“However, we expect the vast majority of our multi-year deals going forward will be invoiced annually.”

In context

“Brian Robins (CFO): 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 the 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 one hundred thirty percent. Our platform is offered with a free version and two paid 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 paid subscription tiers are available as a SaaS and self-managed offering. Ultimate continues to be our fastest growing plan. Going forward, we expect our SaaS 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 ten percent of the contract value and is recognized upfront. Post contract support, which is usually about ninety percent of the contract value, is recognized ratably over the contract period. Our contract terms are typically annual deals with cash collected upfront. Historically, we have had some multi-year contracts where multiple years were invoiced upfront. 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 sixty-six point eight million dollars was up fifty-eight percent from the prior year. As of quarter-end, we had over four thousand customers with ARR of at least five thousand dollars, up from over three thousand six hundred and over two thousand four hundred customers compared to the prior quarter and year, respectively. Current customers with greater than five thousand dollars in ARR represent approximately ninety-five percent of our ARR. We also measure the performance and growth of our largest customers, who we define as those spending more than one hundred thousand dollars in ARR with us. For the quarter, we had over four hundred twenty customers with ARR of at least one hundred thousand, up from over three eighty and over two forty customers compared to the prior quarter and year, respectively. For both our five thousand dollars and one hundred thousand dollars 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 twenty twenty-one and FY twenty twenty. We think this is due to the increased market demand for DevOps platforms and the 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 grow 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 eighty-nine point seven percent for the quarter, which compares to eighty-eight percent in the immediate preceding quarter and eighty-nine point two percent 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 SaaS offering year-over-year, which remains above one hundred percent. We saw improved operating leverage across the business this quarter. Non-GAAP operating loss of twenty-three point nine million dollars, or thirty-five point seven percent of revenue compared to a loss of twenty-two point three million dollars or fifty-two point nine percent 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 twenty twenty-three to support the growth in our business. Operating cash used was ten point one million dollars in the quarter compared to fourteen point one million dollars used in the same quarter last year. We performed 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 as it is relatively underpenetrated and we're well-positioned to capture an outside portion of it. Turning to guidance. For the fourth quarter of FY twenty twenty-two, we expect total revenue of sixty-nine point five million dollars to seventy-seven point five million dollars, representing a growth rate of fifty-one percent to fifty-three percent year-over-year. We expect the non-GAAP operating loss of thirty-three million dollars to thirty-two million dollars and we expect a non-GAAP net loss per share of zero point two six dollars to zero point two five dollars, assuming one hundred forty-four million dollars weighted average shares are outstanding. Let's turn to the full year FY twenty twenty-two. We now expect total revenue of two hundred forty-four million dollars to two hundred forty-five million dollars, representing a growth rate of sixty percent to sixty-one percent year-over-year. We expect the non-GAAP operating loss of one hundred four million dollars to one hundred three million dollars and we expect the non-GAAP net loss per share of one point four three dollars to one point four two dollars, assuming eight million dollars weighted average shares outstanding.”