We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
The underperformance in GitLab shares can be attributed to modest top-line growth expectations in fiscal 2025 due to the challenging macroeconomic environment. It also includes a $4 million headwind related to GTLB’s stand-alone selling price analysis.
Although the latest products like GitLab Duo and GitLab Duo Pro bode well for GTLB’s prospects, meaningful contribution is expected to take some time amid stiff competition.
Hence, a dip in GTLB’s share price brings this question into investors’ minds - is it the right time to jump into the stock or should we wait for a better entry point?
YTD Performance
Image Source: Zacks Investment Research
Strong Portfolio Boosts GitLab Stocks Prospects
GitLab’s total addressable market is estimated to be $40 billion. It has been winning accolades due to a robust pipeline. Gartner, in its 2024 Magic Quadrant for AI Code Assiatants, put GitLab in the Leader quadrant.
GitLab is leveraging AI to boost the potency of its portfolio. It has introduced AI throughout the entire software development cycle that improves productivity and security without sacrificing speed. Customers are fast adopting its AI offerings Gitlab Duo and GitLab Duo Pro.
The company recently strengthened its portfolio with the launch of the GitLab Duo Enterprise add-on, which is charged at $39 per user per month for Ultimate customers. Ultimate accounted for 46% of GitLab’s total Annual Run Rate.
GitLab’s prospects ride on an expanding clientele, driven by the strong adoption of its DevSecOps platform. Its strong partner base, which includes cloud service platforms like Alphabet (GOOGL - Free Report) and Amazon (AMZN - Free Report) , is helping the company rapidly expand its footprint among large enterprise customers.
Expanding Clientele Aids GTLB’s Top Line
GitLab has more than 30 million registered users on its platform. More than 50% of Fortune 100 are GitLab customers.
Customers with more than $5K of Annual Recurring Revenues (ARR) increased 21% year over year to 8,976 in first-quarter fiscal 2025. Customers with more than $100K of ARR jumped 35% year over year to 1,025. Moreover, the dollar-based Net Retention Rate was 129% in the reported quarter.
GitLab’s robust portfolio has been driving clientele expansion. Enterprises, including NVIDIA (NVDA - Free Report) and Google Cloud, have adopted GitLab’s solutions to accelerate AI development and streamline security.
NVIDIA chose GitLab Geo to address scalability and security concerns. It lets NVIDIA's remote teams work more efficiently and effectively by shortening the time taken to clone and manage projects.
GitLab and Alphabet have collaborated to integrate GitLab’s unique capabilities within Google Cloud. The collaboration combined GitLab’s source code management, planning, CI/CD workflow, enhanced security and compliance capabilities with Google's Cloud console and Artifact Registry’s single data plane. This integration is currently in public beta.
GTLB’s Earnings Estimate Shows Upward Trend
For the second quarter of fiscal 2025, GitLab expects revenues between $176 million and $177 million, indicating a growth rate of 26-27% year over year. The Zacks Consensus Estimate for fiscal second quarter revenues is pegged at $176.48 million, indicating year-over-year growth of 26.44%.
GTLB expects non-GAAP earnings between 9 cents and 10 cents per share. The consensus mark for earnings is pegged at 10 cents per share, up by a penny over the past 60 days.
For fiscal 2025, GitLab expects revenues between $733 million and $737 million, indicating a growth rate of 26-27% year over year. The Zacks Consensus Estimate for fiscal 2025 revenues is pegged at $735.26 million, indicating year-over-year growth of 26.79%.
GTLB expects non-GAAP earnings between 34 cents and 37 cents per share. The consensus mark for earnings is pegged at 36 cents per share, up a couple of cents over the past 30 days.
GitLab Shares Overvalued
GTLB stock is overvalued at this moment, as suggested by the Value Score of F.
GitLab stock is trading at a significant premium with a forward 12-month Price/Sales (P/S) of 8.93X compared with the Zacks Internet Software industry’s 2.56X.
P/S Ratio (F12M)
Image Source: Zacks Investment Research
Technical indicator is bearish for GitLab as the shares trade below the 50-day moving average, which indicates downward momentum.
GTLB Shares Trade Below 50-Day SMA
Image Source: Zacks Investment Research
What Investors Should Do With GTLB Stock
GitLab’s strong portfolio and expanding partner base are noteworthy. Hence, investors who already own the stock may expect the company's growth prospects to be rewarding over the long term.
Image: Bigstock
GitLab Down 25.3% YTD: How Should Investors Play the GTLB Stock?
GitLab (GTLB - Free Report) shares have plunged 25.3% year to date (YTD), underperforming the Zacks Computer & Technology sector’s growth of 21.7% and the Zacks Internet Software industry’s return of 14.5%.
The underperformance in GitLab shares can be attributed to modest top-line growth expectations in fiscal 2025 due to the challenging macroeconomic environment. It also includes a $4 million headwind related to GTLB’s stand-alone selling price analysis.
Although the latest products like GitLab Duo and GitLab Duo Pro bode well for GTLB’s prospects, meaningful contribution is expected to take some time amid stiff competition.
Hence, a dip in GTLB’s share price brings this question into investors’ minds - is it the right time to jump into the stock or should we wait for a better entry point?
YTD Performance
Image Source: Zacks Investment Research
Strong Portfolio Boosts GitLab Stocks Prospects
GitLab’s total addressable market is estimated to be $40 billion. It has been winning accolades due to a robust pipeline. Gartner, in its 2024 Magic Quadrant for AI Code Assiatants, put GitLab in the Leader quadrant.
GitLab is leveraging AI to boost the potency of its portfolio. It has introduced AI throughout the entire software development cycle that improves productivity and security without sacrificing speed. Customers are fast adopting its AI offerings Gitlab Duo and GitLab Duo Pro.
The company recently strengthened its portfolio with the launch of the GitLab Duo Enterprise add-on, which is charged at $39 per user per month for Ultimate customers. Ultimate accounted for 46% of GitLab’s total Annual Run Rate.
GitLab’s prospects ride on an expanding clientele, driven by the strong adoption of its DevSecOps platform. Its strong partner base, which includes cloud service platforms like Alphabet (GOOGL - Free Report) and Amazon (AMZN - Free Report) , is helping the company rapidly expand its footprint among large enterprise customers.
Expanding Clientele Aids GTLB’s Top Line
GitLab has more than 30 million registered users on its platform. More than 50% of Fortune 100 are GitLab customers.
Customers with more than $5K of Annual Recurring Revenues (ARR) increased 21% year over year to 8,976 in first-quarter fiscal 2025. Customers with more than $100K of ARR jumped 35% year over year to 1,025. Moreover, the dollar-based Net Retention Rate was 129% in the reported quarter.
GitLab’s robust portfolio has been driving clientele expansion. Enterprises, including NVIDIA (NVDA - Free Report) and Google Cloud, have adopted GitLab’s solutions to accelerate AI development and streamline security.
NVIDIA chose GitLab Geo to address scalability and security concerns. It lets NVIDIA's remote teams work more efficiently and effectively by shortening the time taken to clone and manage projects.
GitLab and Alphabet have collaborated to integrate GitLab’s unique capabilities within Google Cloud. The collaboration combined GitLab’s source code management, planning, CI/CD workflow, enhanced security and compliance capabilities with Google's Cloud console and Artifact Registry’s single data plane. This integration is currently in public beta.
GTLB’s Earnings Estimate Shows Upward Trend
For the second quarter of fiscal 2025, GitLab expects revenues between $176 million and $177 million, indicating a growth rate of 26-27% year over year. The Zacks Consensus Estimate for fiscal second quarter revenues is pegged at $176.48 million, indicating year-over-year growth of 26.44%.
GTLB expects non-GAAP earnings between 9 cents and 10 cents per share. The consensus mark for earnings is pegged at 10 cents per share, up by a penny over the past 60 days.
For fiscal 2025, GitLab expects revenues between $733 million and $737 million, indicating a growth rate of 26-27% year over year. The Zacks Consensus Estimate for fiscal 2025 revenues is pegged at $735.26 million, indicating year-over-year growth of 26.79%.
GitLab Inc. Price and Consensus
GitLab Inc. price-consensus-chart | GitLab Inc. Quote
GTLB expects non-GAAP earnings between 34 cents and 37 cents per share. The consensus mark for earnings is pegged at 36 cents per share, up a couple of cents over the past 30 days.
GitLab Shares Overvalued
GTLB stock is overvalued at this moment, as suggested by the Value Score of F.
GitLab stock is trading at a significant premium with a forward 12-month Price/Sales (P/S) of 8.93X compared with the Zacks Internet Software industry’s 2.56X.
P/S Ratio (F12M)
Image Source: Zacks Investment Research
Technical indicator is bearish for GitLab as the shares trade below the 50-day moving average, which indicates downward momentum.
GTLB Shares Trade Below 50-Day SMA
Image Source: Zacks Investment Research
What Investors Should Do With GTLB Stock
GitLab’s strong portfolio and expanding partner base are noteworthy. Hence, investors who already own the stock may expect the company's growth prospects to be rewarding over the long term.
GitLab currently has a Zacks Rank #3 (Hold), suggesting that it may be wise to wait for a more favorable entry point in the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.