All right, let's get started. Rob Owens in my last session of the two days, so pleased to be sitting next to the outgoing Chief Financial Officer, Brian Robbins, of GitLab. Probably a different set of questions or discussion than when we had prepared for this. Thank you for joining us. Welcome back to Nashville. Brian did his undergrad and graduate days here in Nashville. It's a good town. It's a great town. We're not going to talk about the football team, are we? No, no, no. Town's changed a lot. This whole second or honky-tonk area was never here when I was here. It wasn't here. Let's talk about how GitLab has grown up over the last four or five years since you joined and just what you kind of came into and where we're at now. In the middle, we've had a pandemic, we've had free money, and then we didn't. Just walk us through the journey of this company a couple of years ago and what you exit now as you take on another opportunity. Yeah, no, absolutely. Thank you for having me. Delighted to be here and thank you for all you for joining. I know everybody has a busy schedule, so thanks for taking your time out today to hear a little bit about GitLab. When I came to GitLab five years ago, this month is my five-year anniversary. We didn't have any audited financials. It took 20 days to quasi close the books. We weren't IPO ready. In just a very short period of time, 11 months after I joined, we took the company public on NASDAQ. It was really one of the most successful IPOs at the time. From a revenue multiple perspective, based on the company's strength, did really well. It's interesting to look at sort of the company and how over the years we've changed and really all for the better. The reason why I came to GitLab is I really do believe that having a system of record and a platform to do the entire software development lifecycle is super powerful. As a CFO and write numerous S-1s, I would spend most of my time being the air traffic controller doing version control in sort of Microsoft Word or what have you. Over the last several years, I actually use Google Docs because you can track all the changes, people can work on the document the same, and it just really, really takes down the amount of time it takes to draft an S-1. Similar to Google Docs and having a system of record do software development lifecycle, we can increase cycle times by like 7x. We had Forrester do a total impact study and the payback period on the product was about six months and ROI was over 480% in three years. It's been fascinating to see the amount of people and the companies that have come to GitLab to experience the payback and sort of the brand of the company and so forth. Today we have over 50% of the Fortune 100, about 25% of the Global 2000. When I joined the company, we just had Premium and Ultimate, and that's really all you could buy. We were just a seat-based model. It was pretty simplistic. Over the years, we developed the Agile Plan SKU. That's not a takeout of Jira, but it actually is good enough that some companies are using that instead of Jira. It comes with Ultimate, but for the non-developers, you can actually buy the SKU. We had some customers that were in highly regulated industries and they wanted to have a single-tenant SaaS so they could have a private network that we would host and run it for them. We launched a product called GitLab Dedicated. GitLab Dedicated has grown 92% year over year. I thought it would only be for very complex organizations, but now a lot of organizations said, "Hey, my total cost of ownership goes down dramatically if you deploy it, you run it," and so forth. It's been really amazing with just AI in general. I think it's been seven quarters ago, seven, eight quarters ago, AI did not enter the conversation whatsoever in the sales cycle. Microsoft made a $10 billion investment in OpenAI. Copilot came around and it was the first time in my life, actually, that something was so led by the media as opposed to technology itself and then people actually using it. There was just a lot of confusion around it in general. We actually got a late start to AI, but we played catch-up and there was a number of reports that were put out at that time that I found really interesting. They thought the LLMs would be commoditized. That's in essence what's happened. We actually partnered with Google, we partnered with Oracle, we partnered with Amazon Web Services, a number of different people to actually come up with very specific AI functionality for DevSecOps. I really feel that was the right play. It was GenAI, now it's Agentic AI, and now we're working on creating all these agents that can actually go do human-like things. It's been super fascinating. It's been an amazing journey. Over the time, the entire team has been switched out. What made the decision so tough for me to take on another opportunity was really the people. James Shin, sitting here in the front row, will be named the Interim CFO on the 19th when I leave. I have a thousand percent confidence in him and the team. It's been really great to watch, going from a 20-day close to a four-day close, going from forecast accuracy of 78% down to less than a percent. The team's really matured, understands the business, and the market's huge. It's not a winner-take-all market. Talking about AI, seven quarters ago, AI came up in every conversation. We would get tons of questions around Copilot Microsoft. That sort of died down. It was, hey, how about this thing called Devin with Cognition Labs? We saw this really cool little demo and how's that going to impact you? That died down. Last quarter, it was around Cursor and Windsurf. Windsurf went and did a little bit of an odd deal. We really haven't got much questions around that. On this past call, what we've been trying to do is really educate the market around what's an IDE, where do they leave, where do we pick off? In 18.3, we announced a lot of integrations into Cursor, Windsurf, Codex, Quad, and so forth. Bill came on about three quarters ago, put three priorities in place for the company. I think the company's heading exactly where it should go. It's going to be fun to cheer him on from the sidelines. It's always been very much a product-led growth company. Very much so. It was a frictionless velocity play in the early days. I think Sid helped drive a lot of that just reputationally. Right. You're growing up on that front too. If we look at the last quarter, 29% growth, one of the best that I saw across my space. There was a little caution looking forward as you're maybe putting some of those final touches or changing some of the go-to-market. Maybe you can touch on how that's evolved as well. Yeah, absolutely. Over the last two and a half years, we had four different CROs. We had a gentleman that was at the company, Michael McBride. He took the company roughly from zero to $500 million plus. Then we brought in someone from Microsoft who was with us only for 11 months. We had an interim CRO. When Bill came into the company, that was the first thing he had to address. He went out, did a search, brought Ian in. Ian's very data-driven, very fundamentally driven. When we talked about guidance and we talked about go-to-market, Ian's been here for a quarter. There's a number of things that Ian wants to do. They aren't really going to impact this year from a revenue and bookings perspective, but they're the right things to set up for next year and beyond. When Bill and I discussed it, we're like, let's make the changes today, right? We don't have to wait for this, knowing that it was going to cause a little disruption. Sales at GitLab historically has really been the one individual, when you land an account, you own that account for the lifetime of the account. Our gross retention rate is top quartile, best in class. When people come to GitLab, they hardly leave. Our churn has been relatively low. The churn and contraction this past quarter, contraction's way bigger than churn. Churn and contraction this past quarter is the best it's been in three and a half years as a% on available to renew. We actually had a number of one-time disclosures that we made this quarter to address some of the concerns that were out there. One of the things I liked the most that we put into the investor presentation was the net dollar retention rate by cohort back to the inception of the company. Cohorts 10, 11 years ago are expanding at the same rate of cohorts two years ago. It's really hard for me to think of a product-led company that actually has expansion of customers 10 plus years at the same rate as customers two years ago. We actually extrapolated out our 2016 cohort just as an example. The 2016 cohort has grown 100x in ARR, over 100x in ARR in just 10 years. We put the chart in there so you could see the wedge for every cohort. That's really the power of the model that I love. We put so much feature functionality into the platform every month. We have these credit values and the I in credit stands for iteration. One of the things that Sid wanted to do was he wanted to ship as much software as he could every month and iterate, get feedback, and then continue to develop that. Without that, GitLab couldn't have been created. We're shipping a lot. Our security module, if you will, is really top-notch. Competes with Snyk, Black Duck, Checkmarx. You get all that when you buy the platform. That's really what's driving the strength of Ultimate. Ultimate now is 53% of our total ARR. It's been greater than 50% of bookings for the last several quarters. By far, it's the highest priced product in the market. I think that's really a testament. That data that I'm talking about is a testament to the benefit that the customers are getting by deploying Ultimate. If you look at that oldest cohort still expanding at that rate, that feels very counterintuitive relative to, gee, we're asymptotically going to go to a couple of coders sitting in a dark room who are just going to suggest things and software's going to be created. As those customers... That would be magical. That would just be magical. You know, you look, you've got the S1 example. Working with bankers is always challenging for any side of the business that you're on. That being said, your biggest customers have like 30,000 developers or so. There are some very, very large customers when you start to talk about 50% of the Fortune 100. There are those layers and levels of complexity. In that customer base and with those big customers, what are they still expanding to at this point? You know, when we land with a customer, typically it's been a bottoms-up adoption. We'll land with a division or department, and then we'll go from one, and the persona is a developer. You know, between us and Microsoft, the amount of license, we have an estimated 50 million users on our free tier. I think they say they have like roughly 130 million. If you combine the two, it's like 3x, excuse me, 3x the amount of knowledge workers in the world today. Typically it's a bottoms-up adoption because every developer, as they get a GitLab account, they got a GitHub account. Whether they worked in it in university, whether they're a hobbyist and were coding, when people go into these companies, they're very familiar with GitLab. Typically, it's bought on a credit card. It's 50 to 150 licenses. It's the developer who has it, and then the next division or department will come up. You'll go around, that's why we have a person that sort of lives with the account. You'll go around, you'll continue to hit division, department, division, department with the persona of a developer. Then you'll get into the operations people, and you'll still expand and sell more seats. Typically they would land on Premium. Now more people are landing on Ultimate, but it would be a Premium bottoms-up led. When you got to the security department, they're like, hey, this is great, but it doesn't have SaaS, DaaS, Fuzz testing, container scanning, vulnerability assessment, all the stuff that we have in security, but our Ultimate does. Then we would typically see an upgrade to Ultimate, and then we would expand more seats and continue to hit the dev, the sec, and the ops. When you look back at the net dollar retention rate for all the years, the biggest area that people are expanding is seats. More people are adopting the product within the company. UBS is a great example. UBS did a wall-to-wall implementation. They went out and did a massive RFP. They were on Azure and some other platform that I won't say. They selected GitLab because of the technical ability and what we could deliver. They deployed 9,000 licenses in nine months. It was like 18,000 licenses in 15 months. I don't know how many they have today, but thousands and thousands of licenses deployed. The beauty about GitLab is you save in four different ways. The first area you save is you can actually get rid of point solutions. Instead of having 15 or 18 point solutions in the entire software development lifecycle, you can actually cancel or just end of life a number of those. You get paybacks really quickly for that. The second thing is usually there's a team within these organizations that are actually doing the UI and putting all the point solutions together. When there's updates or whatever, they have to go make sure that they're, in essence, creating a platform within the company. When you get rid of the point solutions, you don't need as big of a team, or if you go all in on GitLab, you actually don't need the team. That's the second area of savings that we see from companies. The third area is really on developer productivity. If you go from a two-month release cycle to a two-hour release cycle, you have just way more time to do more work, and you become way more efficient because you have this system of record where everybody can work on it at the same time. That's the third area. The fourth area is a lot of these applications are getting developed or revenue-facing. You can imagine if you can get them out in hours versus months, you know, that as well. Those are the areas that we see companies get the payback from the product. In the spirit of UBS, which in our estimations is going to be a high seven-figure, low eight-figure type of customer, they're a big customer. In the spirit of UBS, let's talk about PQC. Price times quantity, but then we got to add in consumption. How you think about that pricing model of, say, a $10 million customer, that they're not waking up with now a $15 million bill and the relationship goes sideways. 100%. We're at a massive transition in this industry, and we're moving to even more of a consumption model soon. Good luck with that. You know, how do you think about these transitions relative to those large customers and how GitLab's going to, what they're going to do to assuage customer concerns? Yeah, 100%. I can, let's unpack that a little bit. I'll talk about two different ways. One is, you know, how do we view pricing at GitLab? There are three different things we look at. We look at, you know, what it costs to deliver. We've included some of our AI features like DuoChat and code suggestions in Premium and Ultimate because the cost of delivery is relatively low. The second thing we look at is what value are we delivering. The more value you deliver, obviously the more you can charge. We try to assess how much value we're delivering. The third thing is how it's priced actually in the industry today. AI is heavily based on tokens. Token costs have actually dropped dramatically over the last two or three years. I was at another conference earlier this week and heard token costs went from like $33 down to like $0.09, like over just a very short period of time. Those are three things we look at in pricing. I think when we talk about the consumption model at GitLab, it's very important to note that we aren't changing the business model. We're actually adding another element to the business model. The way I like to think about it, it's really in three layers. The core layer is core GitLab. That will be a seat-based model. It won't change. UBS will continue to pay us per seat. All of our customers will continue to pay us per seat. The second layer, let's call it the AI core level. Even though most everything is based on consumption, people don't like models where they get surprised. Our sales team will go in and work with the customer to understand what the consumption level will be. They'll buy a package. That package will include, it'll be query-based or token-based or something. They'll be able to budget and plan that. The third sort of level that I like to think about is AI variable. When you go over that package base, then there will be a variable cost associated with that. That will be the highly variable component. We're building some feature functionality and flags into it to where we'll see when they go over. We'll alert them. The per token variable amount will be more than the package amount. The sales team will go in and try to upsell them to a bigger package so they have more consistency on their forecasting. I think that, different than I think the company that you're referencing is pure consumption. This will actually be more in sort of three different layers. I don't think it will be as surprising to someone like UBS because they'll have a real-time meter and can see. They'll know where exactly they're at on the consumption-based component. Do you think there needs to be a wholesale shift to consumption at some point? Or do you still see the seat-based core type of model? You know, with GitLab, it's really interesting, right? When I was interviewing with Sid to come to the company, I said we're giving so much value away on a seat basis. You really want people to buy the blades in the platform. If we actually sold by the blade, I think we could actually get more value from the customers, and it would be more aligned with what we're delivering. When I came into the company and really my entire career, I've actually worked very closely with CROs on the go-to-market and so forth. I realized that the market is just so big. It's a $40 billion TAM growing very quickly. Now with AI and citizen developers and everything else, we believe seats are going to actually grow more. When I looked at the, when we went public, our gross retention rate was like 97%. When I looked at all this, I realized the number one thing for GitLab to be successful was to go land more customers. If you actually made the pricing model super complex, either by blades or all consumption or something like that, the sales process would get lengthened. It would be more complex. It would be way more difficult. The seat-based model, and you know, we got 90% non-GAAP gross margins, so we're delivering it very effectively as well. I think is the right model to capture market share. I think with the add-on of AI that will be consumption-based, that hybrid approach, I believe, is the right approach. In Q2, you grew your R&D high teens on a year-over-year basis. Why doesn't GitLab in and of itself find more efficiency here? We're going back to the number of developer type of argument. Obviously, you're getting better productivity out of those developers. Yeah, I think we've done really well on sort of operating leverage. I think you've done a great model. Since I've been at the company for 20 quarters, sales and marketing EDR has improved every single quarter. We were able to get the company non-GAAP positive. We developed year-to-date for the first two quarters, about $150 million of free cash flow production, greater than rule 40 company. I think we are, you know, one of the things that Sid and I said at the IPO, and it's really stuck, is the number one thing we want to do at GitLab is grow. We're going to do that responsible. Since I've been at the company, there's been really a number of different phases in the company. Got to the company, we're private, hundreds of millions of cash on the balance sheet. The company was growing in excess of 100%. We acted responsibly and we made the investments in the right area. When we went public, investors, Wall Street in general, saying, "Grow at any expense," right? Grow, grow, grow. It's all based on revenue, but we still acted the same. We had a sharp correction in the market and COVID came, and we still acted the same. I think as we look at laying out the plan and we look at sort of develop, creating shareholder value, the number one area we looked first is the growth. We will do that efficiently. The two areas that we're investing most in today are sales and marketing R&D. Sales and marketing capacity curve is super important. We meet on it actually weekly. We never want to get behind. We have enough capacity for this year and going into next year, enterprise ramp times roughly nine to ten months. Very, very critical. R&D, we're investing in AI and security and SCM, CI, CD. We want to remain best in class in that, because we land with a developer, then we can actually expand in the business with operations and security and so forth. Got time for one question if there is one. You know he always has a question. Go ahead. Got it. Can you expand on that point? Great question. There's a lot of questions about a seat-based model. Will seats go way down or will they go way up? We've been saying at GitLab, we think the market will get bigger. There's been a lot of third-party articles around this that AI has actually created more code, but it's taken more time for security fixes, bugs, review time, and so forth. We haven't seen the citizen developer yet. I think the AI tools that people are using are really at the beginning stages. I do believe in the future, especially with Agentic AI, the things that you'll be able to do, like anybody could be a developer. I think software's eating the world. Every company is a software company in some way. I think you're going to see the complexity of software go up. I think the way that people actually are operating within companies is going to change. I think you'll see a much bigger market in the future due to citizen developers and the impact that AI has on that. Excellent. That's all we have time for, Brian. Thank you. Thank you, Rob. Great to see you.