Karl Keirstead: Okay. Congrats on the good results.
Sid Sijbrandij: Thanks, Karl.
Sharlene Seemungal: Next, we have Matt from RBC
Matthew Hedberg: Great, guys. Thanks for taking my questions, Sid, you look great too, so that’s — it’s really good to see that as well. I wanted to ask about — I think, Brian, your comment was customer behavior and the premium price increases in line with expectations. I just wanted to double click on that a bit. What does that mean? Does that mean that they’re just — they’re effectively taking the price increase? Are you seeing any — I know it’s not a factor, but typically that you’ve talked about, but are any moving to Ultimate? Just maybe a little bit more color on what in line with your expectations means?
Brian Robins: Yeah. Absolutely, Matt. When we did the price increase, we did an internal model that looked at bookings, churn, and we came up with what we thought our forecast would be on the overall net bookings. And so I would say overall bookings is more positive than our internal forecast and churn is less. And so we’re seeing positive signs on every element of how we modeled it from a bookings and churn perspective.
Matthew Hedberg: Got it. Thanks. And maybe just a quick follow-up on Dedicated. I believe last quarter, did you have — I think you had two customers, two large customers on Dedicated. I think, Sid, maybe you mentioned that — maybe just a little bit more color on number of customers there if you’re giving that? And then I know there’s a hosting layer to that. But sort of like what are you seeing from a customer spend perspective when they take dedicated?
Sid Sijbrandij: Yeah. I think we’re happy with the pipeline for Dedicated. Right now, you can only get Dedicated if you go for GitLab Ultimate and there is a minimum number of seats. So the list has it that you need 1,000 seats to move to Dedicated. And that’s an attractive offering for like the bigger organizations. We’re happy with the pipeline. There’s been demand, and that demand is coming for the people currently on self-managed. And what they like about this offering, it has the same kind of security of self-managed and that they’re the only customer. They’re completely separated. They can set it up in their VPC, but they don’t have the operational burden. We make sure they’re on the latest version and that everything runs and where the experts at get lab and they don’t no longer need those people internally dedicated to that.
Matthew Hedberg: Got it. Thanks a lot guys.
Sharlene Seemungal: Now we will move to Ryan from Barclays.
Ryan MacWilliams: Thanks for the question. For Sid, for those customers who are evaluating adding large language model features to their DevOps platform today, are they still mostly focused on co-digestions or is there increasingly other considerations at play as these customers get smarter and more in the weeds (ph) on AI?
Sid Sijbrandij: Yeah. I think as customers get more sophisticated, they’re seeing that AI should be throughout the life cycle. As mentioned earlier in this call, like it’s DevSec and Ops, like you need those AI features to make security more efficient. If you just produce more color, that’s not going to do it. And of those developers producing more code, that’s not the only thing they need. So as customers get more sophisticated, they want more AI features, and we’re really happy that we have 10 features out already. The second thing they want is good guarantees of privacy that their inter like property is never going to be used to enhance other people their platform, their intellectual property. So I think in both, we have a really compelling story.
Ryan MacWilliams: Excellent. And then one for Brian. Brian, I know billings and cRPO are not the perfect gauge of your business on a quarterly basis, just given the lumpiness in longer-term contracts. But anything to think about on those two metrics in the quarter just coming off a strong first quarter.
Brian Robins: Yeah, Ryan. In 2Q, when large enterprise clients want to adopt the DevSecOps platform, they typically want to do multiyear deals. We talked about historically where we don’t compensate for that because we didn’t want to drive that behavior with such a high gross retention rate. But we did see a number of multiyear deals in I think it was said earlier, we had the largest deal in company history in 2Q. Once again, big multinational company, just a demonstration of wanting to go to a DevSecOps platform and making a long-term commitment to GitLab.
Ryan MacWilliams: Thanks, guys.
Sharlene Seemungal: And we’ll move on to Mike from Needham.
Michael Cikos: Hey. Thanks for getting me on here, guys. I had two questions, and I’ll take them separately. But if I could first go to Brian I just wanted to make sure I’m kicking the tires here. I know you’re talking in some of your comments to Matt that, hey, net bookings are slightly more positive. Churn is slightly below what you guys had forecast, which is great. But to be clear, like has there been any change as far as your assumption from this price increase to the guide? And can you remind us again, what is the benefit that you are including for this year’s guidance when we think about the benefit from that price increase? And I just have one follow-up for Sid, sorry.
Brian Robins: No, absolutely. Thanks, Mike. There’s been — it’s included in our guidance. And when you walk through the ratable nature of the revenue, it’s very little impact this year. So where we are doing better than expected on the way that we modeled it internally from a bookings and churn perspective. it doesn’t have really any meaningful financial impact this year. We’ll get the majority of the impact next year and then a little the following year.
Michael Cikos: Got it. Thanks for that, Brian. And then for Sid, I just wanted to hash out. I know that we’re all excited for the AI SKU launching later this year. A couple of questions here, but can you help us think about what’s the expected timing? Is it more of a 3Q or 4Q event as well as I think when we’ve spoken about it today and last quarter as well, the main focus that we’ve heard externally is really around code suggestions. And I’m hoping, if you could elaborate a little bit more on maybe some of the additional features or functionality that will be added to that SKU as well or is there a potential actually to have multiple AI SKUs, almost like a good, better, best or separate AI SKUs that you are thinking about rolling out to the market. Thanks.
Sid Sijbrandij: Yeah. Thanks for that. So it’s projected to be generally available later this year. We haven’t made a decision between Q3 or Q4 yet. [Technical Difficulty] It’s likely will also end up coming with a different Q that includes more of the AI features although some of the AI features might be included in the existing alternate package, for example, suggested reviewers is already available to people without paying separately for it. So it’s probably going to be a mix of those things.
Michael Cikos: Perfect. Thank you.
Sharlene Seemungal: We now move to Jason at William Blair.
Jason Ader: Yeah. Thank you. Good afternoon, everyone. I wanted to ask about the user limits on the free tier. Sid, I think you mentioned that — or maybe Brian, you mentioned that. I’m not super familiar with what you did there. Could you just remind us what happened and what the impact has been and what it could be?
Brian Robins: Sid, do you want that? Do you want me to take it?
Sid Sijbrandij: I’ll start off, and you can add to my answer. But the user limits, they don’t apply to self-managed installations. But for people on getlab.com using our free tier, we said, hey, if you have more than five users, you got to switch to a PT (ph). And the reason for that is we have significant costs kind of hosting gitlab.com. So we wanted to be long term sustainable. It is leading to good conversion, although, the majority of those conversions are below the $5,000 base customer cutoff. Brian, anything you want to add?
Brian Robins: Yeah. The only thing I’ll add on top of that, I think you covered most of it was that the free-to-pay conversion is also built into our guidance. And once again, with the ratable nature of revenue recognition, the impact this year will be minimal.
