Key Stats for Gitlab Stock
- Today’s Price Change: -13%
- Current Share Price: $42
- 52-Week High: $74
- GTLB Stock Price Target: $70
What Happened?
GitLab (GTLB) stock is down almost 13% after the software development platform provider delivered mixed quarterly results and issued guidance that fell short of investor expectations.
While Gitlab beat fiscal Q1 earnings and revenue estimates, its forward-looking guidance disappointed the market.
For fiscal Q2, GitLab expects revenue of $226-$227 million, with the midpoint slightly below the consensus estimate of $227.05 million.
It maintained its full-year revenue guidance range of $936-$942 million, which essentially matches analyst expectations of $941.69 million. However, GitLab raised its full-year EPS guidance to $0.74-$0.75 from the previous range of $0.68-$0.72.
It reported Q1 revenue of $214.5 million, representing 27% year-over-year growth, which decelerated from the 29% growth rate in the previous quarter.
While GitLab beat consensus estimates for both revenue ($213.21 million expected) and EPS ($0.15 expected vs. $0.17 actual), the deceleration in growth and conservative guidance appear to have concerned investors.
Despite strong underlying metrics, including 40% growth in total remaining performance obligations to $955.1 million and a healthy 122% dollar-based net retention rate, the market focused on the slowing growth trajectory and cautious forward outlook.
See GitLab’s full analyst estimates, earnings results, and earnings transcript (It’s free) >>>
What the Market Is Telling Us About GTLB Stock
The sharp decline in GTLB stock suggests investors are becoming increasingly sensitive to any signs of deceleration in the high-growth software sector, particularly for companies trading at premium valuations.
The drawdown in GitLab stock indicates the market had higher expectations for both near-term guidance and growth momentum.
However, its strong profitability metrics tell a different story. GitLab achieved a record 49% adjusted free cash flow margin and a 12.2% non-GAAP operating margin, representing a 1,400 basis-point improvement year-over-year.
CEO Bill Staples emphasized GitLab’s position as “the only AI native cloud agnostic model neutral DevSecOps platform,” highlighting their competitive differentiation in the rapidly evolving AI development space.
The market reaction appears to reflect concerns about the sustainability of growth rather than fundamental business health.
GitLab’s AI-driven DevSecOps platform continues to gain traction, with strong adoption of its GitLab Duo AI features and expanding penetration of the Ultimate tier.
A focus on profitable growth and strong cash generation suggests that the business fundamentals remain solid, despite the moderation in growth rate.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
