This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.
spk03: Hello to those of you just joining, we will be starting in about one minute welcome to today's call again, please stand by will be starting momentarily thanks very much. Thanks for joining us today for GitLab's third quarter 2022 financial results. Today, GitLab's co-founder and CEO, Sidzi Brandi, and GitLab's chief financial officer, Brian Robbins, will provide commentary on the quarter. Please note, we will be opening up the call for panelist questions. To ask a question, please use the chat feature. Post your question directly to the IR chat channel using the dropdown menu. With that, I'll turn the call over to Taylor Giles of the Blue Shirt Group to cover the safe harbor.
spk08: Thank you, Kevin. Before we begin, during this conference call, we may make forward-looking statements within the meaning of the federal securities laws. These statements involve assumptions and are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those discussed or anticipated. For a complete discussion of risks associated with these forward-looking statements in our business, we encourage you to refer to our earnings release distributed today and our SEC filings, including our quarterly report on Form 10-Q for the fiscal quarter, which ended October 31st, 2021. Our forward-looking statements are based upon information currently available to us. We caution you not to place undue reliance on forward-looking statements and we do not undertake any duty or obligation to update or release any revisions to any forward-looking statements or to report any future events or circumstances or to reflect the occurrence of unanticipated events. In addition, during this call, certain financial performance measures may be discussed that differ from comparable measures contained in our financial statements prepared in accordance with U.S. generally accepted accounting principles. referred to by the Securities and Exchange Commission as non-GAAP financial measures. These non-GAAP measures are not intended to be a substitute for our GAAP results. We believe these non-GAAP financial measures assist management and investors in evaluating our performance and comparing period-to-period results of operations as discussed in greater detail in the supplemental schedules to our earnings release. A reconciliation of these non-GAAP measures to the most comparable GAAP financial measures is included in our earnings press release submitted to the SEC. These reconciliations together with additional supplemental information are available at the investor relations section of our website. A replay of today's call will also be posted on the website. I will now turn the call over to GitLab's co-founder and chief executive officer, Sid Sebrandy.
spk11: Thank you for joining us for our first quarterly earnings call as a public company. We had a great quarter and we're excited to share today we exceeded our own expectations for the third quarter of fiscal year 2022 with revenue of $66.8 million. This represents revenue growth of 58% year over year this quarter. Our dollar-based net retention rate was above 130%, reflecting the significant return on investment that GitLab provides to our customers. As we look forward, we are seeing continued strong momentum for customers adopting the DevOps platform, and we feel we are still early in a large and growing market. I want to take a moment to express my gratitude to our investors, customers, the wider community, and team members. We are excited to share more details with you about the quarter and our overall business. But first, I want to reflect on our initial public offering. I believe we are the first all remote and most transparent company to go public. Our value of transparency has been prevalent as we've scaled the business. One example of this transparency is our publicly accessible handbook, which is more than 2000 web pages documenting how we run GitLab. Another example of our transparency took place on listing day, October 14th, 2021. GitLab was the first company to publicly stream its entire end-to-end listing day at NASDAQ. You can watch the recording of the live stream by searching GitLab history. While our IPO was a major milestone for GitLab, it was one of the many important steps in the evolution of the company. Because this is our first earnings call, I thought it might be helpful to go over the history of DevOps. I'll explain the value that GitLab provides and tell you about the large market opportunity with enduring tailwinds that we believe we have in front of us. In a world where software defines the speed of innovation, we believe every company has to be great at developing, securing, and operating software. We also believe that to remain competitive, organizations in every industry must digitally transform. This represents a dramatically different approach to software development and operations, known as DevOps. DevOps is a set of practices that allow development, security, and operation teams to collaborate and work together to shorten the software development lifecycle, typically from months to hours. As DevOps adoption increases, the tools for it continue to evolve. I'll explain the evolution of DevOps tool sets in four phases. The first phase was bring your own DevOps, where each team selected their own tools, which caused problems when teams tried to work together. This was because each team was not familiar with the tools of the other teams. The second phase was best-in-class DevOps, where organizations standardized on the same set of tools, but struggled to quickly move software changes through the tools. So teams moved to a third phase, which required doing a set of custom work to integrate DevOps point solutions together in a do-it-yourself DevOps solution. In this phase, tools were not designed to use the same concepts, so they never fit quite right and were hard to maintain. I believe the true potential of DevOps was not fully realized in any of these phases. A single platform approach is needed to improve the team experience and to improve business efficiency. GitLab, the DevOps platform, is the fourth phase of this evolution, replacing DIY DevOps and allowing for visibility and control over all stages of the DevOps lifecycle. According to Gartner, by 2024, 60% of organizations will have switched to a DevOps value stream delivery platform to streamline application delivery versus 20% in 2021. Based on our own calculations, and as we mentioned during our IPO, we believe we have a $40 billion market opportunity for our DevOps platform. GitLab as the DevOps platform allows teams to collaboratively and efficiently plan, build, secure, and deploy software in one application. With one user interface and a unified data model, teams across development, security, and operations can use GitLab for every stage of the software development lifecycle. GitLab replaces the need for teams to switch between tools, allowing companies to cut their complex point solution tool chain. We believe our single application helps companies to deliver software faster, improve organizational efficiency, and reduce security and compliance risks. The DevOps platform also enables our customers to manage and secure their entire DevOps workflow across any hybrid or multi-cloud environment. This enables our customers to select the best cloud provider for their applications, and it allows our customers to avoid vendor locking and over-reliance on a single cloud vendor. We believe this provides us with a competitive advantage to help empower our customers to embrace the full benefits of a multi-cloud strategy. In 2020, Gartner created a new market category for DevOps tools called the value stream delivery platforms. GitLab's position as the pioneer in the market of DevOps platforms is evidenced by the fact that in October 2021, Gartner listed GitLab as a representative vendor for their market guide for value stream delivery platforms for the second year in a row. At GitLab, we prioritize and are extremely effective in improving the platform. We have a dual flywheel development strategy that leverages both our research and development group and our open core community. By leveraging the power of each, we create a cycle and more contributions lead to more features, which leads to more users, leading back to more contributions. As an example of this innovation, in the third quarter, we introduced over 100 new features. A few of our top new features are GitLab Operator, which enables customers to standardize their deployment and manage the full lifecycle of GitLab on Kubernetes-based platforms, including Red Hat OpenShift. In addition, this feature lays the foundation for automating common tasks, which we believe ultimately reduces the total cost of ownership. Another new feature is GitLab's proprietary next-generation static application security testing engine. This new engine was built in-house to enable customers to detect and eliminate security risks faster than before. We also released improvements to the Wiki experience with the new what you see is what you get markdown editor. This rapid increase in features in the DevOps platform enables customers to use GitLab for more tasks, replace more point solutions, and achieve a faster cycle time. The DevOps platform delivers positive business outcomes for a very wide range of customers, from single users to tens of thousands of users, from small organizations to Fortune 500 companies. GitLab's wider community is spread across every geography and across a wide number of verticals, including the public sector. most people start using GitLab with our industry-leading source control and testing functionality. After they start using GitLab, customers often expand their usage in the platform, realizing that they no longer need the custom toolchain with individual point solutions. I'm proud to share that in the third quarter, we added 425 base customers. Some of the new and expand logos include Suzuki Motor Corporation, Smartsheet and Lockheed Martin. Let me give you a few examples of expansion at other companies. In Q3, we had many expansions with our public sector clients. We continue to play a critical role for our government contractors supporting a military program. The contractor migrated 2000 users to a single integrated DevSecOps environment. Another key license expansion was with one of the largest logistics, e-commerce and business services companies in the world. They continue to expand enterprise modernization initiatives with GitLab in Q3. This expansion of GitLab DevOps platform reduced development cycle time from ideas to release and accelerated their data center consolidation efforts. I'd like to highlight another expansion from a major telecommunications customer. The customer added more development teams to GitLab, which further simplifies their tool chain infrastructure. The team was able to reduce their complete data center deploy process to under eight hours. And because of that streamlined deploy and build process they enabled using GitLab, I believe that a platform solution that integrates security is the future. In today's threat landscape, you need to secure 100% of your applications and 100% of the time. We believe that the only practical way to do that is to integrate security into the platform. And GitLab's DevOps platform does this. In Q3, we also welcomed our newest board member, Sonny Betty. Sonny is the chief information officer and chief data officer at Snowflake, and we're very pleased to welcome him to the GitLab board of directors. On November 10, we shared that my co-founder and the creator of GitLab, Dmitry Zaporozhets, made the decision to leave his position as engineering fellow after completing his personal commitment of 10 years to GitLab. I'm excited to continue to lead GitLab and build on what we created. I would like to thank Dmitry for all of his contributions. And I'll now turn the call over to Brian Robbins, GitLab's Chief Financial Officer.
spk10: Thank you, Sid, and thank you again to everyone for joining us today. I will quickly recap our third quarter financial results and key operating metrics and then conclude with our guidance. Before I dive into the quarter, I'll give a brief overview of our go-to-market strategy and our business model. In today's innovative world, we believe that every company must become a software company or they will be disrupted by a software company. GitLab goes to market with a proven land and expand model to help organizations modernize their DevOps. Because customers often come to us seeking to address their most immediate needs and for the best developer experience, we have seen viral adoption and expansion of our platform. This is evidenced by our best-in-class dollar-based net retention that has consistently been over 130%. Our platform is offered with a free version and two page subscription tiers, premium and ultimate, which are priced per user and based on the features available within those plans. The free version and both the page subscription tiers are available as a SaaS and self-managed offering. Ultimate continues to be our fastest-growing plan. Going forward, we expect our SAS offering, which is recognized ratably, to become a larger portion of our business. Our self-managed offering has both ratable and upfront revenue recognition, including a license component, which is usually less than 10% of the contract value and is recognized upfront. Post-contract support, which is usually about 90% of the contract value, is recognized ratably and over the contract period. Our contract terms are typically annual deals with cash collected up front. Historically, we have had some multi-year contracts where multiple years were invoiced up front. However, we expect the vast majority of our multi-year deals going forward will be invoiced annually. Now, let me turn to the quarter. Revenue of $66.8 million was up 58% from the prior year. As of quarter end, we had over 4,000 customers with ARR of at least 5K, up from over 3,600 and over 2,400 customers compared to the prior quarter and year, respectively. Current customers with greater than 5K in ARR represent approximately 95% of our ARR. We also measure the performance and growth of our largest customers, who we define as those spending more than 100K in ARR with us. For the quarter, we had over 420 customers with ARR of at least 100K, up from over 380 and over 240 customers compared to the prior quarter and year respectively. For both our 5K and 100K customers, I think it is important to note that we have already well exceeded the number of new customers we've added to our platform compared to FY 2021 and over FY 2020. We think this is due to the increased market demand for DevOps platforms and business imperative to become better at DevOps. As many of you know, we do not believe calculated billings to be a good indicator of our business. This quarter was an excellent example of this as we saw strong revenue growth and even higher ARR growth. Calculated billings year over year, growth like both ARR and revenue growth due to the prior period being impacted by a number of factors, most notably our history of large prepaid multi-year deals. Non-GAAP gross margin was 89.7% for the quarter, which compares to 88% in the immediate preceding quarter and 89.2% for the third quarter last year. As we move forward, we are estimating a moderate decline in this metric due to the rapid growth rate of our SAS offering year over year, which remains above 100%. We saw improved operating leverage across the business this quarter. Non-GOP operating loss of 23.9 million or 35.7% of revenue compared to the loss of 22.3 million or 52.9% of revenue in Q3 of the last fiscal year. The main factors contributing to this were higher revenue and lower than expected team member growth during the quarter. We anticipate hiring to accelerate in the fourth quarter and into FY 2023 to support the growth in our business. Operating cash use was $10.1 million in the quarter, compared to $14.1 million use in the same quarter last year. We perform well during the quarter and believe our business is set up for continued strength. As Sid mentioned earlier, we believe we have a very substantial market opportunity that is relatively under penetrated and we're well positioned to capture an outside portion of it. Turning to guidance. For the fourth quarter of FY 2022, We expect total revenue of 69.5 million to 70.5 million, representing a growth rate of 51 to 53% year-over-year. We expect a non-GAAP operating loss of 33 million to 32 million. And we expect a non-GAAP net loss per share of 26 cents to 25 cents, assuming 144 million weighted average share is outstanding. Let's turn to the full year FY 2022. We now expect total revenue of $244 million to $245 million, representing a growth rate of 60% to 61% year-over-year. We expect a non-GAAP operating loss of $104 million to $103 million. And we expect a non-GAAP net loss per share of $1.43 to $1.42, assuming 80 million weighted average shares outstanding. With that, we will now move to Q&A. To ask a question, please use the chat feature and post your question directly to IR Questions. Operator, we're ready for the first question.
spk03: Our first question should be coming from Cash Rangan.
spk12: Thank you very much. Congratulations on the first quarter as a public company. Sid, I'm curious if you could give us an update on your perspective in a post-pandemic world, if that were to ever happen. How does software development and release cycle change? Has it become faster or about the same? And also, if you could just give us a quick commentary on the comparative landscape, any interesting displacements that you did that put you on the strategic roadmap for large Fortune 500 corporations. Thank you so much and congrats.
spk11: Thanks, Cash. Appreciate it. We continue to see strong demand for the DevOps platform. And compared to a quarter ago, we saw that the labor market for developers, security experts, and operators got tighter. So we believe that with GitLab, customers can get more done with the people they have. And right now they're really struggling to hire more people. For example, at T-Mobile, they increased their delivery frequency by 10x due to GitLab. So 10 times more frequent updates to their software. And we believe we're still early in what we believe is a massive market with untapped potential.
spk12: Right. And the comment on any competitive displacements or any changes in the comparative arena where you're poised to take more share relative to the competition. Thank you so much.
spk11: Yeah, it's still the case that we're competing with DIY DevOps. According to the latest Gartner numbers that came out in October, they see the adoption of DevOps platforms being at 20% right now. They see that growing to 60% by 2024. But right now, it's all about customers replacing their point solutions with a platform and convincing them that that is the way forward.
spk03: brilliant Thank you so much happy holidays you too thanks guys next up we'll move to sterling audi.
spk13: yeah thanks hi guys so you mentioned the the different pricing tiers that you've got i'm curious what you saw in terms of in the quarter what any additional shift that you might have seen towards that ultimate tier and the impact on the business.
spk10: Thanks, Sterling. Ultimate continues to be our fastest growing tier at more than doubling year over year. As we continue to drive business outcomes to these customers, they're seeing the increased ROI. And so we're really happy with the growth in Ultimate.
spk13: And then one follow up also kind of metrics when when you look at the get over 70% growth in customer spending over 100,000 with you. You give us a sense is that just those customers existing adding more developers, is it a shift to ultimate is it brand new customers what's kind of the mix or makeup of the growth in that in that top tier for you.
spk10: So. In the customers, we see the majority from existing customers adopting more users, and then second is up-tiering. Got it. Thank you. Thank you.
spk03: Next up, we have a question from Rob Owens.
spk00: Great. Good afternoon, and thanks for taking my question. I'd love to dovetail Sterling's question a little bit and understand just how you're landing with customers. Are you landing larger at this point? And are you landing broader with customers in terms of that use case and more of the platform proposition? Thanks.
spk10: Thanks, Rob. We're continuing to see bigger land as well as more expansion. On the land side, we are landing larger. Average new ARR for new lands had a meaningful year-over-year increase. And on the expand side, we're really happy with our expansion. Our net dollar retention continues to be you know, in excess of 130%, which is best in class. It's driven more by, it's driven by new users as well as uptier and ultimate. And then also we don't see many people leaving. So we don't really have contraction or loss of customers.
spk00: And relative to that mix of ultimate, then are you landing more often with ultimate say than you were a year ago at this point?
spk10: Yeah, ultimate is continuing to grow faster and we're landing more with ultimate and then we're also seeing up tier two ultimate. Thank you much, Brian. Yep, thanks Rob.
spk03: Next up, we have a question from Joel Fishbein.
spk01: Hey, congrats on the quarter, gentlemen. And I just have a quick follow up to Rob's question. Brian, where are you in terms of sales productivity and also building out the enterprise sales force? That'd be helpful.
spk10: Yeah, Joel, you know, we believe the productivity remains healthy and continues to get better. We currently can anticipate, continue to build sales team in all market segments. And so we're adding an enterprise at a mid market and some in S&B as well. And so, you know, we add, you know, this quarter we added a number of new salespeople and happy with their productivity. Great. Thank you.
spk03: Moving on now to Koji Ikeda.
spk04: Hey, Sid. Hey, Brian. Congrats on a nice first quarter and your IPO. I was wondering if you could tell us how your conversations maybe have changed or evolved over the past year with your customers and prospects. And their thinking with letting developers being able to choose their own DevOps tools, maybe for speed or familiarity, maybe versus taking a more standardization approach from the top down. What typically is the catalyst that drives more of a top-down standardization strategy?
spk11: Yeah, thanks for that question. So what companies are seeing is that integration efforts are growing. They have more and more DevOps tools. And at the same time, the number of projects that they have within the company is growing at the same time. So together, that's causing an exponential increase in the number of project tools integrations. And that effort is becoming unsustainable. And that's why they're going towards a DevOps platform. Think of it as... as you get more electronics you had a walkman you had a camera you had a flashlight as more and more electronics became available you were carrying more and more things with you it wasn't sustainable no one's going to carry around a belt with all these things and you want an iphone you want something that integrates all of that in a single device
spk04: Got it. Thanks. And then maybe just one quick follow up for Brian. I think in your prepared remarks, you mentioned something about lower than expected team growth. Just wanted to double click on that a little bit. Can you walk us through that comment? Was this because you were maybe a bit front loaded last year or maybe the beginning of this year and this is a pause year? Or is there anything else we should be aware of there? Thank you.
spk10: Yeah, thanks for the question. We just want to point that out. When Sid and I were on the road, we talked about the number one objective was growth, but we do that responsibly. We added more team members this quarter than any of the last six quarters. And so we did have a big quarter of adding team members, but we added less anticipated. And so that fell to the bottom line. We'll look at reinvesting that back in the business when we can.
spk04: Got it. Thanks, Brian. Thanks, guys. Appreciate it.
spk10: Thank you.
spk03: Moving on now to a question I believe from Jeff Hickey.
spk06: Hi, guys. Thanks. I'm on for Carl. The first question I have is, how do you think about the broader opportunity with you have, you know, over 30 million registered users? There are numbers out there around, you know, the estimated number of professional developers, but the opportunity you have is much broader outside of maybe a more technical audience. So the first part would be, you know, how do you think about that moving forward as you move away from just use cases primarily focused on source code management?
spk10: Thanks, Jeff. We think that the broader opportunity is enormous. If you look at us today combined with GitHub, we think combined we're less than 3%. It's a $40 billion TAM. We're just getting started. So we're really early in the market. Every company has to become a software company or you're going to lose money. And we're helping software companies, we're helping companies make software better, faster, more secure. And the ROIs that we're driving and the business outcomes are extremely positive. So we're really excited about the opportunity in front of us.
spk06: Got it. And then one quick follow up would be on just the billings growth. I think you guys were lapping a big deal or something in Q3 last year. Could you elaborate more on that and its billings and metrics we should really focus on going forward? Or do you expect it to be volatile?
spk10: Yeah, billings is a little choppy. And so we tried to steer people away from billings when we were on the road. In particular, short-term billings is a little lower this quarter. But if you remove professional services and true ups, and then the billing from one of the largest deals in company history last quarter, the growth rate is consistent from the last couple of quarters. When you see our 10Q, RPO grew 70% year over year. And our ARR growth for 3Q exceeded that.
spk03: Got it. Thank you. Matt Hedberg has our next question.
spk02: Hey, guys. Thanks for taking my questions. Brian, you mentioned SaaS is growing north of 100%. As it continues to increase in the mix, does that open up new ways for you to leverage data to make the platform even more robust? Maybe it's even from a customer benchmarking perspective.
spk11: Yeah, I'll take that question if you don't mind, Matt. It's a great question, and it does open up new possibilities. You mentioned benchmarking. Another thing is that we can train ML models that accelerate cycle time. For example, figure out who to assign something to. And also, we can make more relevant suggestions to embrace new GitLab functionality. And these improvements don't just benefit our SaaS customers. We can frequently reuse them to also benefit our self-managed customers.
spk02: That is not super exciting considering the growth in that product. And then my second question on the security side, I think we're all aware of the DevSecOp movements and sort of shift left. When you think about where you can take your security portfolio longer term, how do you think about that beyond sort of released and packaged today?
spk11: Yeah, thanks for that. We're really bullish on what we already have. Our secure stage is the most complete offering in the market. That's static analysis, secret detection, code quality, dynamic analysis, API security, first testing, dependency scanning, license compliance, and vulnerability management. We anticipate that we'll be further expanding in the protect stage. In that stage, we already offer basic versions of container scanning, security orchestration, container host security, and container network security. Well done, guys.
spk03: Thank you. Thank you. And a question now from Derek Wood.
spk09: Great. Thanks, and I'll echo my congrats. First one for Sid. I mean, given the trend of companies wanting to buy a DevOps platform, how do you think about selling more bundles out of the gate, like create and verify sold as an initial sale out of the gate? Is that something we could see more of? Is it still going to be a motion of landing in one area and then expanding from there?
spk11: Yeah, thanks for that question. And what's important to know about our pricing model is that every tier includes every stage. So even in our free tier, you get all the stages of GitLab. We charge for functionality on top of that. If that functionality is aimed at an executive, it will be in our ultimate tier. If you look at how customers adopt it, it's a gradual process. It's not possible to rip and replace. This DevOps process is so core to what customers do. It's really hard to change everything day one. If you look at the Forrester study we released together, you find that customers replaced three point solutions in the first year, in the second year, and in the third year, a linear pace of adoption. So customers can keep growing with GitLab for a very, very long time.
spk09: James Rattling Leafs, That that is helpful. James Rattling Leafs, And Brian the you know you're modeling pretty minimal be seller or deceleration and growth and Q4 so I guess a couple questions, I mean you alluded to the why there was a tough comp and Q3. James Rattling Leafs, Does that does that more normalized and Q4 is there anything else to think about and then. You know, I think you guys have a decent amount of government business. Can you remind us what, you know, government seasonality is in Q3? And is there some seasonal downtick in Q4? Just kind of flush out the second half seasonal motions.
spk10: Absolutely. Thanks for the question, Derek. From a PubSec perspective, 3Q is the biggest quarter for them. And so, you know, it'd be lighter for us than 4Q. And then on the velocity or the deceleration growth, you know, really the reference there was to the billings number. The billings came in, you know, the calculated total billings year over year and the calculated current billings. year-over-year growth was lower and so wanted to explain the normalization on that and then on the revenue um growth 58 this quarter um we guided full year uh you know the implied growth rate is 60 to 61 helpful got it thank you yep thank you all right moving on to michael turrets
spk05: Hey guys, Sid, Brian, everybody, congratulations. So Brian, a question for you on go-to-market and engagement with the customers. How's it going, especially as you build out the enterprise sales force in terms of selling more top-down as opposed to bottoms-up to developers? And are you starting to see that kind of standardization across the enterprise as you move up in terms of where you're selling?
spk10: Yeah, thanks, Michael, and appreciate the comments on the quarter. You know, we've been a direct sales motion to the enterprise really since the company's inception. We just added some additional go to market motions over the last year. which are new, but are very, very, the early results are very positive and that's channel alliances, partnerships and so forth. And so, as you know, our normal sales motion sort of is sort of land relatively small and then expand within the client. But there are examples such as UBS, where we did a wall-to-wall implementation in less than a year. And so we do land at the top sometimes as well. And so we do both motions. But the one where you land in a division department 100 licenses at a time is probably the more normal motion for us.
spk05: And then, Sid, if I could squeeze one in with you. I think many, many customers, I think your core, you might want to think of as code repository, SCM, and CI. But can you talk a little bit, I know you talked about security, but talk a little bit more about expansion into the CD and pipeline management side in that direction and how you've been successful there?
spk11: Yeah, thanks for the question, Michael. We do land with source code management and testing code. And that testing code is now also a proper land. So it's not just source control. Some customers use this exclusively for testing the code. From there, from those two land areas, we expand in secure, package, and release. So with secure, we're replacing solutions like check marks, like synopsis, like Black Duck. In package, we'll be replacing things like JFrog Artifactory. In release, we commonly replace custom scripts that the customer made before but that are hard to maintain. Those are our expansion points, and we're investing there. And especially secure has driven a lot of up-tiering to ultimate because it's really important for customers to test 100% of their projects 100% of the time.
spk05: Great. Thanks, Sid. Thanks, Brian.
spk03: Thank you, Michael. And we'll take a question from Jason Ader.
spk07: Yeah, hi, guys. My question is on the accelerants to growth in calendar 2022, fiscal 23. If you had to talk through the kind of different accelerants, whether it's adding more sales headcount, more channel alliances, or more product releases, how would you kind of think about those three elements? Or maybe there are some other accelerants that I'm not thinking about?
spk10: Yeah, thanks, Jason. You know, as I stated earlier, it's a $40 billion TAM, barely penetrated. And so there's a lot of different areas. You know, one is, you know, we're going to continue to do more product investment. And so the more investment we do in product, the more differentiated and driving the more positive business outcomes. Secondly is we'll land new logos. And so when we have new logo expansion, you know, obviously we get landed TAM. And then we can expand them and also uptier them. We're also investing in channel and alliances. And then we're doing international expansion. And so there's a number of different areas that I think give us opportunity to continue to grow in this very enormous market.
spk07: And do you expect the average new ARR, Brian, to continue to trend higher?
spk10: It has done that historically. I can't make a forward-looking statement, but historically it has every quarter.
spk07: Thank you, guys.
spk10: Yeah, appreciate it, Jason.
spk03: And with that, I'll turn things back over to Sid for any additional or closing remarks.
spk11: Yeah, thanks so much. Those were some great questions. I want to thank you very much for joining this call. It's great to be able to announce our first earnings and I want to thank our investors, the wider community around GitLab contributing, our team members, our users, and our customers for the great quarter. Thank you very much.
spk03: Ladies and gentlemen, thanks again once more for joining us. Have a great day.
Disclaimer