Sign in

    Gitlab (GTLB)

    Q3 2025 Earnings Summary

    Reported on Apr 8, 2025 (After Market Close)
    Pre-Earnings Price$66.04Last close (Dec 5, 2024)
    Post-Earnings Price$73.50Open (Dec 6, 2024)
    Price Change
    $7.46(+11.30%)

    What went well

    • Strong Financial Performance: The Q&A highlighted that GitLab delivered record non-GAAP operating margins—with an improvement of over 1,000 basis points year-over-year—and beat revenue guidance, demonstrating robust execution and operational leverage.
    • Robust Customer Adoption & Product Integration: GitLab Ultimate’s strong traction is evident, now representing 48% of total ARR, with Duo features contributing over 25% of net ARR in year 1 in key deals. This cross-product integration drives efficiency and consolidates multiple point solutions into a single DevSecOps platform.
    • Innovative AI Strategy & Strategic Partnerships: The Q&A emphasized GitLab’s end-to-end AI-powered platform, including future-focused agentic AI and noteworthy collaborations like the bundled offering with Amazon Q. These initiatives position GitLab as a leader in transforming software development, providing a competitive edge in a fast-growing market.

    What went wrong

    • Uncertain Adoption and Delayed Impact of New AI Initiatives: Management emphasized that advanced features like agentic AI and Duo workflow are still in early, beta stages, which could translate to slower customer adoption and delayed revenue contribution in the near term.
    • Unclear Future Pricing Models for Innovative Offerings: There is ambiguity regarding the pricing approach for new AI capabilities (e.g., agentic AI), with executives declining to forecast future pricing changes. This uncertainty may affect revenue predictability and margins.
    • Potential Margin Pressure from Increasing SaaS Mix: Although GitLab achieved strong operating margins, executives noted possible pressure on non‑GAAP gross margins due to a growing SaaS revenue share that may require additional cost investments, thereby potentially impacting profitability.

    Q&A Summary

    1. Margin Outlook
      Q: How are margins evolving?
      A: Management highlighted that non-GAAP operating margins improved by over 1,000 basis points (bps) year-over-year while maintaining best-in-class gross margins, demonstrating increased operating leverage.

    2. Revenue Beat
      Q: What drove the revenue beat?
      A: The strong quarter was driven by robust ultimate performance, with 31% YoY revenue growth, record non-GAAP operating income, and excellent net dollar retention at 124%, which helped beat guidance by 4.6%.

    3. Guidance Outlook
      Q: Is growth expected to slow down?
      A: Management expects consistent growth with full-year revenue in the $753–754 million range and roughly 30% YoY growth, attributing any slower pace to the natural effects of scale rather than a market downturn.

    4. CEO Transition
      Q: What value does the new CEO bring?
      A: Bill Staples, with extensive leadership experience from New Relic, Adobe, and Microsoft, is expected to drive strategic initiatives and operational efficiencies, reinforcing confidence in GitLab’s long-term growth.

    5. Ultimate Adoption
      Q: How is Ultimate performing?
      A: Ultimate now contributes 48% of total ARR, reflecting strong customer upgrades and integrated security features, which are key drivers of GitLab’s recurring revenue growth.

    6. AWS Partnership
      Q: How is the AWS integration progressing?
      A: Management detailed an exciting AWS collaboration, with a bundled offering currently in closed beta for self-managed Ultimate customers, setting the stage for additional growth opportunities on the cloud.

    7. Duo Pricing
      Q: What is Duo’s contribution to ARR?
      A: In the top deals, Duo accounts for over 25% of the net ARR, underscoring its role in achieving significant productivity gains and enhancing overall pricing yield.

    8. Agentic AI Progress
      Q: What progress is there in agentic AI?
      A: Early efforts in agentic AI are underway, aiming to integrate end-to-end workflows that empower autonomous software development actions, with a beta expected in winter.

    9. Seat Deployment
      Q: How are customer seats being rolled out?
      A: Customers are adopting a phased approach to seat deployment, initially purchasing a bulk quantity and gradually rolling them out across different groups, ensuring measured and steady adoption.

    Analyst Coverage

    Research analysts covering Gitlab.

    Related Publications