Key takeaways
- GitLab generated first-quarter adjusted earnings of $0.23 per share, beating analysts’ expectations of $0.21, while revenue reached $264.2 million — an increase of 23% year over year that beat expectations of $254.2 million.
- The outlook for fiscal 2027 has been fully upgraded, with the company now expecting earnings per share in the range of $0.79 to $0.82 on revenue of between $1.112 billion and $1.118 billion.
- The significant restructuring initiative will eliminate approximately 14% of the workforce (about 350 jobs) and will involve withdrawing from 22 countries, incurring $30 million to $35 million in related expenses.
- CEO Bill Staples highlighted the AI-driven “age of agents” as a growth catalyst, emphasizing early momentum from the company’s Duo Agent platform.
- GTLB shares fell about 5.4% during Wednesday’s pre-market session, following Tuesday’s 5.8% decline that took the stock to $31.82.
GitLab (GTLB) beat first-quarter earnings expectations and upgraded its annual forecast, yet shares continued their downward trajectory — here’s the details.
The software development platform reported adjusted earnings of $0.23 per share for the period ending April 30, beating Wall Street expectations of $0.21. This represents growth from $0.17 in the same quarter last year. Total revenue was $264.2 million, up 23% year over year and exceeding the analyst consensus of $254.2 million.
GTLB shares fell 5.8% during Tuesday’s regular session, closing at $31.82, before falling an additional 5.4% in early trading on Wednesday. The stock is down about 15% since the beginning of the year, despite rising 40% last month.
The updated forecast is lower than market expectations
The company raised its full forecast for fiscal year 2027, and now expects earnings per share from $0.79 to $0.82 on revenues ranging from $1.112 billion to $1.118 billion. The analyst consensus was expecting $0.80 EPS and revenue of $1.11 billion.
Look at the second quarter getlab It provided guidance of $0.17 to $0.18 per share on revenue of $272 million to $274 million. Wall Street expected $0.19 per share and revenue of $273.2 million – meaning Q2 earnings expectations were a bit disappointing.
Mizuho Securities increased the price target for GTLB from $26 to $28 while maintaining a neutral stance. The company acknowledged the strong revenue performance but highlighted ongoing concerns, including potential disruption to GitLab’s AI developer bench business model and intensifying competition from AI-first rivals.
Rosenblatt Securities maintained its Buy recommendation with a price target of $43. Needham raised its target to $38. Bank of America raised its target to $32, while RBC was revised to $29.
Major restructuring and geographical consolidation
The company announced plans to reduce its full-time headcount by approximately 14%, affecting approximately 350 workers, while also withdrawing operations from 22 countries. The administration described the move as a strategic reallocation of resources.
Restructuring expenses are expected to range between $30 million and $35 million, with $19 million expected in the second quarter. GitLab expects to complete the reorganization by the end of the fiscal year.
“The age of AI agents creates structural tailwinds for GitLab,” CEO Bill Staples emphasized, highlighting the Duo Agent platform as a cornerstone of the company’s future direction. This platform enables collaboration between human developers and Artificial intelligence agents A complex, multi-step workflow.
Last month, GitLab strengthened its collaboration with Google Cloud. The agreement allows Google Cloud customers to leverage the Duo Agent Platform powered by Google’s Vertex AI infrastructure.
The company does not expect a significant revenue contribution from the Duo Agent Platform during the current fiscal year.
Subscription-based revenue expanded 23% year over year in the first quarter, representing 91% of total revenue. GitLab maintains a gross profit margin of 87% on a trailing twelve month basis.
