So at Team SaaStr, we flag certain startups as “hero companies”. The ones founders really look up to, and especially want to learn from. We try to get as many of their founders and CROs and CMOs to speak at our events as possible.
One of the top ones is GitLab. Whether you use GitLab or not to build and manage your software, you’ve at least looked at it and learned from them. They’ve also paved the way in running distributed teams at scale, and in ethical leadership.
And now … they’ve crossed $500,000,000 (!) in ARR, growing a jaw-dropping 58% (!). And yet, Wall Street didn’t like their latest results. Why? Because as blow-out as those results are, GitLab is worried about revenue for the next 12 months. If they’re worried, maybe it’s a sign for everyone to be a bit conservative, too.
Because they’re one of the best of the best.
5 Interesting Learnings at $500m in ARR:
#1. Almost 700 $100k+ Customers — Up from 283 24 months ago. That’s 10% of its Customer Base. GitLab remains committed to its Free tier and smaller customers, but its $100k+ deals fuel the big growth. Almost 700 of its 7,000 customers pay $100k or more:
#2. Less Than 6 Month Customer Payback Period, With a Claimed 427% ROI. How you calculate this, is at best, a subjective exercise. But it’s interesting how in this age of increased budget scrutiny, GitLab clearly calls out up front it’s payback period and ROI. Maybe copy this.
#3. 133% NRR, up a smidge from 130% at $400m ARR. While that’s still down from the crazy 150% NRR at IPO, it’s a great reminder that top-tier NRR can easily last to $500,000,000 in revenue. And beyond!
#4. Material price increase coming for its Premium plan. GitLab is the latest in a string of SaaS leaders to raise prices, from Slack to HubSpot to Zoom and more. They are increasing their $19 a month per user Premium plan to $29 a month per user, or +50%. Exactly how material this is is unclear given their $100k+ deal focus, but likely it’s material or the change wouldn’t be being made.
#5. If Growth Does Slow Materially in the Coming 12 Months — it will be the first time ever. This is probably important. GitLab has basically grown at top tier rates since launching. If it slows down the next 12 months, it will be the first real bump in growth — ever.
Wow, what a run GitLab to $500,000,000 in ARR. Even if the next 12 months brings some macro challenges, we’ll likely still see very strong growth about $1B+ ARR. That’s just what happens with 133%+ NRR.
Published on March 15, 2023