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Yen Liow, Aravt Global - Stock pick: Gitlab

Cliona O'Dowd and Glenda Korporaal
The Australian
Dec 3, 2021

Gitlab is a founder-led software business that is focused on DevOps which is is rapidly growing into a large market with pricing power that is expected to last for decades. Liow stumbled upon the company while researching Atlassian, which itself generated 20 times the return on capital since its IPO.

“We kept on hearing from our conversation with our developers in the community that this company has fantastic software which they believe will become one of the emergent standards for years to come,” he says. “Imagine getting onto Atlassian at the start of the ride. We believe that company is GitLab.”

The $15bn company listed on the Nasdaq in October and trades about $80m a day. Its focus is on source code management within the so-called DevOps stack, where a duopoly exists with Microsoft’s Github and now GitLab. Where Atlassian has created a $100bn business focuses on one core focus in the DevOp stack, Gitlab is focusses on the entire cycle, with leadership in almost three segments.

“DevOps is highly complex; there is no single platform that allows developers to go through this entire process without using different sources of software. GitLab is uniquely positioned to solve that problem. They are investing aggressively throughout the entire DevOp cycle.”

In seven years, the company has been growing at almost 70 per cent, with a run rate of almost $230m a year. Some 90 per cent of the business is subscription based, with 88 per cent gross margins and 97 per cent gross revenue retention.

“We believe GitLab has an opportunity to grow almost 10 fold in the coming decade,” says Liow. “Software developers are among the most valuable employees in the world and that they will be an extremely valuable place to sell software into.”

This article was originally posted by The Australian here.

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