one beyond. the

the to way AI about financials on Now we our and of products. the the impact thinking are

to continue AI. support invest infrastructure in We people to and

recently AI. the on While from we teams other AI work teams on support additional shifted engineers we had working some features, have to

not has to this significant expenses incremental result, talent. a engineering As led on

efforts. R&D and made our support in provider we Additionally, investments AI have spend cloud to our

In continue better AI also make addition, drive Oracle. our This announcements with Partnership included AI own to us offerings allows has AI functionality partners by help Cloud to vision. Google partnership Google we Google their to leverage leveraging toolset. and our Cloud The use

The infrastructure. Both AI cloud partnership learning manner. customers makes customers our to Oracle our of differentiation these a create it easier for and strategic workloads financially for deploy machine their help in Oracle's responsible own using with partnerships

to Revenue Now XX% million the of increase the of year. quarter. organically an turning prior XXX.X this from represents quarter

approximately with ended We rate XXXX prior least and approximately with fourth with ARR. FY'XX This of in year-over-year XXXX of a customers represent at compared XXXX over than XX%. ARR XQ the Currently, to greater the total $X,XXX customers ARR over customers growth quarter our customers XXXX represents year. over XX% of in of

customers as us. the than those we XXX,XXX also and spending in We larger of who performance more with our growth ARR measure define

XX%. had customers first quarter XXX we $XXX,XXX FY'XX, represents This FY'XX. of the growth At customers FY'XX end least customers compared in XXX of ARR a and of the the approximately rate first at XXX year-over-year to of XQ with in of of quarter

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

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

first cRPO XXX%. RPO quarter frame. with of XXX grew year-over-year based for and a XXX time XX% dollar ended the total retention rate to same our net to We This million XX% million grew quarter,

of is reminder, metric the month cohort this period. same trailing a during a XX month of customers with customers over As the XX that compares expansion XX prior last activity months the

quarter contraction ARR expansion The to of for seats. due our be was based compared driven retention lower with in first first XX% by of XXX% to tier, seat representing of tier growing the ultimate fastest and net dollar continues FY'XX, ARR the FY'XX. of quarter The of XX%

over the is margins the gross quarter able of the for XX% continue how non-GAAP business. higher another example quarter first the SaaS of we've improved were of been to cost quarter, is efficiencies Non-GAAP despite margins of FY'XX. delivery. XX% in drive gross which This we maintain slightly represents from and the for total immediate to preceding both ARR,

realizing of of revenue loss saw leverage of we business. scale operating last largely as this Non-GAAP quarter, or million XX We the of to negative revenue continue XX% year. loss greater XX% operating improved compared XQ driven million negative by XX.X in to a or of efficiencies

XQ compared JV and expenses last year. to use to X.X related our first majority same was in in million cash use FY'XX subsidiary includes X.X quarter XQ of FY'XX. to million in compared quarter Operating of million the XX.X FY'XX owned of million XX the

turn let's guidance. Now to

our to over guidance headwinds last macroeconomic in few the the There quarters assuming are We philosophy. trends been have we business change seen continue. has and overall no the

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

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

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

$X.XX of the XX a percentage non-GAAP XXX expect basis we XX negative basis, non-GAAP weighted annual On approximately and million expect million to guidance. shares new XXXX loss at net operating per average share our non-GAAP year-over-year a operating outstanding. a of We implies assuming FY'XX loss million negative of improvement guidance our midpoint points $X.XX to of

The targeted initiatives scaling growth and focus term, to longer track economics. has improvements yield will achieve breakeven believe on continued FY'XX. for we further the unit business that us a flow guidance a cash on in Over

XXX count For modeling purposes, share is diluted we estimate that our fully million.

like update on provide JiHu, would venture. I to Separately, China our an joint

Our goal JiHu. remains to deconsolidate

the potentially cannot timing occur. likelihood we when or of this However, predict may

approximately to compared purposes X% total X% negative loss modeling XX approximately for JiHu now with operating non-GAAP million in for JiHu represent of negative Thus, XX related FY'XX. of These our for million we forecast FY'XX, expenses expenses FY'XX. implied

but Our business management growth, is team the shareholder responsibly. change number value one we'll as in priority no run we long-term. do revenue how been the has that to over a drive maximize philosophical to There

contributions to GitLab like questions, the team quarter. to thank GitLab them community for Before their our want we thank I'd customers business achieve our members, take for Also wider trusting objectives. to help and their this partners

chat ask post IR question, move and to we'll We're your a the question first to that, With now for Q&A. questions. directly To the ready please use feature question.

Darci Tadich

comes question first with Rob Our from Piper Sandler.

Rob Owens

All right.

guys. correctly I three Good think after years I afternoon, of did that Zoom. using

Sid Sijbrandij

Rob. Hey, afternoon. Good

Rob Owens

customer expected we think, deceleration, Obviously Curious to hear update an tech all on a companies. stronger I high-growth conversations. are seeing than across this quarter, but

all just innovations prudent customers to versus, net how Dev the on lately? the So more re-evaluating both for macro, needs in Gen that's the we tools AI a which taking retention -- given should customer rates, headcount guess, Dev Gen about rethinking pressure coming from think environment purchase budgetary and approach acquisition current in I AI

Sid Sijbrandij

on last health. Yeah. answer completed I And chemotherapy. systemic I round of that update before just my an my Rob. maybe question, Thanks,

that. about happy So

Rob Owens

Congratulations.

Sid Sijbrandij

detectable Thanks. my about as excited And also and disease, sign no and continuing role GitLab's Chair. CEO of future I'm and

Yes, question. doing and that now time things lots macro and is we're of to same that's see macro we was to time, count. your on say, the what last to pressure super unpack At the consolidate. of of trends same anticipate trend quarter, continue. seat We to in customers, excited the the because putting they hey, it's mindset the we That continuing, --

see we seeing at market. as hey, are a that, the And consolidating time, the that is analysts same this

going the if comprehensive that most which great platform, consolidate. will also the application DevOps look the And to that is be have way platform So at AI. DevSecOps we people of is you we believe

We're apply able to across for apply it but AI the not entire just Suggestions, Code spectrum.

the how people that alluded We going AI enter have that to along more you we And easier TAM, for think we more features, those as for features the influences make XX they value ship. every drive is able the which were And it to fray. XX stage. at than to, part to

using of product. people supply it the think more we was So a

when be there's that the for At time, we demand more becomes same it. software easier, believe to going development you see

to going used people demand, There's fray. more means it be affordable. the again, demand. development to Software makes And be AI more more very entering more expensive.

And to it's but to use that run to you platform MLOps opportunity last us allow do for to manage to want We managed extend that's constituents least, the GitLab. an that certainly not also just full the We MLOps where their data GitLab. code functionality. with not models. have, our add we but And companies already what with we the a engineers experiments

Rob Owens

And Great. Brian. for can sneak quick one in if a I

regarding at a deals And end? could at quarter, looks of was look DBOs the was if the Or base it flow in from collections Just turn I and cash it, that the receivable soon. weighted? relatively that assume linearity perspective you either corner the back-end very large on like

flow So on turning free any positive? Thanks. cash commentary

Brian Robins

on on I'll free Yeah, DSOs, I'll touch flow breakeven. cash touch and

were weighted the news from last perspective, so the receivables three consistent. not debt good we -- over very quarter. And has been and a more that the end the very, X%, our our amount DSO years age we of exceeded of But is towards has bad

have our European Net of XX. Net customers requested XX, some so And

expense being that accommodated the we've so macro and bad just so And of low. because the debt

FY that. free taken path a also From line on that our a we've free will we given perspective, but stated committed And cash accelerate time specific actions cash flow some breakeven flow we've to profitability, in the to breakeven XXXX. be of previously haven't

Rob Owens

All guys. right. Thanks,

Brian Robins

Thanks, muted. you're Rob. Darci,

Darci Tadich

we Up Truist. have Joel with next,

Joel Fishbein

the through And treatment. on and prayers you. Sid, I'm it sending you, Thank congrats making to

Sid Sijbrandij

Thank you.

Joel Fishbein

you margin question. a improvement. on quick just the Brian, Rob's on Congrats follow-up for

lot color programs us increased of just these of that drive really the any you flow continue a still job. that pushback or a and whether doing that, you're -- not you've time Can to going you. tested -- good breakeven spent that initiatives to on talking more base things about little towards doing, you're customer obviously to which AI like increase cash there's give bit in that's some this there? have $X think some follow-up these to Thank And of -- then as are that I a coming of investing some new while out. they'll license done you your be a you've to

Brian Robins

absolutely. Joel, the Yes, Thanks for question.

As stated at the to objective And GitLab is went quarter. we I one since always but to grow, Sid public tried responsibly. do that is we've number and every have we'll that demonstrate

And has front. changed nothing so that in

Our growth margin SaaS continue non-GAAP of gross our than have XX%, percent up we and even greater to revenue. went to SaaS is high really though XX% overall

continuing areas at doing one within the optimize, aren't And look can but at growth we so expense company. we at we're of that's all where business the that because to number the objective the

demonstrated we categories across cost all look quarter-over-quarter. we'll think continue that that I and at to

perspective, is cloud gave. costs, that $X we headcount the From and the and tested guidance in yet. included we cost of haven't that for increase, the in On a that that's most guidance

any from And a don't perspective. so changes guidance we expect

Joel Fishbein

Thank you.

Darci Tadich

Next, we have Sterling with MoffettNathanson.

Sterling Auty

just Thanks. Brian Hopefully, -- ring Sid, Sid and completion actually got another on question the Hi, the just just bell. treatments. a well chance guys. you pricing. as the the congratulations follow-up on of to

little Or increase size lands or of of change impact actually revenue you of that it, anything So make and the pricing actually the it put maybe where if not, on negotiating some have of may you does through price of a customers the when impacted increase? Did want fine flow think harder will that deals bit line? And the because to were increase? point of to but upon length rates price have here. of any because been touched the in win a sure I asking benefits initial terms

Brian Robins

just I me Yes. on guess Thanks, for the Sterling. on briefly price everyone touch the call, let increase.

And We features period, five platform. we haven't added over the XXX raised years. time prices to in new that

increase. increase. gave price we genesis guidance the was the that today the so include of The price last and quarter And

As you early effective the know, April. in price was

month a the that churn we am the so than And of renewal that. of a than and been have to say better new short land period But had rates and less for I expected. really customers only happy the

And that that we've so the time in just month we're one happy period. seen results with

Sterling Auty

Great. All Thank right. you.

Darci Tadich

Our next from with RBC. question comes Matt

Matthew Hedberg

driving of good Great. ticked you year, offer guys. best news not doing premium call, price noticed AI it of to taking Brian, questions year. flattish, security? XX%, whole more to up. the I was any which, Thanks I believe, that Or driving was folks you -- increase that's Ultimate it the I'll Is some migrations? my hear Hey, of is well. Is and last congrats, said That's my I what of those perhaps it really the showing of the sort for kind Sid. on was the maybe up curious is there really was Ultimate? of that?

Brian Robins

Yes. the try Ultimate, said to basically the When out we talk we Thanks, before, is compensation much sales process. versus want to Premium. take of set we about We as Matt. as don't Ultimate on to compensate friction

same on as consumer well, we do the the SaaS self-managed as well. and For

And so underlying to the based on years, value Ultimate, payback Forrester is The it in Ultimate three was customers. months. around that the study, six driving ROI and XXX% on a did our over we're was really strength Ultimate,

and of order looked quarters. sort Ultimate I was consistent at churn, quarter Ultimate And Contraction and contraction, -- at churn had sort was prior first so of the a consistent. bunch of Premium, looked and the with when expansion, between breakout very

had as order as prior a well. we Our really strong growth just was quarters, as and quarter good first

so our tier, And fastest-growing with results. the well. do happy Ultimate to continues we're It's and

Matthew Hedberg

with And if Sid. could follow with one fantastic. up then That's just maybe I

developer Dev, we that questions count. from Gen the of does put developer is, most pressure get AI from seat investors -- One on the

bit think of And of stays number the but seats sort goes maybe talked little point prepared Q. put or your it I times the in even maybe down think the go P you remarks, you could does up? finer about of do question consistent Or a a in you on future?

Sid Sijbrandij

the expand AI will generative that market. believe We Yes.

and of product first AI Like So hard, make is today easier. it easier. the makes coding you all,

to So that managed GitLab. start these developers we needs And That junior developers, in citizen code coding. expect to somewhere. is the be

can is development thing when you activities. development for do second the should increase that -- you down developer more, bring The you and a price, software make and -- it demand

you where not is be a but code, to platform, manage also what place and that MLOps data today have you is DevSecOps we've the the is of just already want Third, but of a articulated MLOps. management models. we management

are risks, wrong that a Models harder outdated. They they manage security time, of risks code. are risk than over lot change discrimination to risks, risks, and have the that you're thing, doing they

really future, space to expand GitLab. the GitLab. So have it's example, if experiment the can for in a out plan And you it product MLFlow, in experiment a And an with model come today, interesting the link in to you we'll registry in to. to

we reasons expand. the all why are think will those market So

is One code. other in you to also to operations. produces be need generative put have at way to codes secured, AI. it also look more It All that needs

the platform. platform, DevSecOps good the create a a That bottleneck solved DevSecOps have at bottleneck with beginning. don't you you is if So

Matthew Hedberg

Thank you

Darci Tadich

We hear Koji from now will of America. with Bank

Koji Ikeda

I or you into a I'm a question that for that please. to it more to you just bit Fortune it was be more, other Hey, land-and-expand still little Maybe Is sale on strategy? Fortune of a have. I here. sorry, don't is level going the could customers? for dig these you Thanks kind guys. Or of hoping the higher XXX you wanted XXX Brian a primary ask the questions. Sid the or XX% for of a question attacking plan about taking how

Sid Sijbrandij

Yes.

both think sale also sales. that the I it's the is but certainly top-down it bottoms-up

a we go value we're GCP, where we talking So commonly our stream we And work a help as have and the and do What CTOs, analysis. of with sales, CIOs, to getting sales think we but partners, see motion, customers. to motion sales more channel also them direct CSOs, important. that's to a AWS picture. Channel them

We can and they on how cycle adds all cycle initiatives to their can and through go that the out costs, tools with cost use save GitLab, get can going make And time. they on They out. tooling save more and faster that integrating people that the point different up tooling. cycle productive, in they're of the they throughout

our you we're something is certainly And it's Fortune XXX. XXX% as with. So said, goal market of going the to

Koji Ikeda

it. Got Brian follow-up cash flow. of to for on back maybe a And kind going free here

mostly free income. cash be And point. the is there's be out recall this higher non-GAAP contract quarter, mechanics This that I model some around duration by flow flow than of operating cash should

the does is free right basis? Just mechanics? operating So an please? that bit you than with annual dig flow income here And more a trend on that flow little higher cash cash me, just for from just into non-GAAP could

Brian Robins

the gross rate. I When first had the were we Yes, we because do absolutely. joined -- when joined deals company, we such high multiyear force not to incentivizing sales a retention

or grow short-term still billings. existing our within multiyear have deals book billings really same as in at And so calculated rate That's you wouldn't we one business. prepaid year But we is why deals cRPO for this. pushed and saw continue and RPO -- to of the down go

And those collections, renew, QX our and billings and in quarters. those so contracts you'll see lumpiness of as some one was

Koji Ikeda

Got it. Thank you.

Brian Robins

Thank you.

Darci Tadich

Michael KeyBank. have with we Next,

Michael Turits

Hey, guys.

Brian Robins

Michael. Hey,

Michael Turits

about me? you that. Can hear Sorry

Brian Robins

We can. ahead. Go

Michael Turits

you talk how about gone. you has said can around visible Copilot. obviously, Microsoft, very they have you Brian know been again competition So

has out You announced sort features. a in the But of competition lot of day and how gone. day

As sizing you whether differently. about each against said, other or How this Brian, sales people discussion not entering they cycles up extended, [Technical not are you have Difficulty] are and but

Brian Robins

Yes.

what if between you it, think had has with and changed things And Microsoft, Michael. and -- I question -- noticed sales got the most change was how I within the cycle think I any repeat us noticeable I'll of quarter. the

and different last talked about very how call, So quarter was the earnings than is quarter one the I of quarter. note this first of the month thing third on to the month second

is quarter This predictable. really

quarter to sales Week And called fourth was The the that. the the so cycles quarter remained landed with and at first really levels. predictability of close I in Three, happy quarter quarter. we

so a lot there wasn't there. And of change

As to talked do of I well. bookings than about earlier, being and XX% greater the Ultimate continue

well. perspective. as than hyperscalers the grew I we year-over-year previous and from some quarter. of bookings They Microsoft. had a between well lower us quarter, differentiation The shows also this quarter the think great had And discounting as XXX% that over a

the competition the We ChatGPT still at pretty we more so around and is but And XX% deals. remain consistent trends with discussion of see about don't Microsoft there see in where OpenAI, very Copilot. any little deals, them

next Darci, right. one. into the go we'll All

Darci Tadich

Derrick next. Cowen with is

Derrick Wood

Great. initiatives? just how Sid give and customers then you new about to us new quarters with you up partnership on you're start, model Thanks. AI in train the about a a revenue more news. release, I and the offering, from the inference. in Oracle thinking Can And AI/ML a expanded partner speed Gen And wanted little press enabling to an congrats opportunities the around broader detail ahead? those related perspective, talked

Sid Sijbrandij

the thanks question. Yes, for

really we're have GitLab They means Oracle runners on great great a that it DPU-enabled can powerful is now a Oracle our about infrastructure. ML AI customer And Cloud our what customers the and partnership infrastructure, workloads So with now base. that's run and Cloud. on excited

Additionally, marketplace, we're Oracle's available distribution. in expanding our

is We everyone and partner closer workloads their So more closer. AI get is toughest in our we can see strategy, where try with want Microsoft. customers hyperscalers. have to to lot that's forward. with AWS, expect the of normal there want one you momentum, We to else, to too, with partner the their there, Oracle. going to run And and to GCP AI and our us enable We mind, but announcements a workloads,

Derrick Wood

net on there and of retention forward the getting factors? respect rest for gross Kind should expansion be exact Maybe we quick with ranges guidance Or for thinking you'd Brian. revenue numbers one about towards? that to your around the any retention you, rates. guide looking is of Okay. and Appreciate target kind of trends year, how more us a

Brian Robins

didn't predictable. last this We will of the more -- quarter out metrics. those I quarter say give What specifics was is

makes a it so And from perspective. everything guidance. it into And is easier modeling factored

And so we didn't those. give specific metrics for

Derrick Wood

Got it.

Okay. Thank you.

Darci Tadich

with Kash Sachs. Goldman

Kash Rangan

has generation At It Great. Thanks you differentiation see you're point that -- you really the the further offer? for GitLab conversations? like capabilities. question on are auto don't This sticking have. off, the generative those competition? looking there base and GitLab to of AI been need kinds of the set issue code is think made the a what well perception versus market features to in point that Is the capabilities right? feature Okay. in Do AI any we values you had that broader has a question. a quarter. congratulations much taking I there guys. Sid it like very recovering for of my looks customer appreciates good that stabilized real bit appears for of business So competition on is looks and have a to that to the that

does Brian, mix month the what so net that in great. you Thank then of The will in as from linearity saw you up March debunk can much. you, rates us, you the well. If of look it for does expansion improving a the for hold And one quarter, that May May like be as that standpoint? month

Sid Sijbrandij

AI, Thanks, Kash. Like you in generation. have code the

If bunch you log a get just later to pipeline. whole jammed code, the down going produce more it's then

You also fixes. to need do security more

more. You need to deploy

for we store data application, can a to single So we're single apply AI fortunate that of have a and DevSecOps all the cycle, them. entire to really we

our big features a And as That publicly that's is led many AI advantage. times having competition. as to usable us three

you and long that's at make also beginning really get faster As as the if the throughout exciting sure the you course, that you cycle having need of there, a it effective But works, whole development. rest that, time get suggestions. more a and code

Kash Rangan

one I had you. thank you. Yeah, for Brian And

Brian Robins

to quarter-to-date, just you a on forth. pipeline rates, and second piecing, the expansion, of question, internally happy contraction the And as bottom track top as so from part things the would expect, metrics expected. I'm are of number conversion we of And churn,

it I've track quarter out, as all that quarter, like we'll those but so expected it's on was fourth mentioned how metrics see quarter And finishes in the and we internally. predictable and more quarter-to-date last

Kash Rangan

Great. Good you to see Thank the quarter and the results. much. so

Sid Sijbrandij

Kash. Thanks,

Darci Tadich

Next is UBS. Karl with

Karl Keirstead

Thank you. Maybe, I'll Brian, to this you. point

to Is maybe of -- bit seat the to So we're mean. try the as do to you that, as that set paid as only actually it we that might quick accelerate back would our the $X reason the base applicable for does us for users? this little it on can on you of what math what guardrails like guess be monetization I should feel things your could to all user Or mind about paying beyond top such to And of a plan be looks of envelope believe conversion wouldn't relevant mean then subset? a two it any base And tight you. of Thank user paying opportunity is base there could the it 'XX, free estimate per we're in fiscal all of run so follow-ups. any keep maybe offer what user the like? you're think

Brian Robins

in to Lots unpack. there

FY haven't for year out yet. XXXX, guidance on we Just next given

that. really baked I is talked script for on in year. that this Sid the so guidance And can't The our about into comment $X

Karl Keirstead

'XX to we could Okay. But what a Anything it kind as -- not fiscal model we asking conversion? best you it does shot? you'd offer try take for Brian of out mean. as accelerate could guidance, just it I'm framework up our free-to-paid

Brian Robins

faster, doing security that persona and make and and think the all to is the operations efficient I cheaper, more make that is to better, we're developer, allow more secure.

should think that that the on you so model. metrics out track all that anything And do and help that I you enables

Karl Keirstead

Congrats Great. the on Okay. quarter.

Brian Robins

Karl. it, Appreciate

Darci Tadich

with We will hear Blair. from Jason now William

Jason Ader

Hi, hear you me Can guys. okay? Yeah.

Brian Robins

We can.

Jason Ader

Great. right. side. on your to model might I element that work, a how pricing cloud you're consumption the whether to wanted about especially exploring and All ask

Sid Sijbrandij

consumptives Yes, We thanks model. have for that. elements in already our

AI XXnd, and that we basis. MacOS on consumption for where released So partnership DPU you the a GitLab for to example, for Oracle runners. have released more runners, pay example, features adding for runners, storage, in had compute June runners, we we we released XX We're on Linux consumption,

additional is that we're features. a our but today, So small of revenue releasing part

that is become see the time, licensing going flexible. think I to more over you

for. today pay licensing that be have what more We flexible us cloud and allows you to in

otherwise for it's the example, you if we AI, it, pay for efficient to add-on not. right use are For now, it, envisioning you something

We'll see what we end thinking up releasing, about. what but that's we're

you're there. customers of is consumption, don't and So the we think more want meeting I we to going the right expectations -- that be mindset

Jason Ader

Got in to included going SKU. be follow-up AI What is just you. Suggestions? one on And that then All quick right. that SKU Code beyond

Sid Sijbrandij

only Suggestions Right of we've now, being about it. Code talked part

Jason Ader

see Sid. Good you. Thank good, to you Perfect. looking

Sid Sijbrandij

it. Thanks, Jason. Appreciate

Darci Tadich

Mizuho. with Gregg

Brian Robins

We We one. don't the next go see to can him.

Darci Tadich

JPMorgan. Pinjalim with

Pinjalim Bora

AI the gap where SaaS then part are Is doing application, the with seeing well. for building in And difference understand help The visual of per Great. at of Thank thinking between that there follow-up. they're we of this a as or you for understand per their $X MLOps. kind a to extension DataOps I'm self-managed questions. craze add-on Can user one trying month you are customers GitLab a kind an one us GitLab maybe apps? is existing user? when see the point? maturity Sid, about MLOps this you new MLOps. AI you using talking to curve respect developing on kind current about Sid, workflow into Is of Gen of user to basically good taking Gen with or the code?

Sid Sijbrandij

Thanks Yes. that. for

$X So to answer whether the first, or user. last question you're be user the a SaaS that same will self-managed a $X,

able Web Suggestion Code. editors be You'll in usual as well to IDE features Code use the in Studio the as Visual our like

early. really really, we're ModelOps, Regarding

have and model start where GitLab the where in as we will is we're of It's of basis to you control have to model we form going functionality GitLab, a then experiments So Today, a well, the this. oversell registry, new that a that's expanding. you the link want have do future, I adding MLFlow the can when model and you next the is come of functionality. of out don't feature in we registry. the to more vision And can functionality TAM see to going to kind

that expect ways a The like come the more DataOps to the MLOps functionality looks before data. lot We model many than code in functionality. learning

that of have will it's is don't come functionality later. logical With models the first So -- it's and we step data. kind then data, yet and

-- thing we ambition. the have is know to it's think I that the

go the beyond have to code. ambition We

We your manage compliance are want DevSecOps to the the three governed. you. of figure security to we think have all platform ambition your have going going three data you all code, questions future out are to All your your your be is to for that application have tool, models and the and because going and three, to

is bring why all every valuable it's because easy, doing have application interactions And because this, together, three, the for our super to be constituents going can we and that's because customers. we it's are to not useful, super that's those going super, between but if

Pinjalim Bora

Thank helpful. you Very

Darci Tadich

Next is Needham. with Mike

Mike Cikos

Hey, guys.

Cikos the You thank the on question. have line for taking and here Mike

are that circle you AI add-on news, to GitLab know be phrase you I I about. And us features AI will technology follow-up offering the have an however one and the only part investments Sid, on AI talking Code to of for that's to today? tremendous to Sid, you through, That's up reap help today then going we've are you to adopt we're you AI it, or Can And for going to great the First and think us guys I add-on? that independent products, hear of making talking been appreciate is certain able one want have health. Brian. that on of to add-on up be to that Suggestions Or one benefits giving be add-on. Wanted that the all the the update. that

Sid Sijbrandij

question. can't on it be of Will it will add-on? still additional valid of add-ons? be It's that AI Will and functionality pricing great or We're Premium question Ultimate? in piece every work? does looking comment a And it's packaging today so Like there questions. Yes, though. be AI, that. a are how into Those I part

Mike Cikos

XQ? well then, just what quarter? And guidance now Can revenue at for the more, modest guess, the expectations. of was if Brian much we're better than its help and And QX, Okay. your in sequential embedding look I the guidance, us looking I you is to during management if obviously, the think I was look growth ahead in at through revenue expected similarly, what that

Brian Robins

the as we When we more Thanks for earlier. Mike. range happy because the states call, fourth the on about the last got I quarter, in quarter, Yes. in question, I the higher. predictability guidance was with had talked variability

bottom And looked end of the selected so range that. and at the we

XQ, to if were at And did you compare I so sales remained us how cycles bookings over hyperscalers XQ discuss XQ the XXX% levels. year-over-year.

the discounting, on strength in lower the and I quarter. touched of had also Ultimate the We

a the given approach and we at assumptions come history detailed at with planned. very use look we and When the the look we approach so And hasn't the model, we to what guidance we've have up of we macro same the conditions, in guidance. how changed. model And bottoms-up guidance done the have that's that we

Mike Cikos

guys. it you leave there. Thank I'll

Brian Robins

Appreciate it.

Darci Tadich

reconnected. Mizuho. Gregg try with has He Let's

Gregg Moskowitz

curious glad All I and right. science And to very And I have do enhancement. a Thank very is holding. teams regard forward And registry Brian. get platform is I'd that ramp? to the an Glad to it's know on you ModelOps, interesting native news then to really going I health. for like follow-up much. the starts Sid the just data up regarding to encouraging your to think with connection the follow as hear early. attracting your expectation

Sid Sijbrandij

hand. Yes, because early, work it's really in them hand we want together to

the many see You and code different the in in going lead change outputted. a both to need change to data models and changes it's that the being

manual. different So different in happen these sometimes and changes platform, chains very today that tool

the on to same more to and be more going it's that expect We important level. happen

them point and need immediately and to just in customers we a up and see have way document platform that's your you that you you what data a model code based data it's answer, questions want that. to code, it financial friction-free to is need the you of to running, you're that, that you're industry, can model prove was about what it called and a to to where do on care to how but execute, You answer, every procedural that model to on from have need each to think you only our auditors transaction like use not based we train did the did time changing your you be the plus that that's what you the out takes going to the help prove that developers to plus then

for. that's And without what really achieve a And hard we're to platform. today that's going

a very early, very, hope said ambition. compelling but I I As

Gregg Moskowitz

Very decreased the And yield. that All equally, to in change the Brian, you price seats, across for helpful. mix NRR tier your and right. Any mentioned think, in almost then upgrades that QX? QX, I

Brian Robins

relatively the been same. It's

is increase XX%, so is XX%. seats about about last XX%. and is Price And the

whatsoever. been hasn't change really So there any

Gregg Moskowitz

All right. Perfect. Thank you.

Darci Tadich

Next is Nick with Scotiabank.

Nick Altmann

Awesome. Thanks, hear and to questions for the taking you're great well. Sid doing guys

was up. Ultimate delta there sounds the also Just Ultimate, like there business was Premium, mix and a a up it sounds for like between driven from Matt's on of the renewal price point ticking in question follow-up on some a that uptick Ultimate. was smaller some It mix in But strength we here? of as customers renewal new on Ultimate XQ strength to there landing to sort progressed just curious given I'm through the we at should second net more businesses just expect there's the continue half, Thanks.

Brian Robins

for Thanks Nick. Yes. the question,

we said it's sales and don't versus we saying again, I worth think Ultimate compensate As team before, the Premium. to sell

not for the output to business that something so is and to the an a that deliver We get we're best customer solving positive And solution for. and a want outcome. value time and them quick

compliance, the quarter. has. Ultimate additional by had Ultimate product security driven all really that features It's in the so and And strength

look performed Ultimate a the of expansion, and and and as well through lot Ultimate categories orders go you expected. forth, look in so When at at first

well And really well. in of the was on we contraction expansion some saw low, our saw contraction. so as clients we where of was weakness relatively some as existing as still Premium but pockets Churn

had Ultimate we happy I'll watch. what There them premium, we pockets some said, quarter. delivered. a I weakness in was good like of continue with But to so that overall, And call points watch

Nick Altmann

Thank Great. you.

Darci Tadich

question Our final Barclays. comes from Ryan with

Ryan MacWilliams

on? development AI this handle items they they like an grade today? for adopting Or Thanks. squeezing that how would RFP happen in. are of what So you evaluating Thanks via the something would Sid, me enterprises internally? And key would this for be are their some something that process? like code

Sid Sijbrandij

today. trying I different believe more organic Thanks. it's things. They're

models is important that lot output models. of a their guarantee looking And privacy example, to they're of I who provider for can of isn't for to code. what is what questions for think the a that, used really ask customers is the the they other

of features. us for build top that's something as that's we So our mind

on self-managed. from be the It than the of a editors. work it revenue kind has accessible we everyone company. most popular to have in lot to Other And to also has that, of

to So customers to self-manage can is offer we connect want Internet the to make sure that, over they available functionality. where time, to functionality also that

Ryan MacWilliams

a questions around language you the are output lot models? from of code customers from seeing securing large So of

Sid Sijbrandij

some top the is mind that Code guarantee of to And top for output that of for it's today, you that's another third-party a isn't think the get mind -- the don't of Suggestions I for the certainly with customers organization. train used services them.

Ryan MacWilliams

$XX of to in Appreciate for see Brian. looking or that quarter? that. pull transition of price customers the you from contract take forward one any early And negotiations Do demand advantage

Brian Robins

out Ryan. answer last We the allow close I'll back on We renewals. one, backs. this get not to is and this, early the did call got but

to had renewal two contract expiration. up be to prior Your weeks

that. was the in And pull forward no so quarter there related to

Ryan MacWilliams

Okay. Thanks, guys.

Darci Tadich

FY'XX earnings for once Thanks Have That concludes a us. great our again, joining more, XQ presentation. day.

GitLab (GTLB) 5 Jun 232024 Q1 Earnings call transcript