Gitlab Q3 Earnings Beat Estimates: Will Raised View Aid Shares?

GitLab GTLB reported non-GAAP earnings of 23 cents per share in third-quarter fiscal 2025, beating the Zacks Consensus Estimate of 16 cents per share. The company reported earnings of 9 cents per share in the year-ago quarter.Find the latest EPS estimates and surprises on Zacks Earnings Calendar.Total revenues of $196.05 million beat the consensus mark by 4.46% and rallied 31% year over year. The upside can be attributed to strong demand for its DevSecOps platform and AI-driven solutions.The company’s shares have returned 4.9% year to date compared with the Zacks Computer & Technology sector’s rise of 32.4%. We believe the raised guidance will help GTLB stock to recover.GitLab Inc. Price, Consensus and EPS Surprise GitLab Inc. price-consensus-eps-surprise-chart | GitLab Inc. QuoteGitlab’s Top-Line DetailsSubscriptions- self-managed and SaaS (89.4% of total revenues) revenues increased 33.8% year over year to $175.3 million, beating the Zacks Consensus Estimate by 5.30%. License-, self-managed and other revenues (10.6% of total revenues) rose 11.3% year over year to $20.8 million.SaaS revenues contributed 29% to total revenues and surged 44% year over year. The strong adoption of GitLab Dedicated contributed to this growth, and the success of GTLB's SaaS offering has helped drive increased operational efficiencies.Customers with more than $5K of Annual Recurring Revenues (ARR) increased to 9,519, up 16% year over year. Customers with more than $100K of ARR increased to 1,144, up 31% year over year, demonstrating GTLB’s ability to attract and retain large enterprise customers.The dollar-based Net Retention Rate was 124% in the reported quarter.Total Remaining Performance Obligation (RPO) surged 48% year over year to $811.8 million. The current RPO increased 39% to $515.2 million.Gitlab’s collaboration with Amazon AMZN cloud computing platform, AWS, in the third quarter of fiscal 2025 remains noteworthy.In the reported quarter, GTLB announced an integrated offering with AWS, combining GitLab Duo and Amazon Q to deliver an AI-powered DevSecOps experience for faster, secure software delivery.Expanding portfolio has also been noteworthy. In the third quarter of 2024, GitLab announced the general availability of Advanced SAST for Ultimate customers, leveraging Oxeye technology for enhanced vulnerability detection in first-party code.Gitlab’s Operating DetailsThird-quarter fiscal 2025 non-GAAP gross margin was flat year over year to 91%, indicating improved operational efficiency and cost management. On a non-GAAP basis, research & development expenses increased 29.6% year over year to $47 million. Sales and marketing expenses were up 10.9% to $78.2 million. General and administrative expenses rose 8.1% to $27.3 million in the reported quarter.On a non-GAAP basis, operating income was $25.9 million compared with the year-ago quarter’s $4.7 million.Gitlab’s Balance SheetAs of Oct. 31, 2024, cash and cash equivalents and short-term investments were $9.16 billion compared with $1.08 billion as of July 31, 2024.In the reported quarter, the company generated an operating cash outflow of $17.7 million compared with an operating cash flow of $11.6 million in the previous quarter.  As of Oct. 31, 2024, adjusted free cash flow was $9.65 million compared with $10.8 million as of July 31, 2024.Gitlab Raises FY25 GuidanceFor the fourth quarter of fiscal 2025, GitLab expects revenues between $205 million and $206 million, indicating growth of 25-26% year over year.Non-GAAP operating income is expected to be in the range of $28-$29 million for the fiscal fourth quarter. Non-GAAP earnings are expected to be between 22 cents per share and 23 cents.For fiscal 2025, GitLab expects revenues between $753 million and $754 million, indicating growth of approximately 30% year over year.Non-GAAP operating income is expected to be in the range of $69-$70 million for the fiscal fourth quarter. Non-GAAP earnings are expected to be between 63 cents per share and 64 cents.Gitlab’s Zacks Rank & Stocks to ConsiderCurrently, Gitlab has a Zacks Rank #3 (Hold).C3.ai AI and Broadcom AVGO are some better-ranked stocks that investors can consider in the broader sector. AI and Broadcom carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.C3.ai shares have gained 30.6% year to date. AI is scheduled to release second-quarter fiscal 2025 results on Dec. 9.Broadcom shares have gained 52.8% year to date. AVGO is scheduled to release fourth-quarter 2024 results on Dec. 12.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.1% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Amazon.com, Inc. (AMZN): Free Stock Analysis Report Broadcom Inc. (AVGO): Free Stock Analysis Report C3.ai, Inc. (AI): Free Stock Analysis Report GitLab Inc. (GTLB): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks