UPDATED 19:36 EDT / DECEMBER 04 2023


GitLab beats expectations, delivers first-ever profit, and its stock jumps

Shares of the developer tooling company GitLab Inc. shot up in extended trading today after it posted third-quarter earnings and revenue that beat expectations and offered strong guidance for the current period.

The company reported earnings before certain costs such as stock compensation of nine cents per share on revenue of $149.7 million, up 32% from a year earlier. That was well ahead of Wall Street’s call for a one-cent-per-share loss on sales of just $141.5 million.

All told, GitLab delivered a net loss of $286.3 million, rising from the $50.4 million loss it recorded one year earlier. According to the company, the bigger loss was attributable to a one-time income tax adjustment that skewed the numbers.

The report marked the first occasion that GitLab posted an adjusted operating profit, and if that wasn’t enough, officials said they see more of the same in the current quarter. The company said it’s looking for fourth quarter earnings of eight to nine cents per share on sales of between $157 million and $158 million. That contrasts well with the Street’s call for a one-cent loss on sales of just $150.2 million.

Investors clearly liked what they saw, as the company’s stock gained more than 16% in extended trading.

“We continue to grow responsibly and delivered over 2,200 basis points of non-GAAP operating margin expansion,” GitLab Chief Financial Officer Brian Robins said in a statement.

GitLab is a pioneer of the DevOps industry. Its software allows 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 faster than before.

The company, which went public in 2021 and now runs fully remotely, said it ended the quarter with 874 customers that generated at least $100,000 in annual recurring revenue, up 37% from a year earlier.

In a conference call with analysts, GitLab co-founder and Chief Executive Sid Sijbrandij (pictured), said the company had managed to entice many of those new customers from its chief rival, the Microsoft Corp.-owned GitHub. However, we warned that many of its smaller and medium-sized customers remain cautious about spending amid the current economic climate.

During the summer, GitLab released a new tool called GitLab Duo, which enables what the company said are artificial intelligence-powered DevSecOps workflows. “It focuses on everything from helping you in planning all the way through coding, securing and deploying. It’s because GitLab is in a DevSecOps platform. It covers the entire DevSecOps lifecycle,” GitLab Chief Product Officer David DeSanto said last month in an interview with theCUBE, SiliconANGLE Media’s video studio.

On the call, Sijbrandij said this tool won’t have an immediate impact on the company’s financial results but promised that it will make a real difference in subsequent fiscal years. He also revealed that his team is holding talks with Amazon Web Services Inc. about integrating that company’s Amazon Q work assistant with its products. Amazon Q was one of the flagship products announced by the cloud computing giant at last week’s re:Invent 2023 conference.

Excluding today’s after-hours move, GitLab’s stock had already gained 16% in the year to date, just off the pace of the wider S&P 500 Index, which is up 19% over the same period.

Photo: SiliconANGLE

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