People celebrate Gitlab IPO on Nasdaq, October 14, 2021.
Source: Nasdaq
Shares of GitLab surged 33% on Tuesday, after the code-deployment software provider reported a narrower-than-expected loss and raised its full-year forecast.
The stock was heading for its best day since the GitLab 2021 Nasdaq debut. It’s still 65% below its peak in November of that year, a month when tech stocks hit record highs. After that, investors began shifting money away from riskier assets, which were threatened by slowing growth and rising interest rates.
GitLab’s revenue for the quarter ended April 30 rose 45 percent to $126.9 million from $87.4 million a year earlier. The company had an adjusted loss of 6 cents per share, according to a statement. Analysts polled by Refinitiv had expected sales of $117.8 million and an adjusted loss of 14 cents.
GitLab’s net loss widened to $52.9 million from $26.6 million in the year-ago quarter.
For fiscal 2024, GitLab sees an adjusted loss of 14 cents to 18 cents on revenue of $541 million to $543 million. Analysts had expected an adjusted loss of 26 cents per share and sales of $532.6 million. In March, GitLab called for an adjusted loss per share of 24 cents to 29 cents on revenue of $529 million to $533 million.
During the quarter, GitLab raised the price of its premium tier from $19 per user per month to $29 per month.
“To date, customer churn has remained unchanged for premium customers renewed in April,” GitLab finance chief Brian Robbins said on a call with analysts on Monday. He added that average annual recurring revenue per customer was “up against our expectations.”
Sid Sijbrandige, CEO of GitLab, said additional revenue could come from the annual artificial intelligence add-on, which is billed annually at $9 per user per month.
Sijbrandij, who founded the company a decade ago, had some inspiring personal news to share. Three months after announcing his decision to undergo treatment for osteosarcoma, Sijbrandage said on the call that he was “very excited about the future of the company” and that he was “holding on to my role as CEO and chairman.”
The business still has challenges. During the quarter, sales cycles took longer than usual, and customers reduced the number of seats they purchased, Robbins said.
But the financial numbers have led many analysts to raise their price targets on GitLab stock.
“The quarter was stronger than expected, and the company was able to maintain a very positive and conservative outlook – in contrast to last quarter,” Piper Sandler analysts Rob Owens and Ethan Weeks said in a note to clients.
The analysts raised their price target to $52 from $50, equaling a buy rating on the company’s stock. Shares of GitLab were trading at $47 mid-afternoon New York time.
See: The slowdown in IT spending is not reflected in technology revenue, said Jefferies’ Brent Till.
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