Gitlab Full Report
A quick free summary of our premium GTLB report
Introduction
Cloud computing has been transformational for business agility and scalability. The downside is that complexity ensued. Internal DevOps efforts emerged to better handle the complexity by bringing closer collaboration between dev and ops teams. On small scales there have been successes; however, there is now another layer of complexity created via DevOps tooling siloes. Different devs have preferences for different tools, and different vendors specialise in different stages of the application lifecycle. Ultimately, these dynamics have resulted in more, not less, complexity.
Nowadays, orgs need to be not only great at building, securing, and delivering software, but they also need to be great at providing the platform infrastructure to enable these capabilities. Out of all orgs, there is probably less than 1% that can deliver a completely in-house, sustainable, end-to-end DevOps platform. It requires tons of resources, which is why only the mega successful firms like Google, Meta, and a few others, are able to successfully implement such a platform, and actually turn it into a key competitive advantage.
Value Stream Delivery Platforms, or VSDPs, have come to the fore as a solution to break down the siloes emanating from disparate DevOps tooling. A VSDP is a single application for building, securing, and deploying software; providing all the necessary dev and ops tooling inside one platform.
The overarching purpose of DevOps is to overcome the trilemma of software quality, speed, and security. However, tooling fragmentation threatens the simultaneous progress along these dimensions. VSDPs are the remedy to get DevOps objectives back on track.
GitLab is the market leader in this nascent, but huge value potential, market. They started off in 2011 as an OSS project, providing developer collaboration solutions for the early stages of software development. Since then, they have shifted right to offer various services right through to software deployment and monitoring, creating a very comprehensive platform.
At a large scale, GitLab continually receives contributions from the OSS community to help improve its code and feature set. They have organised themselves in such a way, that they can receive, evaluate, and implement these improvement suggestions along with their own in-house improvements, in a really efficient manner. So much so, that every month they release a new version of GitLab consisting of tens of new features. We would say this is their secret sauce, and ought to enable them to stay in tune with their users on an unparalleled level. This is developing a deep flywheel type of moat and should lead to durable growth for this young company.
We really believe that leading VSDPs, like GitLab, could be the next generational value creators. If the hyperscalers are the biggest value creators of the 2010s, then it’s possible that leading DevOps vendors will be the biggest value creators of the 2020s. The major headwinds for future software productivity are 1) complexity and 2) talent shortages. A VSDP addresses both of these and thus can unlock significant value for orgs and industries at large.
Here is how we have laid out the research report on GitLab:
Part 1
The Rise of DevOps: To get a good understanding of the importance of DevOps, it’s helpful to learn the journey to DevOps. In this section we review the pros and cons of DevOps ancestors and how DevOps fills the gaps to deliver better software faster.
DevOps is Great but There Are Some Problems: Compared to legacy approaches, DevOps has facilitated easier software updates and innovation, but Do-It-Yourself DevOps implementations have created another set of problems. In this section we briefly discuss the factors at play that are blocking orgs from realising the full potential of their DevOps objectives.
Brief History of GitLab: GitLab’s OSS roots are a compelling competitive advantage. In this section we review GitLab’s journey thus far and consider the merits of the open-core business model.
Product Evolution: In this section we dive deeper into the OSS community secret sauce powering GitLab’s product evolution. We also take a look at the future roadmap.
Business Model: In this section we delve further into GitLab’s open-core business model and its dual bottom-up + top-down GTM strategy.
Part 2
The Value of DevOps & GitLab: Through the lens of productivity, we assess the potential economic value creation that can be potentially provided by leading VSDPs like GitLab.
The Future of DevOps & GitLab: In this section we review VSDPs, software supply chain security, ML & automation, observability, and SaaS consolidation. These areas promise to generate sizeable future value for orgs’ efforts to implement DevOps.
Competition: At present there are only a few VSDPs that can compete on the same level as GitLab. In this section, we discuss the competition from the hyperscalers and a couple of promising startups.
Financials: In this section we review financial trends and GitLab’s latest quarterly ER.
Valuation: In the final section we provide some commentary on GitLab’s multiples and the Google Sheets DCF valuation model.
Part 1 was published 12th October (yesterday) and Part 2 will be published in a few days. If you're interested in learning more about GitLab become a subscriber and also gain access to 100+ other reports.