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Gitlab loses one-third of its value after company issues weak forecast

221 points| YourCupOTea | 3 years ago |cnbc.com

207 comments

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gregwebs|3 years ago

Gitlab pricing used to be something like $4/mo and they saw incredible growth. They raised their rates to $19/mo and now are seeing slow growth. In April they are raising to $29/mo- not sure what they think is going to happen. Also, for anyone that actively watches, they have to wonder if there will be another price hike once you are on their platform.

Github Enterprise is only $21/mo and for most users it has all the same features of Gitlab.

Gitlab's main differentiator for a long time was CI, but now Github has its own equivalent (Actions).

It seems that Gitlab is only going to be left with 1) existing Gitlab users 2) users that want some enterprise feature set that doesn't exist on Github, and want it in a single platform without a third party

megous|3 years ago

At $29 * 7 * 12 per year it became way cheaper for us to just piece together functionality we needed from nginx+cgit+homegrown database to store users/repos/acl/push info and a few git hooks written in a few lines of PHP. The cost is now independent of the number of developers using the system.

So far it did cost ~1 month of paying for github in dev time and I can't imagine it costing much more when we'll want to add some automation on top of the list of accepted pushes/ref updates, for which we did not have a need for so far.

Certainly beats installing 1GiB debian package of selfhosted gitlab and having to figure out why some stupid ruby service is eating increasing amounts of hundreds of MiB of RAM on an empty gitlab instance while doing nothing at all.

That's $2.5k/yr that can be put into something else.

When developers do operations... I guess. :D

suddenclarity|3 years ago

I reckon their growth was mostly killed by Microsoft purchasing GitHub and making private repositories free. Most of the open source community seem to be on GitHub anyway so it just removed any incitament for average people to join Gitlab. Once you're invested in one environment it takes something special to move.

chainwax|3 years ago

Unless Actions has gotten a lot more fleshed out since I last used it, I don't think it's as robust as Gitlab CI.

memco|3 years ago

> Github Enterprise is only $21/mo and for most users it has all the same features of Gitlab.

Of those things that I like more in Gitlab, it is deploy tokens: an easy way to be able to dole out permission to clone code where needed without having to bother with key management or user management. As far as I can tell GitHub has something like this but it requires setting up an app to talk to the API and isn’t nearly simple as the button available in Gitlab.

brightball|3 years ago

$29 / month as it relates to developer salaries is not impactful.

mschuster91|3 years ago

> It seems that Gitlab is only going to be left with 1) existing Gitlab users 2) users that want some enterprise feature set that doesn't exist on Github, and want it in a single platform without a third party

Add in 3) people who want a reasonable option to self-host that's not charging you to oblivion.

nunez|3 years ago

GitLab Auto DevOps and (now) GitLab Ultimate are definitely compelling differentiators that Github doesn't currently have, but I can't see Github just _not_ responding to that in a big way.

HWR_14|3 years ago

Or (3) Gitlab users that want to self-host. But while those might be users, they are not great customers.

siliconc0w|3 years ago

The problem with these SaaS companies is that they all eventually become seduced into whale hunting (big enterprise) and the product ultimately suffers as they are forced to adopt whale pricing and focus on endless enterprise reqs that the whales say they want (and most of the time don't actually use). The product drifts or stagnates for their core use case and then another startup comes along to 'disrupt' the market and they do until the process repeats.

mdorazio|3 years ago

Here's their operating margin for the last 4 quarters:

Q1: -49%

Q2: -65%

Q3: -50%

Q4: -38%

So what you want is a business model where the company runs purely on VC money instead of on actual profit. SaaS companies like Gitlab usually can't operate at a profit with only free-tier and cheap-tier users - their overhead is way too high. Those tiers are a gateway drug offered at a loss to get people on board so that eventually the actually-profitable enterprise accounts will stack up enough to make up the loss. It's kind of a standard bait-and-switch pushed by the whole VC model. I'm personally hoping we see less of it now that the money spigot is drying up.

viraptor|3 years ago

I'm annoyed that they don't want my money. I'm a really basic user and try to keep my private and public stuff there instead of GitHub. I fit in a free tier and would happily pay maybe $5 for it. But I wasn't going to spend $20 and definitely won't spend $30.

Come on GitLab, I want to keep using you and see you succeed. Let me pay $5 for some token feature like extra GB of space and to vote with my money to keep you going. I'll even do it for a "supporter" badge on my profile.

mgl|3 years ago

Well, $30 mo is just $1 a day. Depending on where you live it can be nothing.

arsome|3 years ago

Too many things in Gitlab feel half-baked, like their requirements feature which is essentially just their issue tracker, no document management, just toss some issues in the bin. And they expect enterprises to pay for it because they checked the feature box.

https://docs.gitlab.com/ee/user/project/requirements/

fletchowns|3 years ago

I've had a good experience using GitLab for source code repositories, pipelines, and code reviews. I don't have much experience using it for issue tracking and document management since we use Jira & Confluence for that. For my own hobby projects outside of work the free tier has been great, and it was easy to host my own gitlab runner so that I don't have to pay for CI/CD minutes.

lmiller1990|3 years ago

To be fair, a lot of enterprise sales is based on "ticking boxes".

paulddraper|3 years ago

I just think it's too ambitious.

Everything and the kitchen sink just will never be as good as best of breed.

gscho|3 years ago

Even though features are half-baked I still think the future is bright for them, especially if GitHub slips up or gets complacent. Intel showed us that it is possible.

erlkonig|3 years ago

Gitlab has been cursed by a marketing team that seemingly just can't imagine having mixed licensing levels. At a side effect, organizations that would adopt them at the low (free) tier (or just above) for the whole company, a higher tier for devs, and max tier for project management, etc, just can't. Instead they have to have separate gitlabs to cover the whole organization, which has a whole set of associated annoyances.

I speak from direct experience, at a company that had the mid level, liked the features, but was forced to eventually jettison them for the free tier to cut costs while broadening internal support.

And we reported this problem to them, this basic lack of a mixed tier system, something many customers want. But Gitlab can't seem to get it through marketing's head that being nearly everywhere is better than just running for few large companies. Running everywhere means that many devs would just bring along an expectation of having gitlab as a matter of course, spreading adoption like a beneficial contagion. Instead, any useful level is being priced into irrelevance from a smaller organization's perspective, something many devs will see at prohibitively expensive, and be the fomites for that perspective instead as they move between companies.

The result is terrible. Our company switched to Git on Microsoft Azure. Good job, Gitlab sales (heavy sarcasm). Hey, Gitlab management, have you checked to make sure your sales team isn't secretly taking kickbacks from Microsoft? (yes, I'm probably kidding, right?)...

activitypea|3 years ago

As much as I love the product, I've really come to dislike Gitlab as a company. The constant price hikes and the gutting of the free tier aren't exactly developer-friendly.

rwmj|3 years ago

I had a strange interaction with one of their sales people a few weeks ago.

We have a free premium open source developer account, plus Red Hat runs all the CentOS infra through gitlab and pays a ton of money to them. I received emails from a salesperson demanding that I book an appointment with them to discuss my account. (It sounded like a meeting which had real this could be done by email energy, or else was going to be a high-pressure sales pitch.)

I asked them which account they were talking about and if we could do this on email, but they literally wouldn't say what account it was related to, and just kept saying I must visit some (non-gitlab) site to book this appointment for a video call.

After several rounds of this and following up with someone who works with gitlab to check it wasn't an actual scam (it wasn't), I just ignored the guy.

Conclusion is they sounded desperate to make the numbers last quarter.

packetlost|3 years ago

Same. They forced GitHub to quit resting on their laurels, at least.

Macha|3 years ago

It feels like they've moved into the extract value phase for sure, maybe a bit forced by github actions removing their USP. I'm still using them for now, but I feel the day I move back to Github for the higher profile or self-hosted gitea/forgejo for the data control is coming.

harrisonjackson|3 years ago

It is especially annoying because of how transparent they are about it. You can follow along in merge requests and issues as they discuss exactly this.

animitronix|3 years ago

Yeah same here. Having to go to an Enterprise level to get free guest users is absurd, they've really stopped listening about product feedback, and the pricing model makes no sense...

stavros|3 years ago

As a user who really liked GitLab, there are a few things that made me consider to move back to GitHub:

1. They had a generous organization free tier, which was handy for stealthily moving companies to it (move a few repos, get people used to it, then move more repos, then when everyone recognizes the value, start paying). They ruined that as soon as they put a limit on the number of people that can be in an org for free. Moving stealthily was good because...

2. GitLab CI was best-of-breed, but GitHub Actions is really good too now (maybe better? I haven't used it enough to answer that).

3. The price is really high now, so it doesn't really make sense to even move a company over to it.

4. The community is (and has always been) on GitHub, so there was always a big reason to be there. Now that the rest of the GitLab offerings aren't as competitive, this wins.

Havoc|3 years ago

I like the product - been selfhosting it for years...but frankly the complete absence of a hobby level tier between 0 and 29 makes it a non-starter for me as a managed solution

It just doesn't produce 29 worth value for me pm. Probably does for a corporate user though so i can see why they're doing it

mkl95|3 years ago

What happened to Gitlab? They used to be one step ahead of Github in some areas, then seemed to go full enterprisey and lost their competitive edge. I smell some sales oriented strategies.

epolanski|3 years ago

You made me curious and I checked their financial report.

Gitlab spent 310M of their total 580M$ of operational costs in sales in 2022.

Those seem crazy numbers, I see similar ratios in other financial reports (such as Cloudflare's).

On one side it means that those companies are essentially cash positive the moment they cut sales expenses, on the other hand GitLab imho does not provide enough over some competitors such as GitHub to make me bet on them 10 years from now.

mindwok|3 years ago

I think it's a consequence of going public. Enterprise is where the money is at, and public companies have huge amounts of pressure to chase the money. I have a lot of love for GitLab, so I hope the strategy works and they can reinvest profits into making the product better for all developers, not just enterprise, but at this stage of their lifecycle it seems this is the strategy they have to play.

samspenc|3 years ago

GitLab increased their prices significantly in the past two years, which resulted in them being less competitive on price than GitHub and others https://about.gitlab.com/blog/2023/03/02/gitlab-premium-upda...

As others have pointed out in comments, their features seem to be incomplete but I think it's their higher price points that pushed users away.

Analemma_|3 years ago

TBF, I don't think Gitlab was ever ahead of, or even close to, GitHub. They got a lot of hype here a couple years ago when everyone decided they hated GitHub now because boo Microsoft, but that didn't mean GL was an actual competitor. People who migrated on hype got burned.

aynyc|3 years ago

When was GitLab ahead of GitHub? I've been using both for as long as I remember, I always thought GitLab is more marketing than GitHub. Believe or not, I prefer BitBucket because I don't care much for CI integrations.

janee|3 years ago

Sad to see. We really loved gitlab, but the pricing was so horrendous for what we were using and couldn't be scaled to non-tech employees (e.g. wiki or just reading MRs), so moved to github and haven't looked back.

Interestingly gitlab pricing influenced us to rethink our own pricing and we spent a month building out granular permission controls to allow sales to craft licenses bespoke to a client needs and charge less.

After a year our revenue has 2x and there's a nice upsell flow towards enterprise.

awill|3 years ago

Instead of Gitlab actually attracting more customers, they're trying to extract more money from their existing customers. This never ever goes well. Why can CEOs not see this.

I'm moving to GitHub. I've always championed the small guy, but the last couple of years have been terrible for Gitlab users.

spacebanana7|3 years ago

I wish that were true but Oracle, Cisco, PayPal etc all seem to have succeeded in pivoting to more extractive business models over growth. At least in terms of earnings.

c2h5oh|3 years ago

The fact they can leave things as serious as this https://gitlab.com/gitlab-org/gitlab/-/issues/344919 unfixed for almost a year and a half basically makes them not suitable for serious use in my opinion.

And since my opinion often matters they continue to lose business.

maccard|3 years ago

It's hard to blame them for every specific bug. It might be incredibly important to you, but not to others, and there's probably another showstopper bug for someone else that isn't important for you in return.

Lorin|3 years ago

Gitlab fell off once they went public, now it's shareholder value instead of ... developer value? They are also laughably slow at implementing features that have been readily available in competing products if you look at their issues page.

nimbius|3 years ago

things like github and gitlab always struck me as oddities. it costs virtually nothing to deploy a containerized gitea and jenkins, or gitlab CE, and you have direct control over its performance and options without any spend.

call me old fashioned but these online git-o-matic sites just seem more like rent-seeking during a recession.

kugelblitz|3 years ago

There's always opportunity costs. What about regular maintenance and updates? What happens when a bug appears? What if the disk is full?

Working 50% freelance and 50% revenue-generating niche side-project, I always calculate my time costs. Assuming I earn $80 an hour as a freelancer and a hosted git costing $10 a month, if I estimate I will need an additional 15mins a month if I go self-hosted, then I'll pay for the hosted version.

I've seen enough projects, where they decided to self-host gitlab, only to have issues like disk full, updates needed, deployments not initiating.

When suddenly a team of 10 can't push or deploy for a day, there's additional costs there as well.

yamtaddle|3 years ago

If you champion self-hosting gitea or gitlab CE, get your way, and something bad happens, you may, personally, be in trouble.

If you just go with Github or Gitlab, and something bad happens, nobody will blame you.

ajb|3 years ago

The first startup I joined, which was 12 people 20 years ago, had our own servers and an IT guy who took the alternate backup tapes home personally. When you have that, running as many services as possible locally, instead of paying for them, makes sense as you are increasing the value you get out of your operational capacity.

I now work in a start-up of 40 people, we don't have any servers or dedicated IT or DevOps staff. All admin gets done in the spare time of a couple of engineers, who have no desire to further lose their development time to admin/ops. It makes more sense to pay a subscription and let someone else deal with it. Even for the backend guys running that kind of service is more operationally complex than most of what they do - no-one has the experience of operating 'pets' class servers.

stavros|3 years ago

This comment strikes me as fundamentally misunderstanding the purpose of GitHub. I don't care that I can set up Gitea (and I already have an instance), I want GitHub because it makes it trivial for people to issue PRs to my code.

Then, because everyone has a GitHub account and knows how to use it, and everyone is already on it, everyone else goes on it too.

Not to mention that I don't need to maintain CI/container registries/asset hosts/pages myself.

imron|3 years ago

How much does it cost to pay someone to administer? Including backups, BCP, integration with SSO etc?

It’ll work for a 5 person startup, but will get expensive fast for larger organizations.

shrimpx|3 years ago

> it costs virtually nothing to ...

Yeah but what's the cost of a global developer social network?

maldev|3 years ago

I think Github knows that and that's why it's turned into more of a "Social Media" site. Jr Dev's grind it and view it as a gateway to a job. Constant memes about "Green boxes". "Only want my Sr Dev's to have full green!111!!". In reality nobody cares, but you can tell that's how the marketing is going. And it's to the point that if I have a public product, I might as well put it on github and get that stuff for free. Even though I do run gitea in a docker container for 99% of my projects offline.

imp0cat|3 years ago

Yes, but having used both, I'd pick Gitlab CI over Jenkins anytime. YMMV, obviously.

twblalock|3 years ago

GitHub is not just hosted Git. It is a platform.

nativecoinc|3 years ago

We use Bitbucket at work. If we switched to some other forge next week I would not care.

Git forges should be expendable.

Spivak|3 years ago

The moat is CI, or more accurately that Gitlab CI is really good and using it requires hosting your code there.

xeromal|3 years ago

I made a garbage tool to pull repositories from gitlab to github or vice versa. I used it just to explore Go so it's not really prod ready but handy if you're just looking to move your code over.

It most likely will explode.

https://github.com/tylerjgarland/git2git

intellix|3 years ago

We were allured to Gitlab as a total offering: code repo, issue and project management, auto devops.

We were developers trying to do everything then we hired project managers who wanted JIRA.

Then we outgrew autodevops and lately it just feels like Gitlab aren't aligned with our requirements at all.

We're paying $19/user/mo for 36 users and just to get status checks for screenshot regression testing we need to upgrade to $99/user/mo?

To get that with github and much more we can pay $24/user/mo.

It's always felt like they're trying to spread themselves too thin and add a billion half features. Like monitoring our GKE cluster from within Gitlab... Why wouldn't I just look at GCP when it's a billion times better and actually works

TheChaplain|3 years ago

Dear GitLab, please introduce a $5 "Pro" tier for small time developer/enthusiasts us who can't justify $29 a month.

Should be enough to just double the free tier, and perhaps make purchasable extras available such as buy extra CI minutes or transfer.

Otherwise there is no way we can support you.

jacooper|3 years ago

Personally I only care about GitLab because its open source with a good CI and because of Copilot.

If the supreme court says the copilot is fully legal, I would probably just revert to using Github for personal projects(their free tier is just unbeatable), i still use it more than anything else, because everything is on Github.

I am excited about Gitea Actions[1], as I feel gitea is generally only missing a decent CI system, and codeberg is growing fast.

1. https://blog.gitea.io/2022/12/feature-preview-gitea-actions/

mrslave|3 years ago

What's your preferred CI/CD system to pair with Gitea? I tried Drone once and found the configuration to be nasty, specifically OAuth2 under Docker Compose. Also the Drone UI left a lot to be desired. This was a while ago so grain of salt etc.

EspadaV9|3 years ago

I really like GitLab the product, and am part of their Hero and Core teams, however, the recent changes and changes pricing adjustments have me doubting if I can continue supporting them.

At work we use their hosted ultimate plan and we were looking to move to their premium but might instead go straight to a self hosted CE instance instead since there is nothing between free and $29/user/month (which is actually $348/user/year because they don't support monthly payments) and the free hosted plan is so crazy restricted.

animitronix|3 years ago

Here's how you fix gitlab:

* Fire the monetization team (yes this is a thing they have) and most of the sales team to reduce cost and hyperfocus on revenue * Go back to implementing user requests * Fixed the missed up pricing model, including guest accounts * Stop releasing half-baked features like the recent subtask debacle

Hopefully it's not too late.

neom|3 years ago

Fingers crossed someone buys them, I'm embarrassed that I'm so underwater in this stock, really regret buying it, one of my emotional purchases. :\

karmakaze|3 years ago

Funny how the headline says value rather than valuation or stock price. The value of the company to users and potential users is about the same.

zmmmmm|3 years ago

We would be giving them tens of thousands a year but they don't want our money. So we use the free version.

hypothesis|3 years ago

That seems to account for layoff and upcoming pricing changes.

mikercampbell|3 years ago

I get “how this all works” but valuation seems like magic

maxdo|3 years ago

why not use gitlab free version + runners on your kube?

lopkeny12ko|3 years ago

Contrary to the common opinion here, I've really enjoyed using GitLab and don't see many problems with it.

Lot of the comments here complaining about pricing. Please remember that GitLab's core is open source. If you think the managed offering is too expensive, just host an instance yourself. This is what I have been doing at home for years, and my company at work for even longer.

mardifoufs|3 years ago

I think the main reason why I dislike the pricing is that there's no way to buy seats with different premium tiers. I'm sure they've done the maths, but it's a very hard sell to just upgrade from the community edition, knowing that you'll have to now restrict the instance knowing that even a casual user (marketing, sys.engineers, mech engineers, etc) will cost the same price...when that limitation just doesn't exist if you don't pay anything at all! It's just counterintuitive.

Good luck trying to get buy in for the Ultimate tier (1200$ per year vs 300$ for the normal paid tier) when only a few users need or use the improved reporting/security featuresEven if it's not a huge cost per se, it makes most premium features a lot less attractive. And remember, you can self host Github Enterprise for a lot less than Gitlab now.

Again, I'm convinced they know how to price their product a lot better than us, but as an enduser, it's a bummer. Because Gitlab is still an amazing product, if just for their open source core alone. So I really hope they figure out a way to be sustainable.

naet|3 years ago

My small company pays for GitLab and I don't see the bill directly, but I definitely have enjoyed working with GitLab. GitHub actions may be catching up but GitLab ci/cd tools have worked great for a while now for us.

eeasss|3 years ago

The fully remote approach may have hit its limits.

epolanski|3 years ago

Nobody I know self manages their git and integrations regardless of where they physically work.

t3rmi|3 years ago

I wonder if we can compare remote vs in person companies across industries and see stock price deltas across the last 2 years.