No matter if you prefer to track public or private markets, 2022 has proven to be a tough year for software companies. After a bullish 2021, when investors sent software stocks into the stratosphere, startups rode the same wave of enthusiasm to new heights. Since then, we’ve tracked the decline in value software companies have suffered, as well as the resulting knock-on effects on startup fundraising and pricing.
The Exchange explores new companies, markets and money. Read it every morning on TechCrunch+ or get The Exchange newsletter every Saturday.
You’re probably tired of bad news by now. We understand, and to combat the overall sinister environment surrounding startup founders, we’ve been looking for some good news. We found some of them over the weekend, and we’re back with more. GitLab just proved that it’s possible to make investors so happy that they change your price by more than 25% in a single day. Let’s find out how, and we’ll include the latest from Salesforce to reinforce our point.
GitLab shares were up just over 28% yesterday to $51.00 per share, an increase of $11.16 in a single day. And investors aren’t changing their minds, as the developer-focused git service’s stock isn’t returning much, if any, of those gains in pre-market trading. What did GitLab have to accomplish to see such a dramatic price revision from investors? The rare public market triple crown: Outperformed revenue, profitability and outlook in the quarter. Here’s the stats: Revenue growth of 75% to $87.4 million, above analysts’ expectations of $78.1 million, and faster than the 69% growth recorded in the previous quarter. Adjusted loss per share of $0.18, better than the loss of $0.27 per share expected in the quarter. Increased revenue forecast from $93.5 million to $94.5 million for the current quarter and from $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. Even more so, for SaaS fans, GitLab saw “over 130% dollar-based net retention,” which is pretty impressive. In short, GitLab accelerated growth, beat revenue and earnings expectations, and raised its outlook to levels that put it ahead of current street estimates. Now that we’re in 2022, of course, there’s some bad news: Even after its big surge in stock market value, GitLab’s stock is still trading well below its record high last year.