What Happened: Shares of software development tools maker GitLab (NASDAQ:GTLB) jumped 9.2% in the morning session after the company reported an impressive "beat and raise" quarter. Second quarter results blew past analysts' revenue expectations. We were also glad to see the company lift its adjusted EPS and full-year revenue guidance, and both metrics came in higher than Wall Street's estimates.
On the other hand, net revenue retention fell. However, this declining retention isn't unique to GitLab. We've observed these declines in many software companies this quarter.
Zooming out, Gartner (NYSE:IT) (a widely recognized technology advisory firm) recognized GitLab as a category leader in the DevOps space. Lastly, the company appointed Chris Weber, a long-time Microsoft (NASDAQ:MSFT) executive, as Chief Revenue Officer. Overall, it was a strong quarter for the company. After the initial pop the shares cooled down to $51, up 2.4% from previous close.
Is now the time to buy GitLab? Find out by reading the original article on StockStory.
What is the market telling us: GitLab's shares are very volatile and over the last year have had 59 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was three months ago, when the stock gained 11.5% on the news that the company reported an impressive "beat and raise" quarter. First quarter results exceeded analysts' revenue, gross margin, non-GAAP operating income, and earnings per share estimates. In addition, customer growth remained strong, with a noteworthy 43% year on year increase in customers generating over $5,000 in ARR (annual recurring revenue). However, the company continued to burn cash.
Moving ahead, guidance was strong. Revenue guidance for the next quarter exceeded Consensus estimates, while full-year guidance also surpassed expectations and was revised upward. Profitability guidance for the next quarter and full year were in line. Management also touched on the company's readiness for the growing AI revolution, adding that "Today, we deliver more AI-powered capabilities to customers than any other DevSecOps platform." Overall, it was a solid quarter with a decent beat on key performance metrics and a strong outlook for the full year.
GitLab is up 16.1% since the beginning of the year, but at $51 per share it is still trading 17.4% below its 52-week high of $61.71 from September 2022. Investors who bought $1,000 worth of GitLab's shares at the IPO in October 2021 would now be looking at an investment worth $490.81.
