In a significant market move on Wednesday, shares of GitLab have experienced a notable spike, rising by 18% in premarket trading. This surge follows the company’s announcement to elevate its full-year financial outlook, paired with impressive fiscal second-quarter results that surpassed market expectations.
GitLab, a prominent player in the code-hosting and DevSecOps arena, has provided revised guidance that is garnering considerable attention from investors. For the fiscal year 2025, GitLab anticipates its per-share adjusted earnings to fall between $0.45 and $0.47. This revised forecast marks a marked improvement from its previous guidance, which had estimated adjusted earnings per share (EPS) in the range of $0.34 to $0.37.
Interestingly, the current consensus on Capital IQ suggests that analysts were expecting EPS of $0.48, indicating GitLab is on a potentially robust earnings trajectory. The company’s revenue projections have also been upgraded, now expected to be between $742 million and $744 million for the ongoing fiscal year, an increase from the earlier estimates of $733 million to $737 million.
The market is currently looking for revenue around $745.6 million, suggesting that GitLab may continue to outperform in this area as well. During a recent earnings call, Chief Financial Officer Brian Robins articulated confidence in GitLab's capacity to exceed customer expectations, especially as opportunities with Artificial Intelligence (AI) promise to accelerate positive business outcomes.
In terms of performance metrics for the three-month period ending in July, GitLab's adjusted earnings per share showed a remarkable increase, climbing to $0.15 from just $0.01 in the same quarter last year. This figure well exceeded market expectations, which had predicted earnings of $0.10 per share.
Revenue for the quarter rose by an impressive 31% year-over-year, reaching $182.6 million, comfortably surpassing the analyst estimate of $177.2 million. The increase in subscription revenue has been particularly noteworthy, rising to $163.2 million compared to $122.1 million from the previous year.
Additionally, the company saw a rise in license sales to $19.4 million from $17.5 million in the prior-year quarter, reflecting strong demand across its service offerings. A key indicator of GitLab’s growth is the increase in customers with annual recurring revenue exceeding $100,000, which has surged by 33% year-over-year to reach 1,076.
Moreover, the company reported a dollar-based net retention rate of an impressive 126% during the same quarter, indicative of strong customer loyalty and upsell strategies. Total remaining performance obligations reached $747.9 million, a 51% increase compared to the year prior, further underscoring the company's solid growth trajectory.
Looking ahead, GitLab anticipates its adjusted EPS to fall within the $0.15 to $0.16 range for the upcoming quarter, with revenue expectations set between $187 million and $188 million. Current market estimates suggest normalized EPS of $0.16 and revenue of $188.3 million for the same period. With shares currently trading at $52.21, reflecting a change of +7.53 and a percentage increase of +16.85 since the previous market close, GitLab’s performance in this quarter not only illustrates the efficacy of its business model but also highlights its significant potential moving forward..