Software development tools maker GitLab (NASDAQ: GTLB) announced better-than-expected revenue in Q1 CY2025, with sales up 26.8% year on year to $214.5 million. The company expects next quarter’s revenue to be around $226.5 million, close to analysts’ estimates. Its non-GAAP profit of $0.17 per share was 11.8% above analysts’ consensus estimates.
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GitLab (GTLB) Q1 CY2025 Highlights:
- Revenue: $214.5 million vs analyst estimates of $213 million (26.8% year-on-year growth, 0.7% beat)
- Adjusted EPS: $0.17 vs analyst estimates of $0.15 (11.8% beat)
- Adjusted Operating Income: $26.12 million vs analyst estimates of $22.62 million (12.2% margin, 15.5% beat)
- The company reconfirmed its revenue guidance for the full year of $939 million at the midpoint
- Management raised its full-year Adjusted EPS guidance to $0.75 at the midpoint, a 6.4% increase
- Operating Margin: -16.1%, up from -31.7% in the same quarter last year
- Net Revenue Retention Rate: 122%, down from 123% in the previous quarter
- Annual Recurring Revenue: $809.3 million at quarter end, up 33.8% year on year
- Billings: $222.2 million at quarter end, up 35.4% year on year
- Market Capitalization: $8.01 billion
StockStory’s Take
GitLab’s first quarter results reflected growing adoption of its AI-driven DevSecOps platform, as management cited strong engagement from both new and existing enterprise customers. CEO Bill Staples emphasized the company’s unique position as an AI-native, cloud-agnostic platform, capable of supporting diverse development environments. The launch of new features in GitLab 18, including expanded artifact management and enhanced security tools, was positioned as a key factor in driving customer value. Staples also pointed to rapid uptake of AI capabilities, noting a 35% quarter-over-quarter increase in customers purchasing GitLab Duo. CFO Brian Robins attributed operating leverage improvements to a continued shift toward SaaS and a remote-first cost structure, while noting some price sensitivity at the lower end of the customer base.
Looking ahead, management’s guidance is anchored by expectations of sustained AI adoption and continued product innovation across the platform. Staples described the company’s focus on integrating agentic AI—software agents that can automate complex tasks—as a core pillar for future growth, highlighting the upcoming launch of GitLab Duo Workflow. The company aims to lower barriers to entry for AI tools by embedding core features into Premium and Ultimate tiers, with the goal of broadening usage and creating upgrade paths to higher-value offerings. Robins cautioned that the macroeconomic environment remains unchanged from prior quarters but expressed confidence in the company’s ability to expand operating margins while investing in platform enhancements and go-to-market capabilities.
Key Insights from Management’s Remarks
Management credited first quarter performance to rapid AI feature adoption, strategic product launches, and increased traction among large enterprise customers.
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AI-driven platform differentiation: GitLab’s unified DevSecOps approach, with integrated AI tools across the software development lifecycle, was cited as a primary factor in winning competitive evaluations and expanding existing customer deployments.
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Product launch momentum: The release of GitLab 18 introduced centralized artifact management and improved CI/CD (continuous integration/continuous deployment) pipelines, features that management described as highly requested by enterprise clients seeking greater speed and security in software delivery.
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Security and compliance focus: Deeper security capabilities, such as enhanced vulnerability dashboards and custom compliance frameworks, continued to drive adoption of the Ultimate tier, especially among highly regulated industries.
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Flexible AI packaging: The decision to include Duo Chat and Code Suggestions in both Premium and Ultimate tiers, with usage limits, was intended to reduce friction for AI adoption and expand the addressable customer base, with an upgrade path to Duo Pro and Duo Enterprise for more advanced needs.
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Strong customer expansion: Management highlighted several large customers increasing their commitments, especially in the public sector and financial services, with GitLab Dedicated (a single-tenant SaaS solution) gaining momentum following FedRAMP Moderate authorization, supporting growth in security-conscious segments.
Drivers of Future Performance
GitLab’s outlook relies on continued enterprise adoption of AI features, ongoing product enhancements, and expansion of its customer base through flexible packaging and go-to-market partnerships.
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Accelerating AI feature integration: Management expects the upcoming launch of GitLab Duo Workflow to support broader automation and agentic AI use cases, which could increase platform stickiness and drive higher seat expansion within existing accounts.
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Evolving customer segmentation: By making advanced AI tools available in both Premium and Ultimate tiers, the company aims to attract entry-level customers while providing clear upgrade incentives, though management acknowledged that price sensitivity may continue to affect smaller accounts.
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Macro and competitive dynamics: While the macroeconomic environment is described as stable, management flagged ongoing experimentation among customers with multiple AI tools as a competitive reality, requiring GitLab to maintain rapid innovation and prove value relative to both established players and new entrants like Cursor and Windsurf.
Catalysts in Upcoming Quarters
Going forward, the StockStory team will focus on (1) the adoption rate of GitLab Duo Workflow as it enters public beta and general availability, (2) continued expansion of GitLab Dedicated in regulated industries following FedRAMP authorization, and (3) the success of new AI feature packaging in driving seat expansion and upgrades. Progress in international markets and feedback from enterprise customers on GitLab 18 enhancements will also be key indicators of execution.
GitLab currently trades at a forward price-to-sales ratio of 8.1×. Is the company at an inflection point that warrants a buy or sell? See for yourself in our full research report (it’s free).
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