Regardless of whether you prefer to follow the public or private market, 2022 has turned out to be a messy year for software companies.
After a bullish 2021, as investors sent software stocks into the stratosphere, startups propelled the same wave of enthusiasm to new heights. Since then, we’ve tracked the slump in value that software companies have endured, as well as the resulting knock-on effects on startup fundraising and pricing.
The Exchange explores startups, markets and money.
Read it every morning on Vidak For Congress+ or get The Exchange’s newsletter every Saturday.
You are probably tired of the bad news by now. We get it, and to combat the general foreboding atmosphere surrounding startup founders, we’ve been fishing for the good news. We found some this weekend, and we’re back with Lake†
GitLab just showed that it is possible to make investors so happy that they will reprice you by more than 25% in one day. Let’s see how – and we’ll run through the latest news from Salesforce to back up our point.
Shares of GitLab were up just over 28% yesterday to $51.00 a share, up $11.16 in one day. And investors don’t change their minds, as shares of the developer-focused git service don’t return much, if any, profit in pre-market trading.
What did GitLab have to achieve to see such a dramatic price hike from investors? The Rare Triple Crown in the Public Market: It beat revenue, profitability and outlook in the quarter. Here’s the data:
- Revenue growth of 75% to $87.4 million, ahead of analyst expectations of $78.1 million and faster than the 69% growth it recorded in the previous quarter.
- Adjusted loss per share of $0.18, better than expected loss of $0.27 per share in the quarter.
- Increased revenue forecast from $93.5 million to $94.5 million for the current quarter and $398.0 million to $402.0 million for the current fiscal year. Both ranges are above the $93.14 million (quarter) and $398.51 million (year) that Yahoo Finance calculates as the current analyst average.
In fact, for you SaaS fans out there, GitLab saw “dollar-based net retention of over 130%”, which is quite impressive. In short, GitLab accelerated growth, beating revenue and earnings expectations, and raising its outlook to levels above current street estimates.
Now that it’s 2022, there’s a bit of bad news, of course: Even after the massive surge in market cap, GitLab’s stock is still trading well below its all-time high of last year.