Leading U.S. provider of cloud-based software development tools, GitLab, is reportedly considering a sale following interest from potential acquirers, according to sources familiar with the matter.
The company, valued at approximately $8 billion, has engaged investment bankers to explore a sale process that has attracted attention from peers such as cloud monitoring firm Datadog, the sources disclosed. However, any potential deal is still in the early stages and remains uncertain, said the sources, who requested anonymity due to the confidential nature of the discussions.
The technology sector has witnessed a surge in mergers and acquisitions, driven by advancements in artificial intelligence and cloud computing.
Alphabet, for instance, is reportedly in advanced negotiations to acquire cybersecurity startup Wiz for approximately $23 billion, following previous interest in acquiring marketing software company HubSpot.
During the first half of 2024, the technology sector dominated mergers and acquisitions globally, surpassing $327.2 billion, a year-on-year increase of more than 42%, according to data from Dealogic.
GitLab’s platform allows development, operations, and security teams to efficiently design and manage software using a unified tool. With over 30 million registered users and deployment across more than half of the Fortune 100 companies, GitLab operates nominally from San Francisco, but all its employees work remotely.
Since its initial public offering in 2021, GitLab’s shares have faced challenges, declining by 16% this year, contrasting with a 3% increase in the S&P 500 Application Software index. Concerns have arisen over customer spending reductions despite the company reporting robust year-on-year revenue growth of 33% to $169.2 million and achieving positive cash flow for the first time in its latest quarter.
GitLab faces competitive pressures, particularly from Microsoft (MSFT.O) following its acquisition of rival GitHub for $7.5 billion in 2018. CEO and co-founder Sid Sijbrandij, who controls 45.51% of the voting stock through dual-class shares, recently disclosed undergoing treatment for osteosarcoma, a type of cancer, for the second time.
Datadog, valued at $44 billion, specializes in software facilitating collaboration and productivity measurement among technology professionals using cloud-based tools.
