Google-Backed GitLab, Explores Sale

After receiving purchase offers, GitLab, a U.S. cloud-based software development tool company backed by Alphabet, is considering a sale, according to sources

According to the sources, GitLab, which has a market value of approximately $8 billion, is collaborating with investment financiers to facilitate a sale process that has garnered interest from its peers, including cloud monitoring firm Datadog.

The sources, who requested anonymity due to the confidentiality of the matter, stated that no agreement is specific and that any transaction is still weeks away.

Datadog and GitLab should have aptly addressed requests for comment. Alphabet, which still needs to be a stake in GitLab through its venture capital affiliate, also did not respond to a request for comment.

The technology sector is experiencing an increase in dealmaking as companies seek to broaden their offerings in response to advancements in artificial intelligence and cloud computing.

Reuters has reported that Alphabet is in advanced discussions to acquire cybersecurity startup Wiz for approximately $23 billion. This development follows the company’s previous exploration of an acquisition offer for marketing software company HubSpot.

According to data from Dealogic, the technology sector was responsible for the highest percentage of mergers and acquisitions during the first half of 2024, with a global increase of over 42% year-on-year to $327.2 billion.

GitLab’s platform enables development, operations, and security teams to design and administer software with a single tool. According to its website, it is utilized by over half of the Fortune 100 companies and has over 30 million registered users. Although its nominal headquarters are in San Francisco, all its employees are employed remotely.

GitLab’s shares, trading in New York since their initial public offering in 2021, have declined by 16% thus far, underperforming a 3% increase in the S&P 500 Application Software index amid concerns regarding its clients’ spending reductions.

The company acknowledged that it faces headwinds in pricing its offerings as it competes with Microsoft following its $7.5 billion acquisition of rival GitHub in 2018. However, it reported robust year-on-year revenue growth of 33% to $169.2 million and its first-ever positive cash flow in its most recent quarter.

During the company’s quarterly earnings call last month, Sid Sijbrandij, the CEO and co-founder of GitLab, disclosed that he would be undergoing treatment for osteosarcoma, a type of cancer, for the second time. Sijbrandij, who holds 45.51% of the voting stock through dual-class shares, was previously treated for the disease last year.

He further stated that he is currently achieving a complete recovery and will continue to fulfill his responsibilities.

Datadog, with a market value of $44 billion, provides software enabling technology professionals to measure their productivity and collaborate through the cloud.