Software development tools maker GitLab (NASDAQ: GTLB) reported revenue ahead of Wall Street’s expectations 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
- Free Cash Flow Margin: 49.1%, up from 29.4% in the previous quarter
- Net Revenue Retention Rate: 122%, down from 123% in the previous quarter
- Market Capitalization: $8.03 billion
Company Overview
Founded as an open-source project in 2011, GitLab (NASDAQ: GTLB) is a leading software development tools platform.
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. Over the last three years, GitLab grew its sales at an incredible 40.5% compounded annual growth rate. 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 26.8%, and its $214.5 million of revenue topped Wall Street estimates by 0.7%. Company management is currently guiding for a 24.1% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 22.6% over the next 12 months, a deceleration versus the last three years. Despite the slowdown, this projection is healthy 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 124% in Q1. This means GitLab would’ve grown its revenue by 23.8% even if it didn’t win any new customers over the last 12 months.
Despite falling over the last year, GitLab still has a good net retention rate, proving that customers are satisfied with its software and getting more value from it over time, which is always great to see.
Key Takeaways from GitLab’s Q1 Results
It was great to see GitLab raise its full-year EPS guidance. We were also glad this quarter's EPS and adjusted operating income exceeded Wall Street’s estimates by a wide margin. On the other hand, its full-year revenue guidance was in line, and investors were likely hoping for more. Shares traded down 11.9% to $42.76 immediately after reporting.
Big picture, is GitLab a buy here and now? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here, it’s free.
