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Gitlab - Worst is over?

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JP_mykayaplus wrote a column · Jun 18, 2023 13:49
Gitlab - Worst is over?
$Gitlab (GTLB.US)$ prices are up by almost 50% after its financial results release in early Jun'23.
It used to be one of the hypergrowth darling stocks back then.
But stock prices are still currently below IPO prices.
What is there for the prospects for this company?
1. Gitlab provides a DevOps platform
Source: Gitlab First Quarter Fiscal Year 2024 Investor Presentation
Source: Gitlab First Quarter Fiscal Year 2024 Investor Presentation
A DevOps platform is a software platform that helps organizations automate and integrate the processes between software development and IT teams. It emphasizes team empowerment, cross-team communication and collaboration, and technology automation.
Some of the platform functions and features include source code management, continuous integration, and continuous delivery.
The main objective of a DevOps platform is to help organizations improve the speed, quality, and security of the software development process.
2. Decent Q1'24 results and metrics
Source: Gitlab First Quarter Fiscal Year 2024 Investor Presentation
Source: Gitlab First Quarter Fiscal Year 2024 Investor Presentation
One of the key highlights of Gitlab's Q1'24 results is its high non-GAAP gross margins, which is at 91%. It also still commands a healthy Dollar-Based Net Retention of 128%.
The number of customers who are paying > USD 100k a year is 10.26% of its total base customer.
3. Operating efficiency showing improvement, but operating cash flow is still choppy
Source: Gitlab First Quarter Fiscal Year 2024 Investor Presentation
Source: Gitlab First Quarter Fiscal Year 2024 Investor Presentation
As revenue continues to outpace the growth of expenses, the non-GAAP operating losses as a $ of revenue have been decreasing for consecutive quarters.
However, GAAP operating cashflow as a % of total revenue is still choppy.
Thus, investors might need to look out whether GitLab has sufficient cash and liquidity to operate onwards prior to its operating cash flow stabilizing.
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