GitLab is up 35% on its Nasdaq debut after the code-sharing firm’s IPO exceeded the anticipated vary

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GitLab stock rose 35% on its first day of trading Thursday after the developer collaboration software company sold shares well above its expected range on its IPO.

Trading on Nasdaq under the ticker symbol “GTLB”, GitLab valued its stock at $ 77 late Wednesday and valued the company at approximately $ 11 billion. GitLab had announced that it would likely sell shares for $ 66 to $ 69 each. The stock opened at $ 103.89, pushing GitLab’s market cap to $ 14.9 billion

Since its inception nearly a decade ago, GitLab GitHub has been chasing GitHub in the source repository market, which includes Atlassian’s Bitbucket. Microsoft acquired GitHub for $ 7.5 billion in 2018 and since then, GitLab has grown rapidly as the only large independent player in the market.

Second quarter revenue increased 69% year over year to $ 58.1 million. However, with GitLab spending three-quarters of its revenue on sales and marketing primarily to build its developer user base, the company posted a net loss of $ 40.2 million in the most recent quarter.

People celebrate Gitlab’s initial public offering on Nasdaq, October 14, 2021.

Source: Nasdaq

GitLab raised nearly $ 650 million through the offering, and investors bought over $ 150 million in additional shares from a unit affiliated with GitLab CEO Sid Sijbrandij.

GitLab offers a free version of its DevOps platform, a term that refers to the combination of developers and IT operations. The software enables users to work on, package, share, and monitor code. Customers can run GitLab on any public cloud, their own data center, or as a GitLab-hosted service.

The company makes money with its premium products. For $ 19 per month per user, GitLab offers business tools and faster code reviews, and for $ 99 per month, users can get features like security and compliance. According to GitLab, 383 customers spend at least $ 100,000 annually.

“Our future success depends in part on our ability to convert users of our free product offering into paying customers by selling additional products and selling additional subscription services,” said GitLab.

GitLab said the net revenue retention rate, a key metric for subscription software companies because it shows customer success, rose to 152% in July. That would make it one of the leading publicly traded software companies.

In addition to the growth of GitLab, this is also the main reason the company has such high sales. With a market cap of $ 14.9 billion, GitLab trades for roughly 64 times annual revenue, less than three of the 58 companies in the Bessemer Cloud Index and through Atlassian.

GitLab is widely known as a pioneer in remote working. While companies were forced to adapt to distributed work during the pandemic, this is how GitLab started and didn’t have to change much for its 1,350 employees in more than 65 countries. In the header of its prospectus, Gitlab says “Address not applicable”.

Founded in 2012 and founded two years later, GitLab was last valued at $ 6 billion on a secondary financing confirmed in early 2021 that allowed existing shareholders to sell up to 20% of their acquired equity. That was an increase from a valuation of $ 2.7 billion in a funding round in late 2019.

In its “team manual” on its website, GitLab had openly announced its plan to go public by November 2020. After the pandemic broke out early last year and shook the entire economy, the company canceled the date for its debut while also indicating that a public listing was still on the roadmap.

According to the prospectus, GitLab co-founder Sijbrandij is the company’s largest shareholder with 19% ownership prior to the offer. Khosla Ventures owns 14%, followed by ICONIQ with around 12%, August Capital with 11% and GV (formerly Google Ventures) with just under 7%.

SEE: The rise of open source software

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