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Needham & Company maintained a Buy rating on GitLab Inc. (NASDAQ:GTLB) shares in a note on Tuesday, but Needham analysts said they believe the company’s recent price increase provides a “multi-year tailwind.”
“Given the phased-in price increase to GitLab’s Premium users, we expect revenue to benefit through FY27,” wrote the analysts.
However, they feel that depending on investor assumptions regarding customer churn and early renewals, new customer acquisitions will provide the bulk of the company’s revenue lift in FY24 and FY25.
In addition, they add that the gradual phase-in of the 53% price increase to existing customers “implies a revenue tailwind through FY27.”
In February, Gitlab announced it would lay off 7% of its workforce, which the analysts said will “generate an approximate low-$40 Million benefit in gross annual savings,” although they stated it is unlikely to be fully recognized in FY24 based on timing and redeployed investments/resources elsewhere in the business.
