GitLab dives 20% on profitability guide; analyst says market reaction is 'overblown'

GitLab’s (NASDAQ: GTLB) shares are down more than 20% in premarket trading Tuesday after the software company’s full-year profitability guidance missed Wall Street’s estimates.

For the fiscal Q4 2024, GitLab reported earnings per share (EPS) of $0.15, surpassing the analyst forecast of $0.08. Revenue for the quarter reached $163.8 million, above the anticipated $157.89 million.

The company achieved a non-GAAP operating margin of 8% during the period.

Looking ahead, GitLab provided guidance for the first quarter of fiscal 2025, expecting a loss per share between $0.05 and $0.04, short of the consensus estimate of $0.06. Revenue is projected to range from $165 million to $166 million, above the $162 million expected by analysts.

For the full year 2025, GitLab forecasts EPS to be in the range of $0.19 to $0.23, below the consensus projection of $0.35. It sees FY revenue landing between $725 million and $731 million, also slightly below the forecasted $732 million.

Despite soft guidance, Goldman Sachs analysts maintained their bullish view on GTLB, reiterating its buy rating and a price target of $80 on the stock.

“We see the market reaction (-22% AH) to in-line FY25 revenue growth (26-27%) expectations and softer profitability estimates (~1% OM vs Consensus’ 4%) as overblown and driven particularly by a demanding set-up (GTLB +26% since 3Q24 results vs NASDAQ +14%),” analysts led by Kash Rangan said in a note.

“Though management also suggested that revenue upside will be more muted going forward, with FY25 guidance assuming yoy declines in new revenue, the numerous top-line levers (pricing, AI, new product rollouts) and potential macro stabilization leave room for outperformance,” they added.

By Vahid Karaahmetovic

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