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GitLab reported better-than-expected fiscal Q1 results in early June, along with an increase in its fiscal ’25 total revenue outlook. Despite this positive news, the stock has seen a drop of up to 10% since the earnings report. The company now anticipates FY’25 total revenue of $733 million to $737 million, up from the previous forecast of $725 million to $731 million. Additionally, the FY’25 EPS outlook has been raised to 34 cents to 37 cents, exceeding the prior guide of 19 cents to 23 cents.

In the April quarter, GitLab’s total revenue reached $169.2 million, surpassing the consensus estimate of $165.9 million by 2%. Subscription revenue, which accounts for 89% of the total revenue, increased by 36%, compared to 35% growth in the previous quarter. Adjusted free cash flow was $37.4 million with a 22% margin. The company also saw growth in its total RPO and current RPO, indicating a positive trend in its revenue generation.

GitLab currently has 8,976 base customers with annual recurring revenue (ARR) of at least $5k, a 21% increase from the previous year. The number of customers with ARR over $100k also rose by 35% to 1,025. The company’s dollar-based net retention rate in FQ1 was 129%, slightly down from 130% in the previous quarter, driven by seat expansion, price hikes, and tier upgrades. Additionally, GitLab’s AI capabilities are a significant differentiator for the platform, extending beyond coding and development to areas such as planning, security, and operations.

The company recently released GitLab Duo Chat into general availability, providing customers with a conversational AI interface that enhances their understanding of projects and boosts productivity. GitLab’s next AI add-on, GitLab Duo Enterprise, combines developer-focused AI features with enterprise-focused capabilities to facilitate faster collaboration on joint projects. While some Wall Street firms have adjusted their price targets for GitLab, many remain optimistic about the company’s growth potential and market position in the DevSecOps category.

Despite the stock’s recent decline, GitLab’s performance and outlook signal continued growth and innovation. Investors and analysts are still bullish on the company’s ability to capture market share and accelerate subscription revenue growth. With a strong focus on AI advancements and expansion of its platform offerings, GitLab remains well-positioned to meet the evolving needs of organizations in the software development and security space.

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