GitLab Inc at Needham Growth Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Michael Cikos - Needham & Company Inc. - Analyst : I think just to level set -- because I know we're a little bit removed; numbers are a little foggy. But coming off the October quarter, which feels like a lifetime ago, can you just give us a quick refresher on the numbers and how it played out?

Question: Michael Cikos - Needham & Company Inc. - Analyst : Excellent, excellent. And then one of the things that we've gotten of that call specifically, I think at some point, Sid had mentioned something about consumption pricing. And I just wanted to see if we could flush that out while we have them.

Question: Michael Cikos - Needham & Company Inc. - Analyst : Excellent. Okay. If I just think broader market at this time, we're in the new year, we'd love to get a sense how are customer conversations shaking out from a budget or a demand perspective. What are you guys hearing currently?

Question: Michael Cikos - Needham & Company Inc. - Analyst : And this last quarter, again, strongest quarter for the company in its history as it relates to pub sec. Has there been historically like any change in demand from federal when we go through these changes in administration now that we know that we have a Trump administration? Or was pub sec maybe even too small to really be talking about four or even eight years back at this point?

Question: Michael Cikos - Needham & Company Inc. - Analyst : Got it. And then -- I mean the platform is obviously meaningfully expanded. You guys now have Dedicated, you have Duo Pro, you have Duo Enterprise. When we come back to the strength of pub sec this most recent quarter again, is it fair to think that part of that is based on having something like Dedicated? I'm sorry. Yes, the Dedicated offering as well as the Duo offering? Or is this just more consistent execution and maybe that's to come still?

Question: Michael Cikos - Needham & Company Inc. - Analyst : Excellent. From a -- I guess if I think about where we are in the world, it seems to be like it's in the easier -- it's just it's an easier way to cross-sell or upsell your existing customer base today versus going out and acquiring new logos. Can you talk about what GitLab is doing on the new logo front? Is there a potential to actually accelerate it from where we sit today? If there is that potential, what would be a driver for that?

Question: Michael Cikos - Needham & Company Inc. - Analyst : Can you talk about that dynamic for a second? Like why -- I would think you see the value expand and then maybe by the fourth or fifth go around, you just roll it out to these. Like I guess, based on your comment, the customers are much more phased as far as how that rollout takes place then.

Question: Michael Cikos - Needham & Company Inc. - Analyst : Excellent. Okay. And on that point, as far as these new customers, are they -- are new logos landing larger today? I would think they are just because of how much traction you're seeing with Ultimate but just to sound check it.

Question: Michael Cikos - Needham & Company Inc. - Analyst : And from that perspective, is that driven by -- again, I know you're not necessarily incentivizing the sales work to go one way or another. But hey, larger organizations have deeper pockets, which might be stickier spend in this kind of environment. Or is it maybe a function of the maturity of the offering? Like what are the drivers for that move-up market or landing larger today versus where we were couple of years ago?

Question: Michael Cikos - Needham & Company Inc. - Analyst : So great on UBS and the expansion there. If you have seen that kind of success, is there a thought that maybe you can build out a stronger top-down selling motion to kind of supplement what you guys have? Or is that already in the works under the hood like --? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 14, 2025 / 4:45PM, GTLB.OQ - GitLab Inc at Needham Growth Conference

Question: Michael Cikos - Needham & Company Inc. - Analyst : Okay. And we spoke about the $40 billion TAM already, the fact that there's two platforms out there that are leading, it's you and GitHub. My question is, why haven't we seen consolidation faster in this market. There are so many point solutions out there. We're talking about these very quick paybacks and productivity gains. If someone says, hey, we're good. Well, we'll take a pass on GitLab. What's the pushback on that?

Question: Michael Cikos - Needham & Company Inc. - Analyst : Excellent. And I know that you guys put a big focus on security compliance, putting that checkpoint thing in place throughout the process, right? I think on the most recent quarter, you're talking about the launch of advanced SaaS, is now GA as well. And that was always the big pull for Ultimate. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 14, 2025 / 4:45PM, GTLB.OQ - GitLab Inc at Needham Growth Conference It feels like you guys are continuing to use packaging as a lever to help that up market adoption, right? We talked about like Dedicated, you have to be an Ultimate customer. Duo, you have to be an Ultimate customer.

Question: Michael Cikos - Needham & Company Inc. - Analyst : Is that the philosophy we should think about as driving like it's carrot not stick necessarily?

Question: Michael Cikos - Needham & Company Inc. - Analyst : And with Premium, obviously, lower price tag, customers more economically sensitive. What is it you guys are seeing on that front from a new logo perspective versus internal plan experimentation, again, just given the economic sensitivity of those customers?

Question: Michael Cikos - Needham & Company Inc. - Analyst : Excellent. And for Duo Pro and Duo Enterprise, how has the go-to-market playbook built for those solutions? Does it require a little bit more of a sales specialist or sales overlay? Is a sales engineer getting pulled in to help architect that? Like how is that introduced to the customer and the sales process?

Question: Michael Cikos - Needham & Company Inc. - Analyst : Excellent. And for Duo, you guys have spoken about some big customer wins there, [Emirates F5]. Can you talk about, I guess, the adoption trends? When that is discussed with the customer, is that typically at renewal? Or is that, again, that's another opportunity for me to go out to the customer and engage them even before they're up for renewal?

Question: Michael Cikos - Needham & Company Inc. - Analyst : When Duo was introduced, so great on the 25% uplift, right? But when that's introduced, do you tend to see sales cycles elongate just because there are potentially more constituents or now it's a larger price tag than it would have been otherwise? Like how does that play out?

Question: Michael Cikos - Needham & Company Inc. - Analyst : Excellent. And for Duo Enterprise specifically, you guys also just recently announced that now customers can self-host their models, again, probably feeds very well into the public sector. Are commercial enterprise is asking you for similar functionality as well? Or again, should I think about that as being much more of a public sector play?

Question: Michael Cikos - Needham & Company Inc. - Analyst : And for, again, the core, let's say, Premium or Ultimate offering. We understand that all right, if I'm not adopting, it's because Mike Cikos has built out this tool chain. There's a lot of sweat and blood that went to that, and now we're just going to deprecate it because we don't always get led. What's the push back to see if someone decides, hey, we don't want to go with Duo? Is it really the privacy concerns, or maybe compliance still needs to get over that hurdle?

Question: Michael Cikos - Needham & Company Inc. - Analyst : Right. I don't mean to mitigate what you guys have achieved either. Like again, it's interesting to see the spectrum because you do talk about new logos who are landing and buying GitLab with Duo, right? So not to take away from it, I'm just trying to figure out what that pushback would be you're getting for the market. I think it'd be great to touch on Enterprise Agile planning as well. And all that's been made as far as potential market share gains coming from competitors out there. How is that tracking?

Question: Michael Cikos - Needham & Company Inc. - Analyst : And also, correct me if I'm wrong, but I think that comes in as well as far as having that unified data store. I know you guys maybe don't say it as boldly but like I think of AI, like this is kind of your spot to win right now just given the unified data store. Can you take a second to just carve out and talk about that data store? What are the advantages that you guys have versus, again, some cobbled-together tool chain? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 14, 2025 / 4:45PM, GTLB.OQ - GitLab Inc at Needham Growth Conference

Question: Michael Cikos - Needham & Company Inc. - Analyst : Right. And the greater insights generated just because you remove those silos, right?

Question: Michael Cikos - Needham & Company Inc. - Analyst : Okay. Okay. I think what would be interesting to the extent you can comment -- but like with your Duo customers or customers who are coming over and using you guys or AI code Assist, are those -- do you have a segment as far as how many of those are net new to AI code assist versus maybe coming from a competing solution or continuing to use a competing solution and just tacking on GitLab as well? Is there a way to frame that out?

Question: Michael Cikos - Needham & Company Inc. - Analyst : Got it. And I know I still have questions on my side, but I want to make sure I'm being true to my word. Does anyone have questions out there that they want to lob in, otherwise, I'll keep going? All right. Let's go. On the competitive front, when you guys are coming in and let's say displacing one of those tool chains, are there more common competitors which are taken out first? Let's say, there's some solution that just hasn't been invested in, are the solutions being deprecated by the vendor? Can you comment again from a competitive standpoint, not versus GitHub, but versus, again, that point solution effort? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 14, 2025 / 4:45PM, GTLB.OQ - GitLab Inc at Needham Growth Conference

Question: Michael Cikos - Needham & Company Inc. - Analyst : Okay. For Dedicated and Duo as well, again, just trying to think about potential benefits to the longer-term model. But newer offerings, are you starting to see enough data that would tell you that maybe these customers have better lifetime value economics or not necessarily, again, just based on the nascency of the offering, tough to get there?

Question: Michael Cikos - Needham & Company Inc. - Analyst : And there is a demand from partners to work with you guys as well. We recently got news about the Amazon partnership. Can you discuss that as far as how the integration is supposed to work? And what increased functionality or efficiencies you anticipate bringing to customers as a result?

Question: Michael Cikos - Needham & Company Inc. - Analyst : And just to be super crisp on that, they're Dedicated Salesforce for this. They'll be able to retire quota by selling GitLab then.

Question: Michael Cikos - Needham & Company Inc. - Analyst : Okay. Excellent, excellent. Profitable growth, you would discuss earlier. Obviously, margins have meaningfully increased in the last year plus. How do you guys think about growing this business? Is there like a baseline yield you try to generate off each dollar. Like again, how do you think about this margin expansion story for GitLab right now?

Question: Michael Cikos - Needham & Company Inc. - Analyst : Right. And it's one of the things we're highlighting for folks too. I think if you go back the last two years, the incremental margins on the operating profit line have been somewhere in the neighborhood of like 50% plus. And even this year, I think it was Q1, you guys had a big live event that was somewhere around $10 million or $15 million as far as expense. But year-to-date, you're still well north of 40 on that incremental margin as well.

Question: Michael Cikos - Needham & Company Inc. - Analyst : Again, we're post-COVID now, is that expected to be an annual thing then? Should we just --?

Question: Michael Cikos - Needham & Company Inc. - Analyst : All right. Pulse check, again, any questions out there? All right. We'll close it out. Then just two more questions on my side. The first management CEO, obviously, we have Bill Staples, who's now appointed CEO. Can you just discuss his background, credentials, and how -- what his expertise are as far as continuing to scale this business?