GitLab Inc at Piper Sandler Growth Frontiers Conference Transcript

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

Question: Rob Owens - Piper Sandler - Analyst : So Q2 has proven to be, I think, a really choppy environment for many of your DevOps peers, and you guys put up a heck of a quarter. I think it was on a few beacon raises, and we argue about how much they raise, but there was a little raise in that. So absolutely, that we saw across the space. What do you think you're seeing right now in terms of prioritization of DevOps platform, consolidation, a lot of those trends that are likely buoying the GitLab story?

Question: Rob Owens - Piper Sandler - Analyst : I'm going to do the Wall Street thing and ask the question a different way. Why are you in the enterprise right now? Because I think that's not what we're seeing across the board. Is there something unique about the proposition that GitLab is bringing? Who are you displacing in the price opportunities?

Question: Rob Owens - Piper Sandler - Analyst : Great. And then who do you think you're displacing in that? Is there a lot of open source capabilities? Is it the different point vendors, homegrown, all the above?

Question: Rob Owens - Piper Sandler - Analyst : I think what really surprised investors just was the CRO departure and the strength that you saw on the heels of that. So maybe talk about just where the pipeline was is relative to that. And as you're especially out there mining for new logos, number one, and then just the replacement of the CRO and any time frames that you guys are trying to hit?

Question: Rob Owens - Piper Sandler - Analyst : I'd like to hit on a couple of the growth drivers right now. So number one, let's talk uptake of Ultimate, which continues to show really strong traction and the value proposition under that and what's driving that decision. Because it is considerably more expensive at roughly 4x list price relative to premium.

Question: Rob Owens - Piper Sandler - Analyst : And are you landing more with Ultimate? Or is it a tier upgrade that you're seeing more success with?

Question: Rob Owens - Piper Sandler - Analyst : Okay. And the Premium price increase seems to have been sticking better than expected. I think you even commented on the call, how conversations gone with customers about uplift to price there?

Question: Rob Owens - Piper Sandler - Analyst : And with that price sensitivity in the SMB market, you guys have taken some proactive steps to kind of address it from a customer acquisition standpoint. And I know it could create some concern out there, but maybe you can speak to it?

Question: Rob Owens - Piper Sandler - Analyst : And if we look at a seat-based model, I know you incurred just not to, but of course, we're going to get down to every metric and then pick at them. Are we almost through the COVID hangover in your perspective? I mean, we obviously saw a massive ramp into COVID with digital transformation and spend. And as we've come off the back of that, as you look at pipelines and things, are you seeing stabilization in those types of numbers where we might start to see a more normalized or better growth rate around seat count?

Question: Rob Owens - Piper Sandler - Analyst : And lastly, in terms of growth, let's touch on Duo adoption. And I think it was 3 times your internal expectations. Realize it's still very early. Gartner had some very compelling statistics out in terms of what they thought the take rate was against your entire customer base, not just your 5,000 and above. Can you comment on the success that you've seen thus far?

Question: Rob Owens - Piper Sandler - Analyst : Could we see further fragmentation within the Duo family? You're going after other opportunities that are Gen AI-based?

Question: Rob Owens - Piper Sandler - Analyst : Any change to your view around developing -- developer hiring as a result of GenAI and as a result of code assist? This has been a lot of, obviously, investor trepidation around asymptotically, we're going to one developer per organization, but that hiring will slow over time as a result of productivity.

Question: Rob Owens - Piper Sandler - Analyst : Shifting gears a little bit and asking the financial question about unit economics. And granted you're not a government-granted monopoly at this point, which -- you used to work at Verisign, so we can all debate that. But the unit economics here are absolutely -- that's where we first met.

Question: Rob Owens - Piper Sandler - Analyst : But the unit economics here have been fantastic. And is that a result just -- I mean software company, obviously, high contribution margin every sale, but a lack of investment opportunity on the other side here? You drove the double-digit operating margin pretty quickly. Free cash flow margin probably looks a little bit better than that, given your model. So just curious around, A, the unit economics; and B, how investors should kind of contemplate future investments? And just how quickly you're going to grow that? Because you guys have always talked about responsible growth. And obviously, you're at a point where you're dropping a lot of free cash flow. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 10, 2024 / 6:00PM, GTLB.OQ - GitLab Inc at Piper Sandler Growth Frontiers Conference

Question: Rob Owens - Piper Sandler - Analyst : We got time for one or two questions. Go ahead, [Ethan]. Unidentified Participant Yeah. I understand Duo is not material to the business currently. But as it starts to be a real contributor to growth, how should we expect you to kind of bucket that NRR based on some of the [three] breakouts you're on currently? Or is it going to become a fourth bucket?

Question: Rob Owens - Piper Sandler - Analyst : One last quick question? All right. Well, Brian, thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 10, 2024 / 6:00PM, GTLB.OQ - GitLab Inc at Piper Sandler Growth Frontiers Conference