Software development tools maker GitLab (NASDAQ: GTLB) beat Wall Street’s revenue expectations in Q4 CY2024, with sales up 29.1% year on year to $211.4 million. The company expects next quarter’s revenue to be around $212.5 million, close to analysts’ estimates. Its non-GAAP profit of $0.33 per share was 44.6% above analysts’ consensus estimates.
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GitLab (GTLB) Q4 CY2024 Highlights:
- Revenue: $211.4 million vs analyst estimates of $206.2 million (29.1% year-on-year growth, 2.6% beat)
- Adjusted EPS: $0.33 vs analyst estimates of $0.23 (44.6% beat)
- Adjusted Operating Income: $37.38 million vs analyst estimates of $29.14 million (17.7% margin, 28.3% beat)
- Management’s revenue guidance for the upcoming financial year 2026 is $939 million at the midpoint, in line with analyst expectations and implying 23.7% growth (vs 31.1% in FY2025)
- Adjusted EPS guidance for the upcoming financial year 2026 is $0.70 at the midpoint, missing analyst estimates by 13.8%
- Operating Margin: -7.3%, up from -21.3% in the same quarter last year
- Free Cash Flow Margin: 29.4%, up from 4.9% in the previous quarter
- Net Revenue Retention Rate: 123%, down from 124% in the previous quarter
- Market Capitalization: $9.77 billion
Company Overview
Founded as an open-source project in 2011, GitLab (NASDAQ: GTLB) is a leading software development tools platform.
Developer Operations
As Marc Andreessen says, "software is eating the world" which means the volume of software produced is exploding. But building software is complex and difficult work which drives demand for software tools that help increase the speed, quality, and security of software deployment.
Sales Growth
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can have short-term success, but a top-tier one grows for years. Luckily, GitLab’s sales grew at an incredible 44.3% compounded annual growth rate over the last three years. Its growth surpassed the average software company and shows its offerings resonate with customers, a great starting point for our analysis.
This quarter, GitLab reported robust year-on-year revenue growth of 29.1%, and its $211.4 million of revenue topped Wall Street estimates by 2.6%. Company management is currently guiding for a 25.6% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 23.8% over the next 12 months, a deceleration versus the last three years. Still, this projection is noteworthy and suggests the market is forecasting success for its products and services.
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Customer Retention
One of the best parts about the software-as-a-service business model (and a reason why they trade at high valuation multiples) is that customers typically spend more on a company’s products and services over time.
GitLab’s net revenue retention rate, a key performance metric measuring how much money existing customers from a year ago are spending today, was 126% in Q4. This means GitLab would’ve grown its revenue by 25.5% even if it didn’t win any new customers over the last 12 months.
Despite falling over the last year, GitLab still has an excellent net retention rate. This data point proves that the company sells useful products, and we can see that its customers are satisfied and increasing usage over time.
Key Takeaways from GitLab’s Q4 Results
It was encouraging to see GitLab beat analysts’ revenue, EPS, and adjusted operating income expectations this quarter. On the other hand, its full-year EPS guidance missed significantly. Overall, this quarter was mixed. The stock traded up 4.8% to $59.03 immediately following the results.
So do we think GitLab is an attractive buy at the current price? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.
