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RBC Capital Markets Global Technology, Internet, Media, Telecommunications Conference

Nov 14, 2023

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

I'm really excited for this one. I'm spending a lot of my time talking to CEOs and CFOs over the next two days, but I get to talk product here in this presentation, and so I'm really looking forward to this. It's a name that for those that don't know GitLab, we've known them for a long time and have been big fans of the technology. So I'm gonna start out with some questions. If there are some in the audience, and it's a bigger group, so I will certainly leave some time at the end for folks. These guys are under a quiet period, so there's gonna be nothing about any forward-looking comments of any nature on that side. So with that as a disclaimer-

David DeSanto
CPO, GitLab

Great disclaimer.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

David, David DeSanto, Chief Product Officer at GitLab. Maybe for those that don't know David, could you, you know, maybe tell us a little about yourself, your journey? I think you've been at GitLab for a little over four years now. But yeah, maybe just a little bit about your background.

David DeSanto
CPO, GitLab

Yeah, absolutely. So I started off my career in software development, cybersecurity, and IT, and I have been across both product and engineering organizations for the majority of my career. In 2019, I did join GitLab. I actually joined to add security and compliance into DevOps, which I think you all now know as Ultimate.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yep.

David DeSanto
CPO, GitLab

Over the course of my time at GitLab, I took over product, and as GitLab's Chief Product Officer, my primary focus is on setting vision and strategy for the company and then making sure we can bring that to a reality.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Excellent. All right, well, we've got a lot to talk about here. So maybe before we get into... you mentioned your focus on security. Maybe before we get into that, and GenAI, which you and I have been talking about outside here, can you talk about the importance of a DevOps platform, and why in modern software development that is so critical? And I'll caveat this, I used to be a software developer in my days prior to doing this, and I can tell you, it was... I wish I had GitLab back then. But maybe talk about the importance of DevOps, and the real value of the DevOps platform.

David DeSanto
CPO, GitLab

Absolutely. So one of the things that companies are struggling with is doing their digital transformations, and that's because it's tied to very brittle tool chains that they've built. And so when talking to customers, and as a former engineering leader, I can say this, you end up with dozens of tools that are needing to be stitched together-

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yep

David DeSanto
CPO, GitLab

... to deliver software. What it ends up doing is it drives artificial silos in the organization. You get concerned about upgrading a component. From my own career, there was a point where I had to ask myself: I have to release software next month. Do I upgrade Jenkins now? 'Cause last time I did that, it broke a bunch of my other things that are attached to it. And those are the trade-offs that organizations are trying to make. So a DevOps platform comes in, and I'll say a DevSecOps platform-

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yep, yep

David DeSanto
CPO, GitLab

... 'cause that's what GitLab is-

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yep

David DeSanto
CPO, GitLab

... is a way to essentially give yourself better visibility, better collaboration, and honestly, better control over how you deliver software. The best way I can put it is in the words of our own customers. About two years ago, we did a survey through Forrester of GitLab Ultimate customers.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yep.

David DeSanto
CPO, GitLab

What came out of that survey was a couple of interesting data points. The first was, on average, those customers were saying they were 7 times more effective at delivering software.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Hmm.

David DeSanto
CPO, GitLab

They got an ROI of 427%, and it paid itself back in six months. The reason why that's important is all those things are about delivering software more effectively and also delivering it more securely, and that gives them an edge up in the market. So when you look at traditional DevOps, which is developers pick the tools-

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yep

David DeSanto
CPO, GitLab

... you try to stitch it together, and you compare it to a DevOps platform, you get a better acceleration, and you deliver secure software.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

So one of the things that always intrigued me about what you guys are doing is, you mentioned it, David, you're, you're taking a real fragmented historical market, and you're bringing a platform approach. The question I get from investors a lot of times is: Is there a trade-off between best-of-breed functionality and more of a platform approach, and are your customers actually using the entire feature set within the platform versus maybe a particular module, particular use case?

David DeSanto
CPO, GitLab

Yeah, so what... I kind of look at it from this point of view. I get asked the question a lot: "Well, what's the value of a best-in-breed versus a platform?

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yeah.

David DeSanto
CPO, GitLab

And I always say-

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yeah

David DeSanto
CPO, GitLab

... "A platform can be the best of breed." And so for us, we've really focused on five key areas of investment. Obviously, source code management, code review, that's the-

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yep

David DeSanto
CPO, GitLab

... original GitLab. CI/CD, helping people ship software. Enterprise agile planning, which you and I were just talking about-

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yep

David DeSanto
CPO, GitLab

... before we started, and our ability to bring all planning into GitLab, and then security and governance. Those are the bets that we've made that give GitLab its value, and then those other areas, we consider them better together. They're not maybe best of breed, best in the market, but because they're attached to the platform and you get that additional visibility, they end up being good enough for a lot of customers.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

So are you seeing, then, customers maybe come to GitLab initially for a use case, or is it... And then, "Hey, this is, it's great for CI/CD or, you know, code development or code promotion," but then start to expand into some other things. And ultimately, does that then cause them to then look at their tech stack and say, "Well, hey, like, I'm actually using more of these features. I can eliminate XYZ?

David DeSanto
CPO, GitLab

Yeah, absolutely. So typically, depending on the customer and the industry they're in, I'll talk about enterprise customers primarily today, but they land usually with source code management, CI/CD, and security and compliance. Because if you're going to change how you deliver software, you're gonna modernize it, you might as well grab the three most important things in the portfolio. To your point, from there, over the course of their first initial contract, usually their first year, they see other tools that they're now using that feel obsolete in comparison to the platform, and that's when they move into things like planning, our artifact registry, and the other components that are around those key areas.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yep, yep. The other thing that, And I wanna get to the kind of the SecOps piece or the full DevSecOps-

David DeSanto
CPO, GitLab

Mm-hmm

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

... piece, but when you think about what makes it into the paid version, either the Enterprise or the Ultimate-

David DeSanto
CPO, GitLab

Mm-hmm

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

... or the Premium or the Ultimate version, how do you think about what gets... What stays in free and what, you know, sort of that trade-off? Because you give a lot of functionality at free.

David DeSanto
CPO, GitLab

We give a fair amount of features for free. So the way I look at it and how I lead the product organization is we ask ourselves: "Well, who's that feature for? What does it benefit?

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Mm.

David DeSanto
CPO, GitLab

If it's a feature that is going to enable teams to be more effective, we put it in Premium. If it is something that's going to benefit organizations, we put that in Ultimate. That's kind of how those two tiers work. When going back to look at free, we have become very strategic as to what we put in free. Two examples would be, we wanna do free to paid conversion plays.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yep.

David DeSanto
CPO, GitLab

And so about two years ago, we put some of our security scanners for free. That's not the whole UI, that's not the enforced workflows, it's just the scanner. And what we found out is that customers would enable that, and then within three to four months, they're reaching out, asking how they can get to a paid version of it.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Hmm.

David DeSanto
CPO, GitLab

And so we're very strategic in what we can put down there to drive that. The other thing is that one of the things that I loved about GitLab, and I was a GitLab user before coming to GitLab, is that community that's been built around it, and that community contributes software into GitLab itself. One of my favorite features was contributed by an enterprise customer for customers in the Ultimate tier.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Hmm.

David DeSanto
CPO, GitLab

By having those free features, it enables them to do their own software development that would contribute back to GitLab. And so I, I always have to look at that, those trade-offs, but I think we've kind of made the, the goal with Premium and Ultimate being team and, and organization related.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yeah, that's an interesting... So, like, when you're thinking about then, you know, these features that are sort of, like, considered maybe more table stakes and part of the free version, and is that kinda how... Like, when you think about new feature development, is it, like, who is it trying to resonate with?

David DeSanto
CPO, GitLab

Yeah, we follow that buyer-based persona for how to build the product. And so, yes, if we're saying, "Oh, that just helps an individual developer or will drive more community contribution," there's a tendency then to put that in free. But if it's something that organizations will pay for-

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yeah

David DeSanto
CPO, GitLab

... and it'll drive value, and specifically drive up-tiering from-

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Right

David DeSanto
CPO, GitLab

... Free to Premium to Ultimate, then we make that strategic decision to put it in Free.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

I guess from a product development standpoint, how do you think about the self-managed product, you know, development versus the cloud?

David DeSanto
CPO, GitLab

Yeah, so actually, I love this question. This is one of the things that brought me to GitLab and differentiates GitLab. Our SaaS offerings, whether that's GitLab Dedicated, our single-tenant SaaS, our gitlab.com, which is multi-tenant, and self-managed, it's all the exact same code base. And so when we're looking at how to provide features, we don't have to ask ourselves, "Well, how would we provide that to our SaaS customer versus how I would provide that to a self-managed customer?" A lot of companies end up with two separate code bases because of how they built their product-

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yep

David DeSanto
CPO, GitLab

... and that now limits them from having a good user experience, developer experience with the product. So we have that benefit that literally GitLab.com is running the same code you can download. We just have scaled the configuration of it to be able to handle the millions of monthly active users.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Are there things, though, that customers are doing with the .com version, the cloud version, and maybe this, we'll get into this from a GenAI perspective-

David DeSanto
CPO, GitLab

Mm-hmm

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

... that are not maybe as scalable as from a self-managed perspective?

David DeSanto
CPO, GitLab

Yeah, so we do, starting early this year, released a thing called GitLab Cloud Connector.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yep.

David DeSanto
CPO, GitLab

So for something like AI, the self-managed customer can connect and use GitLab's cloud infrastructure to run the AI for their team. And so we're doing that to kinda come over that gap, because to your point, it can be very expensive to build some of the infrastructure. But what I would say is that what we're seeing is if you're a heavily regulated industry, you're in fintech, financial services, you're in healthcare, you're government, you're definitely gravitating towards self-managed, or you're gravitating towards GitLab Dedicated. Because we can provide that to our customer, give them data residency, data isolation, and they'll be the only person on that deployment.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Okay, that's... You mentioned, you mentioned a couple important things that I just took, you know, and what I hear, what I... You talk about financial services or government. These are highly regulated industries.

David DeSanto
CPO, GitLab

They are.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Can you talk about how GitLab supports customers with some of these more complex regulatory requirements?

David DeSanto
CPO, GitLab

Yeah, absolutely. So one of the things that's unique about GitLab is that security and compliance is built in from day one in the product. So if you are in one of those regulated industries, you automatically get the benefits of our compliance. That compliance functionality includes who can merge what code, the visibility to know if there's been a compliance violation. You can set global-wide security scanning and execution policies, and that then allows them to have the visibility they need to go into an audit. One of our customers, who's a call them a voice SaaS platform, you know, recording, dictating, and so forth, they shared with us that they were able to get through their last SOC 2 audit very quickly.

Every time they were asked a question, "Hey, how did you handle this," or, "Where is this configured?" they could just point to GitLab and say ... "Oh, here are all those logs. It's captured here. Oh, I can filter by that for you.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yeah.

David DeSanto
CPO, GitLab

Or, "Oh yeah, we have this enforcement here. It can't be turned off.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yeah.

David DeSanto
CPO, GitLab

And so that's how we're supporting them. What I can't stress enough, though, is that GitLab Dedicated part of it, when we launched it a year ago, about 18 months ago, we knew we had something based off our initial demand.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yeah.

David DeSanto
CPO, GitLab

But as time has gone on and we've brought that to general availability, we're now extending what regions in the world can be run in. We're seeing a lot more demand for it. Regulated customers don't want to manage their environment themselves.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yeah. Yeah.

David DeSanto
CPO, GitLab

They want someone to manage it, and they can't go on to a multi-tenant environment, especially if they're a government agency.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yeah.

David DeSanto
CPO, GitLab

And so that gives them the ability to have the benefit of everything you could do self-managed, but not have to manage it yourself.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yeah. It's sort of the best of both worlds.

David DeSanto
CPO, GitLab

Yeah, I mean, honestly, when I was a GitLab customer five years ago, I would've looked at it-

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yeah

David DeSanto
CPO, GitLab

... right? 'Cause we had the same thing. I worked for a company who sold into government agencies around the world.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yeah.

David DeSanto
CPO, GitLab

We always had to show them we were being secure, and things were stored locally.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yep. And so for GitLab Dedicated, it's, you have to, is it 1,000 seats?

David DeSanto
CPO, GitLab

It's a minimum of 1,000 Ultimate seats.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Is there an infrastructure cost in addition to the seat count?

David DeSanto
CPO, GitLab

Correct, yeah. So it, it's kind of billed as one SKU for the customer, but it ends up including GitLab Ultimate seats. They select their cloud region, then there's costs associated to that.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yeah.

David DeSanto
CPO, GitLab

And then, yeah, there's infrastructure, storage, compute that go with that.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Are you seeing non-regulated industries look at, at Dedicated as well?

David DeSanto
CPO, GitLab

We are. Predominantly, it's mostly been regulated.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yeah.

David DeSanto
CPO, GitLab

But no, we do have some customers who are just in, we'll call them high-tech software-

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yeah

David DeSanto
CPO, GitLab

... who are wanting to have their source code better secured. One of the things about GitLab is, it's not just that we sell security and compliance, but security is actually baked into the product.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yeah.

David DeSanto
CPO, GitLab

You're more secure using GitLab's source code management than you would be with another product.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Hmm.

David DeSanto
CPO, GitLab

We're seeing some of those customers. I really want that.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yeah.

David DeSanto
CPO, GitLab

Because now I don't have to manage it myself, and I know the source code's secure.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Interesting. I have a few more questions. I wanna talk about the Ultimate tier, and then ultimately, we're gonna talk about some of the GenAI capabilities you've got, and then we'll open it up to questions here in a second. But let's talk about Ultimate. Let's talk about DevSecOps.

David DeSanto
CPO, GitLab

Yeah.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

'Cause, you know, when you guys went public, you were a DevOps company, and now you're a DevSecOps company.

David DeSanto
CPO, GitLab

Correct.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

It seems like that was a big part of your initiative four years ago.

David DeSanto
CPO, GitLab

It was.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Talk about a little bit more about that progress towards really driving this Ultimate focus, you know, the focus on security, and why customers are resonating moving to that.

David DeSanto
CPO, GitLab

Yeah, so maybe to give a little context about myself, I mentioned formerly in cybersecurity, I worked for a company where we were saying we were shifting security left. In my conversations with GitLab, and I'll say predominantly my long interview with Sid, our co-founder and CEO-

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yeah

David DeSanto
CPO, GitLab

... I realized we're actually, we weren't shifting security left, and so that brought me to GitLab 'cause I was like, "I can actually help organizations-

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Drive it, yeah.

David DeSanto
CPO, GitLab

... do better than I can before." And so then we asked ourselves, "If you're gonna truly do that, what does it mean?" And I can't stress enough, as a former security person, you don't realize how much your terminology is confusing to a developer.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yeah. Yeah.

David DeSanto
CPO, GitLab

And so we focused on moving our security scanners to run at code commit time. That means that we're scanning that delta code change. It means the developer doesn't have to wait hours sometimes, and I'll say this, my last security company I worked for, our scanner could take 24 hours to run. Developers can't wait that long. And so we could scan smaller codes of, or chunks of code, and we made it developer-friendly. We added in training. We added in prompts to help them understand it. We get to AI, we can talk about how we're now using AI to help with that as well. When that was successful, and I would say that was mid-2020 into 2020, we realized we had something.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yeah.

David DeSanto
CPO, GitLab

And so to the question about highly regulated customers, that's when we started asking ourselves, "If you're a compliance person, you're a compliance manager, compliance director, like, what do you actually need to know that you have a secure software supply chain?

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yeah.

David DeSanto
CPO, GitLab

And so that's when we started building out what we call Govern, which is our governance controls across the entire organization. And so that, combined with the security scanning, makes Ultimate the value that it is today. A developer once, who was working on GitLab Ultimate said, "GitLab Secure and Protect," in this case Govern, "make GitLab Ultimate," and their play on words is saying they're providing this value that organizations can really take advantage of.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Hmm.

David DeSanto
CPO, GitLab

What I will say is that, as we start to look at what does it mean, and I know you wanna talk a little bit about the future for security-

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yeah

David DeSanto
CPO, GitLab

... at GitLab. What I would say is that if you end up becoming a GitLab customer, you're always working towards that Ultimate. Because you might land with Premium, you're focused on source code management, CICD, and then you realize there's requirements you have to meet.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yeah.

David DeSanto
CPO, GitLab

Those requirements is that visibility and those controls, which Ultimate offers.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

So let's talk about that. You know, and maybe almost like a day in the life, because historically, you know, you might sell a seat to a developer or maybe a business ops folks person. You know, are you now selling them to... Like, who, who's the Ultimate... like, who... I use the word Ultimate, but who's, like, the ultimate landing spot then?

David DeSanto
CPO, GitLab

We did a good job with that word, right?

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

It's great.

David DeSanto
CPO, GitLab

You can't talk about GitLab without saying Ultimate.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yeah, without saying Ultimate.

David DeSanto
CPO, GitLab

So it depends on the industry they're in. If it's technology, if it's fintech, we have a tendency to see the CTO or CISO be the one who starts that conversation. And the reason why they're asking that is they say, "Hey, look, we have to meet all these requirements. I've got 100 tools," and that's not a joke. Like, I actually talked to a customer who had 100 and, I think, 20 tools that made up their ability to try to deliver software.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yeah.

David DeSanto
CPO, GitLab

And they're like: I have no clue where it is, things are broken, I need to be able to talk to auditors. And so that ends up pulling them towards that. Now, as we talk about, like, who inside that organization gets the most excited-

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yeah

David DeSanto
CPO, GitLab

... it's been very interesting. GitLab used to be a very bottoms-up opportunity. It landed with a single team.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yep.

David DeSanto
CPO, GitLab

That was usually a developer. The developer convinced the other developers in the team and the EM to start using it, engineering manager, and it's actually shifted to almost a top-down.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Top-down, yeah.

David DeSanto
CPO, GitLab

I see what that customer did, and it could be the T-Mobile use case on the website, where they ship software every seven minutes now using GitLab.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yeah.

David DeSanto
CPO, GitLab

I've heard you've all heard the UBS story a bunch, so we won't-

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yep

David DeSanto
CPO, GitLab

...belabor that, but that's another great example. And they say, "I need to do that, too." And I think that's where our customers are great. I see our customers as partners. They see themselves as partners. Everyone says that. Everywhere I've worked, we say that, but this is actually truly the case. Some of our customers do become the best salesperson, 'cause they'll say, "Hey, I was talking to my coworker or, or friend, a confidant, whoever it is, that works at this other company, who has a similar problem that I had," and he's like, "Let me introduce you to GitLab.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Hmm.

David DeSanto
CPO, GitLab

And so I think that's where it is. It's like-

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Top-down, bottom-up now.

David DeSanto
CPO, GitLab

Yeah.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

It's the SecOps piece that may be driving a big part of that.

David DeSanto
CPO, GitLab

That's driving a lot of the top-down-

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yeah

David DeSanto
CPO, GitLab

... for sure.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yeah. Interesting. We could sit here and talk all day on just this, but for the sake of time-

David DeSanto
CPO, GitLab

Yeah

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

... let's move on to some of the generative AI capabilities. I guess from a high level, you know, from a productivity perspective, do you, do you see a difference between... I mean, we've been talking about AI forever.

David DeSanto
CPO, GitLab

Yeah.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

I mean, do you see, do you see an—I mean, and I know the answer partially, so it's leading the witness, but the real difference between AI and generative AI and what that means from a, a GitLab perspective.

David DeSanto
CPO, GitLab

Yeah, so we're primarily using generative AI at GitLab. What I would say is, instead of really talking about the differences between those, I think what would be great is to talk about how GitLab is doing it differently.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Sure.

David DeSanto
CPO, GitLab

Because everyone's saying they're including AI, and that, that's true. I was just at KubeCon last week, it's big ops conference, and you couldn't walk five people without someone telling you they had AI in their product.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yep.

David DeSanto
CPO, GitLab

So GitLab, even though we're source available, we talked about free, we're an open-core company, we're very transparent, we end up in a situation where these are heavily regulated customers. These are people who have intellectual property they can't have go public, and they come to GitLab to help them secure that. And so when we were looking at AI, we had to ask ourselves: What would make GitLab the best usage of AI and do it the GitLab way? And so we, we defined three tenets. The first was apply AI to the entire software development life cycle. When we... We recently just did our DevSecOps survey. If you've not read them, go read them. They're amazing. They're full of lots of great detail. We had over 5,000 respondents.

What we found out through that survey is that only 25% of the time is spent writing software, and if that's the case, then if you just accelerate that one part, the developer part, you're not really helping your organization get better. The second was we wanted to be privacy and transparency first. What that means is that from a privacy standpoint, your code stays your code. We don't use it to train or fine-tune our models, and the transparency part is that you could literally go to GitLab documentation, it's docs.gitlab.com, and you'll see every model we're using and how it was trained. And so that has allowed customers to feel more comfortable adopting it. GitLab is trusted by more than 50% of the Fortune 100 to secure their intellectual property. That's an outstanding number, right?

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yeah, yeah.

David DeSanto
CPO, GitLab

You talked about security started essentially four years ago in the product, and now we're the trusted provider.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yeah.

David DeSanto
CPO, GitLab

And then the final one was we really wanted to focus on best-in-class AI, and what that means is picking the right model for the right use case. And so, we currently have between 12 and 16 models we use to power GitLab for our AI features. And so if you combine those all together, that's how GitLab is doing AI differently, and it, it's really helping people adopt GitLab Duo, which is our suite of AI-powered DevSecOps workflows.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

So today, it manifests itself also in code suggestion-

David DeSanto
CPO, GitLab

It does

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

... as an add-on module. Do you see, you know, multiple, you know, sort of add-on features in the future that are kind of AI based? I mean, how, how do you, how do you think... And I guess it's a question of, how do you think, again, about what makes it into the base, you know-

David DeSanto
CPO, GitLab

Yeah

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

... you know, an Ultimate tier versus an add-on?

David DeSanto
CPO, GitLab

That's a great question. So, just an update for everyone, if no one saw the press release last week, we actually announced Code Suggestions will be GA in December. Very excited about that. We've had a lot of customers turn it on, and use it, and give us feedback. And also, last week, we announced that this week, on the 16th, which I think is Thursday, honestly, I've been all over the world. I can't remember what day of the week it is. The Duo Chat functionality will go into beta, which means it'll be available to a lot more customers and be monetizable.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Hmm.

David DeSanto
CPO, GitLab

And so-

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Is that an additional add-on? That's an-

David DeSanto
CPO, GitLab

It's part of the existing add-on we announced-

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Okay

David DeSanto
CPO, GitLab

... it, which has the introductory price of the $9.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yeah.

David DeSanto
CPO, GitLab

But it'll also be available to customers in Ultimate. So to answer your question, we're looking at where the AI feature fits and who it benefits, and that's driving where it goes in the product. Today, we have nothing that's gonna be in the free tier related to AI-

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yep

David DeSanto
CPO, GitLab

... but things like our vulnerability summary, which I mentioned-

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yeah

David DeSanto
CPO, GitLab

... a couple of minutes ago, a customer shared how that allowed them to drop some of their training material. That, that feature will explain the vulnerability in natural language, give an example of the code being exploited, give an example of that code being fixed in the developer's programming language. And so that feature is gonna go in Ultimate because it's built on top of GitLab Ultimate, and so that's how we're looking at it. It's like, where does the feature fit, what's it built on top of, and what's gonna give our customers the best boost?

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

So then, it's a great sort of like dichotomy of how you think about adding it. Do you see a world in the future where there might be two, three, four different add-ons that are, you know, sort of very specific to, you know, a use case?

David DeSanto
CPO, GitLab

Yeah, I mean, it's a great question. Some of that's probably forward-facing stuff that I can't talk about in the quiet period here. But what I would say is that we're finding ways to monetize the product in a way that is best for our customers.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Okay.

David DeSanto
CPO, GitLab

That includes, we shared with our customers, we have a Plan add-on that's available this week. That's helping them bring in the non-technical people into GitLab Ultimate, and so we're always looking for ways to do that. We realize just Premium, just Ultimate, can be very restricting.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yeah. I'm gonna ask the competitive question, then we'll open it up for the group here.

David DeSanto
CPO, GitLab

Yeah.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

You know, it's the question that I get all the time, and I'm, you know-

David DeSanto
CPO, GitLab

Yeah

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

... we and I were talking ahead of time. You know, we wanted to focus on your functionality versus the competition.

David DeSanto
CPO, GitLab

Right.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

But let's talk about competition.

David DeSanto
CPO, GitLab

We absolutely can talk about competition.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Well, how do you think about, 'cause to me, I see competition with free.

David DeSanto
CPO, GitLab

Mm-hmm.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

I see competition with GitHub, and I see competition with, you know, fragmented providers. Is that kind of how you think about it?

David DeSanto
CPO, GitLab

It is. I'm less worried about the free part. You know, maybe a couple of years ago, free had a lot more-

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yeah

David DeSanto
CPO, GitLab

... value and functionality in it. I'm less worried about that. I can be honest, like, we've done a really good job making it a free to paid conversion play-

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yeah

David DeSanto
CPO, GitLab

... and we're seeing the impact of that. Even through the recession here-

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yeah

David DeSanto
CPO, GitLab

... and, the pandemic, like, we still were growing-

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yeah

David DeSanto
CPO, GitLab

... it's 'cause people were converting.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yeah.

David DeSanto
CPO, GitLab

We do see GitHub, obviously. There's really two main people in this race for DevOps, and that's the two of us. We see them as a developer platform, and that's using their own words. They, they've shared they wanna focus very much on the developer, the developer only, and that developer experience. We then separate ourselves as that enterprise platform-

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yeah

David DeSanto
CPO, GitLab

... that brings in everyone, and so that's kind of how we see that. But to the last part of your question, a lot of times, I see the point solution as the competitor and not so much another platform, and that's because we're going into these companies that have fragmented tool chains, and they have, again, sometimes over 100 tools that they can get rid of using GitLab, and it's helping them understand that GitLab's just as good or better for that use case. And so Jira is a great example of that. This is the year that we're seeing customers migrate off of Jira in favor of GitLab Plan.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Hmm.

David DeSanto
CPO, GitLab

That's not just small startups or little companies. This is large enterprises who are saying, "There's a better way to do plan, and we're gonna use GitLab.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Interesting. So when you see, I guess, the double-clicking on the GitHub piece, the functionality is quite different, right?

David DeSanto
CPO, GitLab

Mm-hmm.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Maybe explain a little bit 'cause, you know, even just from an Ultimate tier-

David DeSanto
CPO, GitLab

Yeah

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

... perspective, just, you know, level set kind of how, when you see the competition with GitHub, why do you win then?

David DeSanto
CPO, GitLab

Yeah, so it's purely on the DevSecOps platform component.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yeah.

David DeSanto
CPO, GitLab

What we're winning on is that GitLab provides a secure SCM. GitLab provides scalability that's not always there with competition, and because we're supporting everyone in the process, you get a much better visibility. The one thing that's been very surprising to me is that customers adopt our Value Stream Analytics day one. That's their ability to look at their entire tool chain and see where their bottlenecks are, and that's giving them that visibility. And so, if you are using GitHub, those things are add-ons you buy through their marketplace.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yeah.

David DeSanto
CPO, GitLab

GitLab, or GitLab, it's included from day one.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Hmm.

David DeSanto
CPO, GitLab

And so for us, it's: I need better CI/CD, I need scalable CI/CD, I need secure source code management, and I need those security scanners, the compliance controls, all just built in.... The one thing that I've been very impressed by with our customers is they're very vocal with us. So they may tell you something different, Matt. They may go, "Well, it's really this other thing that I made-

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yeah.

David DeSanto
CPO, GitLab

A decision on." But really, if you compare the two, it's a developer platform versus a DevSecOps platform.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yeah. And if you, if you look at the number of paid seats, I mean, we don't know exactly what you guys are or even what, what GitHub is, but it's still, we're scratching the surface on the total number of seats out there, right?

David DeSanto
CPO, GitLab

Okay, I know. One of the things that makes me excited about GitLab's future is that this is still very much a disjointed tool world, and there's a lot of upside for that.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yeah.

David DeSanto
CPO, GitLab

GitLab has had a lot of success. In the four years I've been here, almost four and a half years, a bunch before I was here, too, and it's because people need to transform how they deliver software. During the IPO, Sid said, everyone's gonna have to become a software company to stay competitive. I think everyone's got to become a security-aware and AI-aware—

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yeah

David DeSanto
CPO, GitLab

... company to stay competitive.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yeah.

David DeSanto
CPO, GitLab

You could do that by buying 100 tools, or you could buy the leading platform.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yeah.

David DeSanto
CPO, GitLab

The way I like to tell everyone, and this is, you all may have seen this as well, but don't take my word for how great GitLab's DevSecOps platform is. Look at the Gartner Magic Quadrant for DevOps platforms. We were a leader. Look at the Forrester Integrated Software Development Platform, where we were the only leader. And so that is our customers telling you through that survey; it's the industry telling us that there's a better way to deliver software.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yeah

David DeSanto
CPO, GitLab

... and it's very much a lot left to go.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yeah. I'm gonna pause here. Are there questions for the group out here? Yeah. Yeah, it's coming right up here.

Speaker 3

Question for you on the planning opportunity. When you look at the per-seat price, Jira tends to be less expensive for the non-technical individuals, which, at least when we talk to some customers, seems to be an obstacle to adoption. How do you think about that as a way to unlock potential competitive wins?

David DeSanto
CPO, GitLab

That's a great question. So when we've been looking at how to position GitLab Plan against something like Jira, we have to look at it from a feature-by-feature standpoint. And I think a great example of that is the cheaper Jira license you're mentioning is really focused just on team planning. GitLab has OKR functionality, business objective tracking. That, you'd have to go buy Jira Align or another tool on top of that. And so when you start looking at the organization-wide visibility, GitLab, even in Ultimate, becomes a very good selling point for customers. Now, I mentioned a second ago that we announced the plan add-on. That's also gonna help, to your question. As that becomes available, this month, it's gonna give customers an option to bring in, say, their program managers or people who they don't wanna buy a full Ultimate license for.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Thanks for the question.

David DeSanto
CPO, GitLab

It was a great question.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yeah, any, any others out here?

David DeSanto
CPO, GitLab

Yeah, someone else raised their hand. I don't remember who that was.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Okay. Well, we'll keep going here. We only have a couple minutes left anyway. The one thing that I... You know, it always strikes me that observability should be-

David DeSanto
CPO, GitLab

Mm

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

... hand in glove with DevSecOps as well. How do you think about that opportunity as well, right? If you're helping to build, deploy, manage, shouldn't you be observing it as well?

David DeSanto
CPO, GitLab

Yeah, so how I look at it is that if you're gonna be successful delivering software, you need to have the loop closed-

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yeah

David DeSanto
CPO, GitLab

... which is observability, analytics, and so forth. And so, not much of a secret, we acquired Opstrace-

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yep

David DeSanto
CPO, GitLab

... to bring observability into GitLab. We've now shipped both error tracking and tracing inside of GitLab. We also looked at it as that's part of getting the feedback, and we need to be able to close that loop with actual user feedback. Our customers asked us for a way to essentially measure that. Their proposition was: if we build, secure, and deploy the application using GitLab, should we not be able to get the analytics of that application-

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yeah, yeah

David DeSanto
CPO, GitLab

... back into GitLab?

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yeah.

David DeSanto
CPO, GitLab

And so we built a unified analytics stack that observability, our Value Stream Analytics, and product analytics are on top of, and it's allowed us to then continue to expand what we can do. But absolutely, I think you have to close the loop with that information, whether it's incident tracking with observability or-

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yep

David DeSanto
CPO, GitLab

... user feedback. If not, you don't know what to build right in your next release.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yep. So I think there's a lot of things to be excited about. I think it's when I think about the opportunity for GitLab, yeah, I think of multiple drivers. I think of free to pay, I think of Ultimate, I think code suggestion, I think dedicated.

David DeSanto
CPO, GitLab

Mm-hmm.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

You know, if I ask you, what is the single or just, you know, underpenetrated market opportunity-

David DeSanto
CPO, GitLab

Yeah

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

... what's the single biggest thing that you're excited about?

David DeSanto
CPO, GitLab

It's that last one. So as a former engineering leader and seeing what's needed to securely deliver software, it is truly an untapped market. We put it at $40 billion. If you add up us and GitHub, we're not to $40 billion.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Yeah.

David DeSanto
CPO, GitLab

So there's a lot of untapped potential there, and I think it gets unlocked with questions like: How do you bring in Plan better? How do you bring in Observability better? And I think that's gonna allow GitLab to continue to grow. That's why I'm excited about the future of the company, and I think that over the course of however long, you're gonna see us mature those areas and bring in more into GitLab.

Matthew Hedberg
Managing Director and Head of Software Research, RBC Capital Markets

Excellent. Well, David, from all of us at RBC, thank you for your time. We're excited about the future product roadmap here at GitLab, so thank you, man.

David DeSanto
CPO, GitLab

Yeah, thank you very much, and thank you, all.

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