GitLab Reaches A $15 Billion Market Cap, Shares Jump 35% After Its No-Office Radical CEO Opts For A More Traditional IPO

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GitLab cofounder and CEO Sid Sijbrandij (center left) presses the button to open Nasdaq's stock exchange as the company went public in October 2021.

2021 Nasdaq, Inc.

Long before the pandemic, software business GitLab operated fully remotely, building its developer tools without any physical office. It was unusual in another way, too: cofounder and CEO Sid Sijbrandij had a date set for its eventual public offering: November 18, 2020.

Covid-19 had other plans. But already set up in many ways for the push of more work online – both in its corporate structure and with its products, which help businesses build, maintain and secure their websites and apps – GitLab didn’t have to wait too much longer. The company went public on Thursday on Nasdaq under the ticker “GTLB.” Priced at $77, shares of GitLab closed their first day of trading at $103.89, up 35%, giving GitLab a market cap of nearly $15 billion.

In an interview, Sijbrandij (pronounced “see brandy”) said that going public would help GitLab to remain a well-resourced, long-standing steward of the open-source project on top of which its business software is built. “This had to happen sometime,” Sijbrandij says. “We knew we were ready, the markets were ready, so why not take the step today?”

With revenue of $58 million in its previous quarter, up 69% year over year, on losses of $40 million, GitLab fits the mold of a classic high-growth, unprofitable business-to-business software provider – cloud players that have in recent years proven popular, and able to command high multiples, with Wall Street. While its losses have narrowed recently, GitLab still generates about $1.50 in new business for each $1 spent by customers previously on its tools, putting it in elite company in the category.

But unlike recent companies such as Amplitude, Warby Parker and Coinbase that opted for a direct listing instead of an IPO, GitLab went the traditional route. Proponents of direct listings typically point to the first-day “pops” as evidence that the value created by a rising stock price is going to the banks and insider investors who buy into the IPO, not the company itself, leaving millions in potential fuel for the listing company on the table. Startups that raise a private financing before a direct listing, they note, might bring in comparable sums of cash for smaller pieces of their company.

Like Snowflake’s CEO Frank Slootman and others before him, Sijbrandij wasn’t swayed by such arguments. GitLab’s CEO says he preferred to select investors through a traditional IPO roadshow. “It’s great there’s so many options available to companies,” he says. “There’s a lot more possibilities available to entrepreneurs. So I encourage everyone to do their due diligence and talk to a few companies that when through the different processes. I think there’s good reasons for each … we’re really happy with the route [we chose], and happy with the investors we’ve been able to attract.”

Perhaps an even bigger factor for GitLab: as a DevOps business, the company and its leader wanted as much exposure as they could get. GitLab’s spent aggressively on sales and marketing in recent quarters relative to its revenue, and Sijbrandij noted repeatedly that being public would help raise GitLab’s awareness and profile with potential customers, partners and investors. The company was the first-ever on Nasdaq to livestream its entire IPO day, with about 18,000 people stopping by over the course of the broadcast, it says.

A former submarine company employee and web project manager for the Dutch Ministry of Justice, Sijbrandij launched GitLab in 2012 as a business built on top of an open source project created by Dmitriy Zaporozhets and Valery Sizov. Zaporozhets joined a year later as cofounder and CTO (Sizov followed in 2014). GitLab the company would sell subscriptions to software tools to help manage projects build on that tech, charging for what became a suite of 10 distinct tools for different stage in an app’s lifecycle.

That’s meant GitLab has competed with a variety of offerings from other companies, including, unsurprisingly from the name, Microsoft subsidiary GitHub, but also infrastructure players and security specialists. “A couple of years ago when we introduced security, we saw a lot of revenue coming from it and we interviewed those people, ‘why did you buy this?”” Sijbrandij says. The tool wasn’t as good as others yet, GitLab heard back. But customers would find the vulnerabilities faster within GitLab; buying everything from one vendor was simpler enough that they trusted GitLab to catch up over time. “That’s been a great accelerant of our growth,” Sijbrandij says.

Along the way, Sijbrandij also became known as one of remote work’s leading evangelists, advocating a no-hybrid, radically transparent office culture he says is fairer and more productive. That purist view remains a hiring advantage, he tells Forbes now; it also helps explain the livestream, part marketing opportunity and part way to include GitLab employees and advocates across the globe. “It’s always behind closed doors,” Sijbrandij says of the IPO festivities and listing process. Originally from the Netherlands, Sijbrandij added his parents were two of the viewers. “It was awesome to share it with the world.”

And while GitLab didn’t quite make its initial IPO proclamation date, Sijbrandij says there’s significance to this October, too. When he first went out to raise outside capital in 2015, he says, he asked cofounder and CTO Dmitriy Zaporozhets, one of the creators of the open source project on which GitLab has been built, how long he was committed to build the company. Ten years from the start of the project, Zaporozhets told Sijbrandij.

Going public in November 2020 would have had its own symbolism and given some wiggle room, Sijbrandij admits. But with the first code commit to the GitLab project on October 8, 2011, the company’s IPO date has fallen within one week of Zaporozhets’ deadline. “It’s great to be able to celebrate that milestone together today,” Sijbrandij says.

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