Gitlab Rises 1.5% on Solid Q3 Results, Offers Guidance

Shares of California-based Gitlab, Inc. (NASDAQ:GTLB) gained 1.5% in the extended trading session on Tuesday after the company reported strong results for the fiscal third quarter ended October 31.

Gitlab operates The DevOps Platform that empowers organizations to maximize the overall return on software development by delivering software faster and efficiently while strengthening security and compliance.

Gitlab Earnings and Revenue

Gitlab reported earnings an adjusted loss of $0.34 per share, narrower than the Street’s estimate of a loss of $0.48 per share and the year-ago loss of $0.44 per share.

Revenue increased 58% year-over-year to $66.8 million, exceeding analysts’ expectations of $59.24 million.

Annual Recurring Revenue

The number of customers with more than $100,000 of ARR (Annual Recurring Revenue) jumped 73% year-over-year to 427 and customers with an ARR of over $5,000 rose 66% to 4,057.

Margins

Adjusted gross margin increased to 90% from 89% in the third quarter of the last fiscal year.

Management Comments

The CFO of GitLab, Brian Robins, said, “We are pleased with our Dollar-Based Net Retention of over 130% and the positive business outcomes we continue to drive for our customers across all verticals around the world. The market for DevOps platforms is underpenetrated, and as a pioneer of The DevOps Platform, GitLab is well-positioned to make the most of the substantial market opportunity before us.”

The CEO of GitLab, Sid Sijbrandij, said, “As we look to the fourth quarter and Fiscal Year 2023, we see continued strong momentum toward our large addressable market.”

Outlook

Along with the third-quarter results, the company has also issued guidance for the fourth quarter and Fiscal Year 2022.

It expects revenue to range from $69.5 million to $70.5 million in the fourth quarter and adjusted loss to be around $0.25 per share to $0.26 per share.

The Street expects GitLab’s revenue and loss to come in at $63.92 million and $0.27 per share, respectively, during the quarter.

For Fiscal Year 2022, the adjusted loss is expected to lie between $1.42 per share and $1.43 per share and revenue in the range of $244 million to $245 million against the consensus revenue estimate of $231.18 million.

Wall Street’s Take

After the release of the third-quarter results, Piper Sandler analyst Rob Owens maintained a Hold rating on the stock and lowered the price target to $100 from $120 (22.3% upside potential).

In a research note to investors, Owens said, “While some investors may have been looking for a larger beat, the print sets up the company for a consistent beat and raise cadence from here.”

Further, Cowen & Co. analyst Derrick Wood reiterated a Buy rating on GitLab but reduced the price target from $145 to $130 (59% upside potential).

Wood said, “The company continues to see growing initial deal sizes and robust expansion as its DevOps platform strategy takes hold.”

Overall, the stock has a Moderate Buy consensus rating based on 6 Buys and 4 Holds. The average Gitlab Stock forecast of $124.89 implies 52.8% upside potential. Shares have lost 21.3% over the past year.

Website Traffic

TipRanks’ Website Traffic Tool, which uses data from SEMrush Holdings , the world’s biggest website usage monitoring service, offers insight into GitLab’s performance.

According to the tool, compared to the previous year, the company’s website traffic registered a 22.3% decrease in global visits in November. However, the website traffic has increased 7.8% year-to-date against the same period last year.

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