Written by Akash Shriram
(Reuters) – GitLab shares rose 16% on Tuesday after the software developer expected full-year 2025 sales and profits to be lower than Wall Street expectations, citing a cautious spending environment due to an uncertain economy. It fell.
CFO Brian Robbins said he expects GitLab's philosophy behind providing forecasts to become “less conservative” as it enters its third year as a public company.
Still, analysts and investors expected steady growth for the company.
Investor Ofir Gottlieb, CEO of Capital Markets Laboratories, said, “Given the uncertainty surrounding the Fed and economic indicators, some investors may consider this a measure of caution rather than a measure of a slowdown in economic forecasts.'' “We expect lower-than-expected guidance.”
If the losses continue, GitLab will lose about $1.9 billion from its market cap of $11.59 billion as of Monday's close.
The company expects a first-quarter loss of $12 million to $13 million, including related to its first company-wide in-person summit for primarily remote employees since 2019. Includes $15 million in costs.
GitLab said it is ramping up adoption of the platform, which helps users manage code, develop, automate processes, and test programs.
Revenue estimates for the first quarter and fiscal year 2025 also fell short of analysts' expectations. However, the company cautioned that this forecast does not include the possibility of price increases.
“GitLab has tightened the limits on its free tier, which has resulted in a healthy amount of free-to-paid conversion,” said Gil Luria, senior software analyst at DA Davidson.
The company is raising prices for its premium tier for the first time in five years in April 2023 and expects to increase revenue by $10 million to $20 million in the fiscal year, Robbins said.
GitLab stock trades at 241.09 times forward earnings estimates. By comparison, peers Atlassian and Splunk are 69.42x and 26.99x, respectively.
(Reporting by Akash Sriram in Bengaluru; Editing by Shailesh Kuber)
