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Please note today's call is being recorded. Now I'll be standing by should you need any assistance, but for now, it is my pleasure to turn things over to Kelsey Turcotte. Kelsey? Over to you.

Good afternoon. We appreciate you joining us for GitLab's fourth quarter fiscal year 2025 financial results conference call. With me are Bill Staples, our CEO, and Brian Robbins, our CFO. During this afternoon's call, we will provide an overview of the business, commentary on our fourth quarter results, and guidance for the first quarter and fiscal year 2026. Before we begin, I'll cover the Safe Harbor statement. I'd like to direct you to the cautionary statement regarding forward-looking statements on page two of our presentation and in our earnings release issued earlier today. Both of which are available under the investor relations section of our website. The presentation and earnings release include a discussion of certain risks, uncertainties, assumptions, and other factors that could cause our results to differ from those expressed in any forward-looking statements within the meaning of the Private Securities Litigation Reform Act. As is customary, the content of today's call and presentation will be governed by this language. In addition, during today's call, we will be discussing certain non-GAAP financial measures. These non-GAAP financial measures exclude certain unusual or non-recurring items that management believes impact the comparability of the periods referenced. Please refer to our earnings release and presentation materials for additional information regarding these non-GAAP financial measures and the reconciliations to the most directly comparable GAAP measure. I'll now turn the call over to Bill. Still?

Thank you, Kelsey, and good afternoon, everyone. Thank you for taking the time to join us today on our fourth quarter earnings call. Before I get any further into the call, I want to take this opportunity to welcome Ian Stewart to GitLab in the role of CRO. He will join us later this quarter from Tricentis. Where he currently serves as CRO. Ian has spent his career driving revenue growth with a strong analytical and operational bias and brings a wealth of experience in helping developers and IT organizations realize value. I am thrilled Ian is joining the company and will help drive GitLab through our next growth stage. I also want to thank Ashley Kramer for her service as interim CRO over the past few Orders. Ashley will remain in the interim CRO role, through the end of Q1, FY2026, and will work with Ian to ensure a smooth leadership transition and will then pursue opportunities outside of GitLab. Turning back to the quarter, Q4 was a strong finish in FY2025, continuing the momentum GitLab has built, throughout the year, driven in part by Ultimate, Dedicated, and GitLab Duo, fourth quarter revenue increased 29% year over year to $211 million once again coming in ahead of our expectations. And consistent with our commitment to responsible growth, our non-GAAP operating margin reached 18%. This is an increase of 960 basis points year over year. Brian will give a deeper dive into the quarter, and provide guidance for Q1 and fiscal year FY2026 in just a moment, but first, let me step back and share what I've learned in my first quarter at GitLab and how we're approaching the opportunity ahead. I spent most of my time this quarter meeting with customers, investors, and team members learning everything I could. I engaged with more than fifty customers, including Booking.com and USAA, and listening to how GitLab uniquely accelerates their team's ability to deliver secure software faster. Three key themes emerge from those conversations. First, GitLab's comprehensive platform approach drives enormous productivity and efficiency improvements with very clear ROI. Second, the momentum around DevSecOps and, specifically, the need for security responsibilities to shift left. We believe every engineer needs to understand and be part of delivering secure software and AI is only going to accelerate that trend. Finally, every customer even those who admitted they were skeptics just a few quarters ago, are actively evaluating AI tools and exploring how they can benefit by incorporating AI into their DevSecOps strategy. As we brainstorm their AI strategy together, it became even more clear our customers bet on GitLab will become a competitive advantage for them and the foundation for a successful AI strategy in the years to come. Nearly every customer I spoke with feels it. With the power of generative AI for co-creation, we're almost certainly going to see a significant increase in both software creators and code in the coming years. We believe organizations won't just have more developers, they'll have more production-ready code generated by AI more applications built and deployed by agents. As with any software, this code will need to meet the quality, security, privacy, and compliance requirements of the business. A successful AI strategy, therefore, depends on a successful approach to managing the software lifecycle at scale something GitLab has already proven to do better than anyone else in the category. Great. Organizations who have already adopted in the process of moving to GitLab taking a platform approach, benefit from automated security scanning enforceable compliance guardrails, and standardized workflows not only with their human developers, but for agent-generated code as well. We believe organizations without an integrated DevSecOps approach will struggle to manage the complexity and potential risk of agentic AI development. For organizations that want to leverage the benefits of AI agents while delivering a safe and reliable experience for their customers, we believe the best path is to standardize on an end-to-end DevSecOps platform and GitLab offers the most comprehensive DevSecOps platform today. I spent a lot of time this quarter meeting team members around the world and at every level of the organization. I heard their commitment to our values. Their passion for both the people and the mission of GitLab and the many things we're doing well today as a company. I also heard the typical growing pains of a public company at our age and maturity and the desire to go faster. With less friction so we can scale to become a defining generational company in our category. Driven by that, and with the help of the executive team and leaders around the company, we put together an FY2026 plan to help us improve. Our plan is very simple. Really focused on the fundamentals of a successful business. Number one, we will focus on adding more new paying customers this year. Especially in the mid-market and enterprise segments where our ability to expand is the highest and our value is the most. Number two, we will focus on our expansion motions and helping customers realize the value of our platform faster and number three, we will focus on delivering customer value through innovation at a faster pace, especially in our core DevOps, security, and AI areas. With an eye to provide higher quality, more complete, and market-leading solutions in all three areas. Every team member is now orienting their work around these three objectives. I sense a renewed energy and excitement as we enter the new fiscal year. Let's talk about each of the three objectives, and the momentum we saw in Q4 that we're building on. A great example of execution against objective number one is the deal we closed in Q4 with Anthropic. The creator of Claude, a large language model trusted by millions of users worldwide. With Ultimate self-managed the Anthropic team is trusting GitLab to securely house all their code in one place while providing greater performance, Insight, control, and customization over their development workflows, We also landed one of the largest cybersecurity companies a competitive displacement for source code management. As a global cybersecurity leader, the customer requires a reliable, scalable solution can run-in their own environment which our competitor could no longer provide after sunsetting their on-premises offering. The customer's engineering teams were also unhappy with the user experience in their existing tool. They chose GitLab for our enterprise-grade scalability, ease of use, and continued investment in on-premises capabilities. This strategic decision will help them dramatically improve developer productivity and accelerate product delivery, while maintaining control of their development infrastructure. Our second FY2026 objective is to unlock value faster for our customers. Customers on our platform are enjoying fifteen times faster time to market four times faster feature delivery, and up to 60% reduction in manual tasks. We know that when customers see results like these, they expand usage and invest more with us. A good example of this is the investment arm of the French state. After seeing success with an initial deployment of GitLab Ultimate in their infrastructure team, they're now standardizing their entire development organization on GitLab. Replacing a complex array of point solutions including source control, CICD, enterprise agile planning, and security scanning tools. This decision will help CDC streamline their development experience, reduce technical debt in their tool chain, and strengthen their security posture through integrated security scanning and compliance controls. To further strengthen our ability to grow with customers, we're making numerous go-to-market enhancements. Including expanded customer success and professional service teams and offers, intensive onboarding and training to get our reps ramped more quickly, improved enablement on new innovation, and standardized customer success plans. Partners are also critical to success both landing and expanding with customers. This year, will expand our relationships with services and consulting partners and we continue to invest in our hyperscaler relationships. In December, we announced an integrated AI offering with AWS at re:Invent, which went into beta in January. This collaborative product development brings together GitLab's AI-powered DevSecOps platform with Amazon Queue's autonomous AI agents to create a seamless AI-powered developer experience. Which we expect to be available in the coming months. Our third FY2026 objective is to accelerate innovation in focused ways that increase value for customers. This year, our R and D investments will be made across three themes, The first is our core DevOps platform to help customers accelerate tool chain consolidation. The second, is to build upon our differentiated security and compliance capabilities. And third, we'll continue to drive AI innovation, including Duo Enterprise and Duo Workflow. Our goal here is to enhance and deliver world-class products in all three areas with clear monetization paths and while we expect these innovations will have some modest impact on FY2026, they will set our field organization up with multiple expansion paths for customers FY2027. To get a sense for the opportunity ahead, as we focus on these areas, let me share a few customer stories and the business expansion we saw from them in Q4 FY2025. This quarter,

We delivered a strong end to FY2025, and I want to thank the GitLab team for your ongoing commitment to our customers and partners. Driving results for our customers is the most important thing we do. Q4 was a strong quarter for our enterprise segment. We closed the largest net ARR deal in company history, We had a record quarter of net ads for customers over $100,000 in ARR. This group of new customers also included the most first orders of more than $100,000 in ARR in the company's history. With GitLab, customers can deliver software faster and more securely They can also consolidate into a single platform, saving both time and money which is a high priority in any spending environment. I'll start with a brief recap of our full year and then turn to the fourth quarter results guidance. FY2025 revenue grew 31% to $759.2 million as our growth continues to be driven by our land and expand motion. FY2025 non-GAAP operating margin reached 10.2% an increase of approximately 1,050 basis points year over year. While adjusted free cash flow grew 259% to $120 million. Turning to Q4, I'm really pleased our results which exceeded our expectations. Revenue for the quarter reached $211.4 million, an increase of 29% from Q4 of the prior year. And we delivered a record non-GAAP operating margin. We now have 9,893 customers with ARR of at least $5,000 which contributed over 95% of total ARR in Q4. In particular, we monitor performance of our larger customer cohort of $100,000 plus in ARR, which increased 29% this quarter reached 1,229. This includes 123 customers of $1 million or more in ARR. An increase of 28% year over year. As a scale, this cohort continues to make significant investments in Ultimate and Duo. On the expansion front, we ended the quarter with a dollar-based net retention rate or DBNR of 123%. Q4 DBNR was driven by a combination of seed expansion, approximately 75%, increased customer yield at approximately 15%, and tier upgrades at approximately 10%, Seat strength this quarter was driven in part by a large expansion with a strategic customer as well as growing traction with our Duo offerings. As we have mentioned, expect these ratios to fluctuate quarter to quarter based on the composition of the underlying renewal portfolio. Total RPO grew 40% year over year to $945 million while CRPO grew 35% year over year to $579.2 million We encourage investors to look at these metrics over a multi-quarter period. Non-GAAP gross margin was 91% for the quarter. The team has maintained a best-in-class gross margin even as our SaaS business has quickly scaled driven in part by GitLab dedicated. SaaS now represents 29% of total revenue and grew 36% year over year. We ended the year with 2,375 team members. An increase of 12% over FY2024. The majority of the hiring was in sales for additional sales capacity and in R and D. Once again, we saw a significant increase in operating leverage. Q4 non-GAAP operating income was $37.4 million compared to $13.2 million in Q4 of last year. Similar to previous quarters, we dropped our revenue outperformance to bottom line which, in combination with the team's focus on execution, translated to a record quarterly non-GAAP operating margin 17.7% compared to 8.1% of Q4 last year. This is an increase of more than 960 basis points year over year. Q4 FY2025 adjusted free cash flow was $62.1 million compared to $24.5 million in the prior year period. Cash from operating activities was $63.2 million in the fourth quarter compared to $24.9 million in the prior year period. Now turning to guidance. Guidance assumes that the macroeconomic environment we've been operating in over the last year stays consistent. In addition, we have completed our annual stand-alone selling price analysis. Or SSP. Which determines the upfront revenue recognition rate for license revenue. Year over year, SSP has no material impact on revenue allocation and is included in today's Q1 and FY2026 guidance. For the first quarter of FY2026, we expect total revenue of $212 million to $213 million representing a growth rate of 25% to 26% year over year. We expect a non-GAAP operating income of $21 million to $22 million. And we expect a non-GAAP net income per share of $0.14 to $0.15, assuming 172 million weighted average diluted shares outstanding. For the full year FY2026, we expect total revenue of $936 million to $942 million representing a growth rate of approximately 24% year over year. We expect a non-GAAP operating income of $109 million to $114 million and we expect a non-GAAP net income per share of $0.68 to $0.72 assuming 173 million weighted average diluted shares outstanding. Before I move on, I have two final points on guidance. First, in Q1 FY2025, we invested $15 million in a global gathering our team, that will not recur in FY2026. As a result, we anticipate non-GAAP operating margin to be flat from Q1 to Q2 FY2026. Second, with the conclusion of the bilateral advance pricing agreement or BAPA, with IRS Netherlands' Dutch tax authority beginning in FY2026, we will be applying a 22% long-term non-GAAP projected tax rate. The new 22% rate is included in both Q1 FY2026 non-GAAP net income per share guidance. This rate reflects a new location of our IP in the US following the conclusion of our BAPA. It does not imply any incremental increase on actual cash taxes paid. Separately, I would like to provide an update on Jehu. Our China joint venture. In Q4 FY2025, nine GAAP expenses related to Jihu were $3.2 million compared to $3.8 million in Q4 of last year. Our goal remains to deconsolidate Jihoo However, we cannot predict the likelihood or timing of when that may potentially occur. Thus, for FY2026 modeling purposes, we forecast approximately $18 million of expenses related to Jehu, compared with $13 million In summary, Q4 was a strong close FY2025, a year which we saw tremendous demand for GitLab Ultimate, achieved triple-digit growth with Dedicated, acquired strategic capabilities and security with Oxi and Resilient, delivered both DuoPro code assistance and Duo Enterprise. Injecting AI throughout the entire software development life cycle. And we announced key integrations with Google and AWS. All this sets us up for a strong FY2026, and I'm excited for the year ahead. Thank you for joining us today. With that, I'll turn over the call to Kelsey who will moderate the and a.

Great. Thanks, Brian. At this time, if you'd like to ask a question, please use the raise hand function. Or if you join via phone, you may press star nine. Please limit yourself to one question, and we'll take our first question from Karl Keirstead at UBS. Karl, are you there? Chelsea, did we hear Karl?

Yep. Can you hear me?

You're almost there. Yep. You're back. Go ahead. Okay.

Yep. Sorry about that. Congrats on the nice results, particularly the NRR mix from a seat expansion stood out to me. But Bill and Brian, I'd love to ask about the cogen space. Maybe Brian, if you can offer any even qualitative color about and then, Bill, just maybe a question for you about the market development. It sounds like you've had some good success. You called out obviously, Barclays and kept Gemini. Among others. But the co-gen market from our vantage point is looking increasingly competitive with obviously, GitHub Copilot, but you've got some stand-alone tools like Cursor that are already at $100 million in revenues. Even Anthropic is launching their own version of Claude Code How do you differentiate Duo Enterprise in what's likely to be a more competitive co-gen market throughout the year? Thank you.

Thanks, Shar. I'll start I'll start first and appreciate the question. This quarter, we're really pleased with the performance of Duo. It exceeded our expectations again this quarter. You know, if you looked at the deals that included Duo, about a third of that was Duo ARR. Versus the total ARR. And so once again, people are buying enough licenses to match the ultimate licenses that they have, you know, within the purchase On the prepared remarks, Bill mentioned a number of customers Yeah. We had Barclays this quarter, CACI,

Great. Thank you. Thanks for the question, Karl. Kash Rangan from Goldman Sachs, you're next.

Hey. Yeah. Thank you very much. Congrats, on your first full quarter of the company. Clearly, your tone sounds quite encouraging. You're encouraged by AI. Duo and the work the the workflow. Agentic technology and also the the impact of pricing. There's some new CRO not to mention that. Yet when I look at the reported results, is there something that is not reported in the reported results that is representative of the broader enthusiasm that you share and also when I look at the guidance, the sequential growth in CRPO, as good as it is in Q4, and the guidance Maybe the the tone there in the financial outlook is not matched by the the tone that you optimistically share with all the changes you make. And granted that it's all super early. It's just one quarter, and, hopefully, it's a very, very long amazing career. But help us understand why the the fundamental conviction in the company is not quite expressed in the financial although I'm sure Brian would agree to disagree with me that you would say that guidance is very, very good. I agree. But maybe there there's some bridge between the optimism and the numbers the way we look at it. If there's something else underneath the surface that is binding your conviction, what is that? Thank you.

Yeah. Thanks, Kash. Well, let me start with how I spent my time. You know, this quarter was an amazing opportunity to get on the road, spend a lot of time with customers, really hear from them what GitLab does for them. I met with more than fifty customers, as I said, and hearing their enthusiasm for GitLab Is really a big component of what makes me excited. We have some fantastic customers as you all know, and they are dependent on us to build their software and to run their business. And it's, you know, it's amazing. What GitLab has built, and I'm just honored to be part of it. I also think that's recognized. If you look at the Magic Quadrant, as I already mentioned, We are known as a platform that's world-class and brings incredible ROI, nearly 500% in three years with a six months payback, And I think our strengths are really you know, well known and and customers are increasingly betting on this platform approach because they see the productivity and efficiency gains that it provides them. I also spend a lot of time with team members. Learning GitLab from the inside. And hearing their conviction, you know, their commitment to our values and our mission And, they're excited to be part of this next chapter of growth. That also think increases my confidence and optimism, you know, for the road ahead. You know, I also do believe, as I just shared when, Karl asked about AI, you know, this is, one of the most exciting times in technology that I've experienced in my career, and I've seen quite a bit from know, the launch of the Internet to the rise of the smartphone and social media and Oden. You know, all the technology waves that we've seen the last couple of decades. I do believe AI represents an enormous opportunity for world transformation and that's driven by software And GitLab is at the heart of building software. So from my perspective, there's no better place to be Certainly, you know, we've got competition. We've got you know, things to navigate as a company to in order to continue to grow at the scale that we're reaching. But I believe those are, you know, challenges that any great competitor would face, and I'm optimistic given what I'm hearing from customers and from team members that we can tackle them and continue to grow.

Great. Thanks for that, Bill. Rob? Owens from Piper Sandler, your question now.

Great. Thanks, Kelsey, and good afternoon, everyone. Bill, we'd love to drill down on some of these conversations that you had with customers throughout the quarter. I think you cited fifty customers, and especially relative to your view about increasing the number of soft developers because I I guess in other areas of the enterprise stack, we're seeing more optimization as a result of AI. And so help us understand kind of the the view of a lot of these customers and why it doesn't creep into a a less developer type of argument versus taking the other side of the coin in terms of increasing the number of software creators. Thanks.

Yeah, Rob. I get that question a lot, actually, mostly from investors. It doesn't come up often from customers, interestingly enough. You know, I think the reality is for many customers, they've always felt resource constrained. The number of engineers in the world has you know, if you think about it as a percent of the world's total population, it's less than a one percent. It's a fraction of one percent that's created all the software in the world that now reaches billions and billions of you know, people around the world every day on their smartphones and through the cloud. And what AI represents is an opportunity to raise the abstraction level again to make it easier than ever to build software. And so that's an incredible, you know, productivity boost. But it also, you know, the process of building software is not just about authoring code. That abstraction is gonna go higher. It's gonna be easier to generate code or write code just like it has, you know, over the last couple of decades. With higher level languages and with the cloud. But it's not just about writing the code. Right? You've gotta ensure that the code is high quality. You've got to make sure it's secure. You've got to make sure it appears to the compliance practices and everything else. And that is what GitLab really specializes in. Not necessarily in the code authoring, although we help engineers do that with our Duo Pro product, But with the entire software management, the entire software life cycle, So we serve a number of personas, not just developers, but all of the roles around the software life cycle. And as I said earlier, I think that's only gonna drive more demand for our platform as more software creators are come about as well as more code is generated.

Great. Thanks, Bill. Next question goes to Matt Hedberg at RBC. Matt, go ahead.

Great. Thanks, Kelsey. Thanks for the the time, guys. And, Joel, congrats on Joining. Look forward to working with you. I had a question on Ultimate. It was a big part of the prepared remarks, and we've seen a pretty dramatic increase in the mix there, which is really great to see. I think it really resonates especially the ops piece. I'm wondering, you know, you talked about a couple of nice wins and a couple of upsells there. Yeah. How should we think about the sustainability? Because it's it's done quite well on on an improvement in mix over the last year. Is that something that you think continues into into fiscal twenty six? And maybe just, like, if you could summarize, you know, the one or two items why customer so drawn to Ultimate, I think that would be helpful.

Hey, Matt. This is Brian. Thanks for the question. You know, super happy with the old performance. You know, as we said, it's now 50% of the total ARR. And that is even with the price increase. It's it's doing that well. And the reason why people are attracted to Ultimate are really for security and compliance. And so, you know, the payback period is less than six months. ROI is over 480% in three years. And, you know, we're really seeing the strength of the enterprise come into ultimate. Yeah. We talked about know, in 4Q, we had the most first orders greater than 100k in company history, and obviously, that's mostly ultimate. And so there's a there's a number of reasons why people come into in Ultimate. We're getting more and more lands on Ultimate, and it's really for, you know, the payback period, the time to value, the ease of use, deposit business outcomes.

Great. Thank you. Next question goes to Joel Fishpoint. At Truist.

For taking the question, and congrats on the great results. I I guess it's a question for both of you guys. You know, congrats on hiring Ian, to be your CRL. I'm just curious to see if there's you expect any significant changes to go to market, sales comp, any of that, and is that already baked into the guidance you've given? Thanks.

Yeah. Thanks, Joel. I'm really excited to bring on Ian. I spent know, quite a bit of time this quarter meeting with nearly a dozen candidates looking at all different kinds of profiles of CROs, different stages of their career. I got a lot of help from the board as well, and some pretty wise directors who spent a lot of time in as well as members of the management team. And Ian really represents an amazing profile for GitLab. You know, he's spent his career in the trenches He's been an account executive. He's been a sales manager. He's been a region leader and a CRO. He's opened new regions, expanded into countries, driven partner channel, You've built territories and compensation models. And he's a strong operational and analytical operator. I really believe he's gonna bring a level of of rigor our go to market strategy as we plan beyond the billion mark to scale the business. He starts with the customer success and the market opportunity in mind, and he maps that back to individual contributor success. As he builds out the go to market strategy. So I'm really excited to bring that into the company I believe it will only build on the strengths that we already have from a go to market motion perspective perspective and help us continue to scale as we grow. In terms of go to market changes, really, I think they're mostly incremental at this point. We are incentivizing, as I mentioned, on first orders, to increase our ability to win new customers. We're starting a small new inside sales team who's also focused on landing new customers. We're looking at global expansion to ensure that we're capturing the opportunity around the world. And we're continuing to invest in our partner ecosystem. To ensure that can get their leverage. In driving expansion as well. So we just finished up last week. Our company kickoff. And our sales kickoff. Whole organization's aligned around our goals now, and think as Ian comes on with the start of Q2, it'll only continue to help us achieve our objectives.

Great. Thanks, Bill. Next question goes to Derek. What it Cowen. Derek, go ahead.

Great. Thanks. And, Brian, 18% operating margin in Q4. Congrats. That is impressive. And really just leads me to wanna ask about the the balance of growth investments versus margin expansion. You're thinking about at n calendar twenty twenty five versus the last couple of years. Given that you've had such a big improvement on margins and I know Bill mentioned some things that you're doing on the R and D side, but would just looking to double click on the go to market side. Just get a sense of, you know, how active you have been in in building up sales capacity, how you're thinking about, you know, driving more growth to make sure you've got the the the right growth and capacity going forward. And I know, Bill, you just mentioned some of the some of the you're making, but just would would love to hear about the balance of investment and growth and and margins. Yeah. So let me, let me jump in just on the margin profile. You since we've gone public, we've been you know, we've the number one thing to do our number one objective is growth, but we'll do that responsibly And, you know, we've been doing that quarter after quarter and so we want to invest and grow to the extent we exceed what our in internal estimates are, that typically falls to the bottom line. And so we've been doing that, you know, quarter over quarter. We had a roughly a thousand base points improvement year over year. And so way we set our model up for next year is the same. When we look at investing in go to market you know, dollars, it is pretty much you know, we have the management built out, we have the second layer of management built out, And so the hires are pretty much in capacity. And we have a pretty deep sales capacity planning model where depending upon what we do in a quarter, You know, we'll hire certain amount of reps, you know, based on time to ramp. And it's driven really on a quarter by quarter basis. And so the biggest investments that we're making next year or this year that we're in is sales capacity and in engineering. From an engineering standpoint, it's really a focus on AI and increase in the feature functionality across the platform, you know, you know, with a focus towards security.

Great. Thanks for the question. Next question goes to Koji Aikida at Bank of America. Koji, go ahead.

Yeah. Hey, guys. Thanks thanks so much for taking the questions. I wanted to ask about how you drive strong utilization of the GitLab platform offering, across the DevSecOps work workflow. And and the reason why I asked that is I totally get that you can sell the premium and ultimate versions from a high value proposition consolidation theme. But but how do you drive higher utilization of the platform? And does utilization of the platform need to come first, and is that the key to unlock adoptions of add ons like Duo, and Agile Planning. You.

Yeah. I'll jump on that. This is Bill. Thanks, Koji. You know, our approach to helping customers realize value or as you describe it, utilization to realize that value is really a full team approach. As well as a partner approach. So as we engage customers, one of the things that we like to do as part of the contract renewal or the first order. To build out a customer success plan where we identify their objectives and, you know, how they want to adopt the platform, the resources and time frames that they have in mind, And know, for in particular, for our larger enterprise customers where there's a lot at stake, We often talk about new offerings that we have both in terms of customer success, dedicated customer success resources available to them as well as professional services that could help them with that adoption journey. In addition, we have a number of technical partners who we can bring into the conversation or our customers can tap into to help them with their DevSecOps journey, both with the technical migration as well as the practice of DevSecOps, you know, often requires process and organizational changes in order to fully realize the value. And our partners are well utilized by our customers as well. You know, I guess I'll I'll also share Our approach to help customers basically, meet customers where they are also plays a a large role with the GitLab adoption experience. We're we're the only software provider in this category that allows customers to run the software on premise in air-gapped, know, environments. In their own cloud or in a public cloud. So that makes the transition to run GitLab as a DevSecOps platform perhaps a little smoother and easier for customers in particular for high regulatory environments Or compliance such as government or financial institutions.

Next question goes to Kingsley Crane at Canaccord Genuity. Kingsley, go ahead.

Hey, thanks. Just to expand on that, it's nice to hear that you're expanding customer success initiatives in fiscal twenty six. Sounds like it's also a a big focus for Ian. So just to double click, what's the state of that organization today? How much transformation do you think needs to occur, if any, or is it really just about finding more scale and adding more resources to the existing framework? Thanks.

Yeah. Thank you very much, the latter. As I mentioned, spent a lot of time with customers, and, of course, with that comes a lot of time with the field and really impressed with our go to market organization. With, you know, their commitment to customer success and and and and to get that into our mission. So the the team's been performing really well. But this is an opportunity to bring in another level of leader with that deep sales background experience. And the operational and analytical skill to help us scale beyond the billion dollar mark that we're currently putting in the crosshair. So really excited for Ian and what he brings to the organization.

Next question goes to Greg Moskowitz at Mizuho. Greg, go ahead.

Great. Thanks, Kelsey. Hi, everyone. Bill, it's encouraging that every customer you've met with so far is actively evaluating the incorporation of AI tools into their DevSecOps strategy. If you were to look out, maybe a couple of years from now, how often might you expect or might we expect, GitLab to upsell in entire DevOps workforces to Duo Pro or Duo Enterprise versus a mix and match type of outcome. How do you see this evolving?

Yeah. It's a good question. You know, I think of AI as because becoming an essential part of the developer experience. Both through code creation as well as every stage of the life cycle. That's why we're investing in that right now with our duo enterprise and our duo workflow products, injecting AI at every stage I I don't think a few years from now, developers will be building software without AI.

Great. Next question, please, goes to Sanjit Singh at Morgan Stanley. Sanjit, go ahead. Okay. Maybe we'll get you back in the queue again. Next question goes to Pinjalim Bora at JPMorgan.

Great. Angela, are you on muted?

Yeah. Can you hear me?

Thanks.

Yep. Yeah. Thank you. Thank you for taking the question. Brian, just two Parker for you. Could you maybe talk about the the assumptions around the guidance, especially around NRR has kind of reached around 123%. I'm trying to think if if we have reached kind of a trough. Are you seeing underneath kind of the seed growth stabilizing? Are you expecting any kind of a ramp? And then lastly, what did you see with respect to the pricing benefit in twenty five versus your initial expectations, and are you baking in any for for fiscal twenty six?

Yeah. So thanks for the question. Let me let me start off with pricing. You know, we exceeded our expectation through through, and so we expect the same amount of incremental impact next year as we did this year. If you look at you know, we we'll get everything that we got this year plus we'll get incrementally what we got last year, this year as well. And so we're about halfway through the pricing impact. That is factored into our guidance, and so you know, when we looked at this quarter, compared to the prior two or three quarters, they've been consistent, you know, it's still people a cautious spending environment out there. But there is consistency. And so, you know, we've had less standard deviation when we do the bottoms up build. And, you know, we looked at guidance from several different angles. We did a field a roll up. The CR leadership team did a roll up, and then we do one in our FP and A team. And you know, based on all the historical numbers and trending and pipeline and so forth, And so we use that to come up with guidance. There's been no change in our guidance lawsuit.

Great. Next question goes to Ryan McWilliams at Barclays. Ryan, go ahead.

Hey, guys. Thanks for taking the question. Following the third quarter strong public sector deal result, any update on your public sector business and pipeline under this new administration? And there any extra conservatism baked into your guide for the sector for this year? Thanks.

You know, great question. And, you know, we debated this a lot internally for the call. You know, we don't know what we don't know. PubSec makes up roughly about 12% for total ARR. What we do as a platform helps people become more efficient and actually save money. We've gone through the payback stats and ROI stats, And so, you know, our biggest quarter you know, in pubsec is third quarter. We're watching closely with the team, but we assume no changes at this time.

Great. Our last question will go to Nick Altman at Scotiabank. Nick, go ahead.

Awesome. Thanks, guys. There was some great commentary around the dedicated SKU and so can you just talk about the underlying drivers there and why dedicated is resonating with those larger customers? And then going forward, kinda going back to Matt's question around the ultimate ARR mix this year, how impactful can can dedicated be to that that ultimate mix moving higher? You.

Yeah. Thanks, Nick. Good question. Dedicated really is doing well. It grew more than 90% year over year in Q4. I think that's really driven off of the fact that we're the only ones in our category that can provide that single tenant SaaS offering. It's a really important competitive advantage. As you know, when customers adopt Dedicated, it also does drive an ultimate upgrade for us. So they get the full value of the complete platform And it's, particularly valuable for You know, certain verticals in particular where there's complex security and compliance requirements. So I'm thinking about industries like embedded software, financial services, and the public sector. We see a lot of potential to move our large self-managed customers to this dedicated SaaS offering. As time goes on, know, for example, Delta, an existing customer, chose dedicated as part of their cloud transformation this last quarter. So I believe we'll continue to see that opportunity, and it's really driven off of our unique competitive advantage.