Shares of the DevOps company GitLab Inc. headed lower in extended trading today, even though the company beat Wall Street’s expectations with its latest financial results and offered strong guidance.

The company reported a second-quarter net loss of $59 million, up from a $40.2 million net loss in the same period a year earlier. It logged a loss before certain costs such as stock compensation of 15 cents per share, beating Wall Street’s consensus estimate of a 23-cent-per-share loss.

GitLab also reported revenue of $101 million, up by an impressive 74% from a year ago and well ahead of Wall Street’s forecast of $94.4 million. Following the report, GitLab’s stock fell just over 2%, adding to a smaller decline earlier in the day.

GitLab is one of the pioneers of DevOps, enabling companies to adopt a modern strategy of rapid, continuous software updates by combining their developer teams and information technology operations staff. Using GitLab’s tools, developers can share code more easily and create new applications much faster than before.

GitLab co-founder and Chief Executive Sid Sijbrandij (pictured) said the company is continuing to see strong momentum and that today’s results show that the market is embracing its leadership position.

“Enterprises are navigating economic uncertainty while still needing to embrace the imperatives of digital transformation, cloud migration and app modernization,” he said. “Delivering software fast and efficiently in a secure way is essential for success.”

Highlighting its momentum, GitLab reported strong numbers on the customer acquisition front. It said its number of customers delivering at least $5,000 in annual recurring revenue jumped 61%, to 5,864. Meanwhile, customers that generate at least $10,000 in annual sales rose 55%, reaching 593 in total, the company said.

GitLab also reported a dollar-based net retention rate of over 130%. NRR is a key metric that indicates how much revenue growth or churn a company has from its existing customers. Investors like to see a number over 100% because it shows that a company is growing even apart from acquiring new customers.

Holger Mueller of Constellation Research Inc. said that if anyone had any lingering doubts that software rules the world, GitLab’s latest results should set them to rest.

“The company broke the $100 million revenue barrier for the first time on a sales jump of 74%, clearly showing that managing code with DevOps is a recession-proof business,” Mueller said. “The problem for Sid Sijbrandij and his team is that the company’s costs grew almost as fast as revenue did. Even so, the team managed to half its earnings per share losses. If GitLab delivers more quarters like this, investors will show their appreciation.”

Looking to the third quarter, GitLab said it’s anticipating revenue of between $105 million and $106 million, with losses coming to 15 to 16 cents per share. That compares well with Wall Street’s forecast of just $103.4 million in sales and a 25-cent loss.

GitLab also raised its full-year guidance. For fiscal 2023 it now expects revenue of between $411 million and $414 million, up from an earlier range of $398 million to $402 million. Wall Street is still looking for full-year revenue of $402.8 million.

The company’s shares fell about 1.4% in after-hours trading following a 1.9% decline in regular trading.

Photo: SiliconANGLE