SAN FRANCISCO - GitLab Inc. (NASDAQ: GTLB) reported a fourth quarter that exceeded analyst expectations, but shares fell sharply due to disappointing earnings guidance for the upcoming quarter and fiscal year. In aftermarket hours, the shares price decreased 12.58%.
The DevSecOps platform provider reported an adjusted EPS of $0.15 for the fourth quarter, surpassing the analyst estimate of $0.08. Revenue for the quarter was also higher than expected at $163.8 million, compared to the consensus estimate of $157.89 million.
Despite the strong fourth quarter, GitLab's stock dropped approximately 13.91% as the company's forecast for the first quarter of 2025 and the full fiscal year fell short of analyst expectations. For Q1 2025, GitLab anticipates an adjusted EPS between -$0.05 and -$0.04, which is notably below the consensus estimate of $0.06. Revenue guidance for the same period is set at $165-166 million, slightly above the analyst consensus of $162 million.
Looking further ahead, GitLab's guidance for fiscal year 2025 projects an adjusted EPS of $0.19 to $0.23, which is significantly lower than the consensus estimate of $0.35. The company's revenue forecast for the year is $725-731 million, trailing behind the analyst consensus of $732 million.
The fourth quarter's 33% year-over-year (YoY) revenue growth and the expansion of non-GAAP operating margin by over 1,900 basis points reflect GitLab's continued business momentum. CEO Sid Sijbrandij emphasized the role of integrating AI throughout the software development lifecycle in driving efficiency and scaling the impact of software investments on business outcomes. CFO Brian Robins highlighted the company's achievement of breakeven cash flow a year ahead of schedule and a second consecutive quarter of non-GAAP operating profit.
Despite the positive performance in the fourth quarter, the market's reaction was primarily influenced by the future earnings outlook. GitLab's guidance suggests that investors may need to temper expectations for growth in the near term.
GitLab's financial outlook and the market's response underscore the challenges the company faces as it aims to capitalize on the large market opportunity ahead. As GitLab continues to invest in key product areas and execute its strategy, investors will be watching closely to see how the company navigates the balance between growth and profitability.
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