Yahoo Finance Does GitLab's (GTLB) Growing Clientele Make the Stock a Buy?
GitLab GTLB is benefiting from an expanding clientele, driven by the strong adoption of its DevSecOps platform. Its strong partner base, which includes cloud service platforms like Alphabet GOOGL and Amazon AMZN, is helping the company rapidly expand its footprint among large enterprise customers.
GitLab has more than 30 million registered users on its platform. More than 50% of Fortune 100 are GitLab customers.
Customers with more than $5K of Annual Recurring Revenues (ARR) increased 21% year over year to 8,976 in first-quarter fiscal 2025. Customers with more than $100K of ARR jumped 35% year over year to 1,025. Moreover, the dollar-based Net Retention Rate was 129% in the reported quarter.
GitLab’s robust portfolio has been driving clientele expansion. Enterprises, including NVIDIA NVDA and Google Cloud, have adopted GitLab’s solutions to accelerate AI development and streamline security.
NVIDIA chose GitLab Geo to address scalability and security concerns. It lets NVIDIA's remote teams work more efficiently and effectively by shortening the time taken to clone and manage projects.
GitLab Inc. Stock Price and Consensus
GitLab Inc. price-consensus-chart | GitLab Inc. Quote
GitLab and Alphabet have collaborated to integrate GitLab’s unique capabilities within Google Cloud. The collaboration combined GitLab’s source code management, planning, CI/CD workflow, enhanced security and compliance capabilities with Google's Cloud console and Artifact Registry’s single data plane. This integration is currently in public beta.
In the fiscal first quarter, GitLab announced that it will integrate its products with Google Console to help customers improve developer experience and decrease context switching across GitLab and Google Cloud.
Expanding Portfolio Benefits GitLab’s Prospects
GitLab’s total addressable market is estimated to be $40 billion. It has been winning accolades due to a robust pipeline. Gartner, in its 2023 Magic Quadrant for DevOps platforms, put GitLab in the Leader quadrant above Microsoft and Atlassian.
GitLab is leveraging AI to boost the potency of its portfolio. It has introduced AI throughout the entire software development cycle that improves productivity and security without sacrificing speed. Customers are fast adopting its AI offerings Gitlab Duo and GitLab Duo Pro.
In April, GTLB announced the general availability of GitLab Duo Chat. The solution brings the GitLab Duo suite of AI capabilities together into a single, easy-to-use, natural language chat interface to connect DevSecOps workflows across the entire software development lifecycle.
In May, GTLB unveiled GitLab Duo Enterprise. This end-to-end AI add-on combines the developer-focused AI capabilities of GitLab Duo Pro — organizational privacy controls, code suggestions, and chat — with enterprise-focused AI capabilities.
The new solution will help organizations proactively detect and fix security vulnerabilities, summarize issue discussions and merge requests, resolve CI/CD bottlenecks and failures, and enhance team collaboration.
It also released GitLab 17 featuring GitLab Duo Enterprise, an end-to-end AI add-on to integrate secure AI-driven capabilities across every step of the software development lifecycle.
GitLab Revenue Estimate Revisions Positive
For the second quarter of fiscal 2025, GitLab expects revenues between $176 million and $177 million, indicating growth rate of 26-27% year over year.
The Zacks Consensus Estimate for fiscal second quarter revenues is pegged at $176.41 million, indicating year-over-year growth of 26.39%.
Non-GAAP operating income is expected to be $10-$11 million for the fiscal first quarter.
Moreover, non-GAAP earnings are expected between 9 cents and 10 cents per share. The consensus mark for earnings is pegged at 9 cents per share, up 80% over the past 30 days.
Conclusion
GitLab Shares have declined 26.5% year to date, underperforming the broader Zacks Computer & Technology sector’s return of 8% and the Zacks Internet Software industry’s gain of 13.9%.
However, a strong portfolio and an expanding partner base are expected to help GTLB shares recover in the near term.
This Zacks Rank #2 (Buy) stock has a Growth Style Score of A and Momentum Score of A, a favorable combination that offers a strong investment opportunity, per the Zacks Proprietary methodology. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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