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“The current macroeconomic environment is tough, and as a result, companies are still spending, but they are taking a more conservative approach to software investments and are taking more time to make purchasing decisions,” Sijbrandij said in his message to employees.
GitLab shares are down more than 13% on the news, adding to its decline over the last year.
The company’s 100% remote workforce is made up of approximately 1,630 team members in over 68 countries, according to a GitLab filing in January 2022.
Sijbrandij said he had hoped “reprioritizing our spending would be enough to withstand the growing global economic downturn,” but they, unfortunately, need to take further steps and match its pace of spending with its commitment to responsible growth.
Following the announcement, MoffettNathanson analysts noted that the wording in the statement points to tougher macroeconomic conditions and lengthening sales cycles.
“Our interpretation is this must mean that the business has seen a slowdown beyond what was anticipated on last quarter’s earnings call when they announced that they were comfortable with 40% plus growth for this upcoming fiscal year,” wrote the analysts in a note to clients.
“There are no details specific to results in the quarter just finished or expected growth outlook for the fiscal year, so we expect shares will be significantly negatively impacted on the lack of information initially,” they added.
They also said that given GitLab management did give preliminary thoughts on fiscal 2024 growth, they are surprised by the move.
