GTLB gives up recent gains as guidance fails to impress
AInvestMonday, Mar 4, 2024 4:54 pm ET
2min read
GTLB --

GitLab, a leading software development platform, reported strong Q4 earnings for the fiscal year 2024, demonstrating resilience in the face of market headwinds. Shares tumbled 12% in reaction as the company"s outlook failed to impress following a 20% rally into its report. The stock is coming back to test important support around its $60 level. 

Gitlabs (GTLB) released its earnings report for the fourth quarter (Jan) of the fiscal year 2024, exceeding market expectations. The company reported earnings per share (EPS) of $0.15, surpassing the consensus estimate of $0.08. Additionally, revenues grew by 33.3% year over year, reaching $163.8 million, beating the consensus estimate of $157.89 million.

One notable achievement during this period is the increase in customers with more than $1 million of annual recurring revenue (ARR). There were 96 such customers, representing a significant 52% growth compared to the previous year's fourth quarter. This growth in high-value customers demonstrates the company's ability to attract and retain larger contracts.

Gitlabs also reported a Dollar-Based Net Retention Rate of 130% for the fourth quarter of fiscal year 2024. This metric indicates the company's success in expanding revenue from its existing customer base, as it signifies that customers are increasing their spending over time.

In terms of contracted and recognized revenue, Gitlabs showed substantial growth. Total RPO (contracted but not recognized revenue) increased by 55% year over year, reaching $674 million. Additionally, cRPO (current contracted but not recognized revenue) grew by 40% to $430 million within the same timeframe. These figures indicate the robustness of the company's order backlog and its potential for future revenue recognition.

Looking ahead, Gitlabs provided guidance for the first quarter (Apr) of fiscal year 2025. The company expects EPS in the range of $(0.05)-$(0.04), lower than the consensus estimate of $0.06. Similarly, Gitlabs anticipates revenues in the range of $165-166 million, slightly exceeding the consensus estimate of $161.75 million. While the guidance suggests potentially weaker financial performance for the next quarter, the company maintains a positive revenue forecast.

In terms of guidance for fiscal year 2025, Gitlabs expects EPS between $0.19 and $0.23, compared to the consensus estimate of $0.35. Similarly, revenue guidance for the fiscal year stands at $725-731 million, slightly below the consensus estimate of $730.21 million. Despite the conservative outlook, the company still projects healthy revenue growth for the upcoming year.

Following the earnings release, Gitlabs' shares declined by 12%. It is essential to consider that market reactions to earnings reports can be influenced by various factors, including investor expectations, market conditions, and broader industry trends.

In summary, Gitlabs has delivered solid financial results in its latest earnings report, surpassing analysts' expectations for both EPS and revenue. The company has demonstrated strong customer growth, particularly among higher-value customers. The Dollar-Based Net Retention Rate indicates positive customer engagement and expansion opportunities. Gitlabs' guidance for the next quarter and fiscal year suggests more modest growth, which may have contributed to the decline in the stock price. Nonetheless, Gitlabs remains well-positioned to capitalize on its robust order backlog and maintain revenue expansion in the long term.


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