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Gitlab Inc. (GTLB)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 FY25 revenue rose 31% YoY to $196.0M with record non-GAAP operating margin of 13% as management “exceeded both revenue and profitability guidance” .
  • KPIs strong: $100k+ ARR customers up 31% YoY to 1,144, DBNRR 124%, cRPO +39% YoY to $515.2M, and total RPO +48% YoY to $811.8M .
  • FY25 guidance raised: revenue to $753–$754M (from $742–$744M), non-GAAP operating income to $69–$70M (from $55–$58M), and non-GAAP diluted EPS to $0.63–$0.64 (from $0.45–$0.47) .
  • Strategic updates likely to drive stock narrative: CEO transition to Bill Staples, deepening AI roadmap (self-hosted models, agentic AI preview), and new AWS integration (GitLab Duo + Amazon Q) .
  • Cash from operations (-$177M) reflects $188M BAPA-related tax payment; adjusted FCF positive at $9.7M in Q3 .

What Went Well and What Went Wrong

  • What Went Well

    • Record profitability: non-GAAP operating margin reached 13%, up >1,000 bps YoY; non-GAAP operating income $25.9M (vs. $4.7M LY) as revenue hit $196.0M (+31% YoY) .
    • Demand indicators: $100k+ ARR customers +31% YoY to 1,144; DBNRR 124%; RPO +48% YoY to $811.8M and cRPO +39% YoY to $515.2M .
    • AI and platform traction: Ultimate now 48% of total ARR; SaaS 29% of revenue (+44% YoY) supported by Dedicated; Duo attached to top deals; AWS integration announced .

  • What Went Wrong

    • Operating cash flow negative (-$177M) due to tax payments from APA conclusion; management reserved additional $10M for IRS (petitioning for abatement) .
    • GAAP gross margin ticked down YoY (89% vs. 90% LY) amid mix shift toward faster-growing SaaS (management had flagged potential SaaS pressure) .
    • Continued expense drag from China JV “JiHu”; non-GAAP expenses $3.5M in Q3 with deconsolidation timing uncertain .

Financial Results

P&L trend and profitability (oldest → newest)

MetricQ1 FY25Q2 FY25Q3 FY25
Revenue ($M)$169.2 $182.6 $196.0
GAAP Gross Margin %89% 88% 89%
Non-GAAP Gross Margin %91% 91% 91%
GAAP Operating Margin %(32)% (22)% (15)%
Non-GAAP Operating Margin %(2)% 10% 13%
GAAP Diluted EPS ($)$(0.35) $0.08 $0.18
Non-GAAP Diluted EPS ($)$0.03 $0.15 $0.23
Non-GAAP Operating Income ($M)$(3.8) $18.2 $25.9
GAAP Net Income ($M)$(54.6) $12.9 $29.6
Non-GAAP Net Income ($M)$4.5 $24.5 $39.1
Cash from Operations ($M)$38.1 $11.7 $(177.0)
Adjusted Free Cash Flow ($M)$37.4 $10.8 $9.7

Revenue mix (oldest → newest)

Revenue Component ($M)Q1 FY25Q2 FY25Q3 FY25
Subscription — self-managed and SaaS$151.179 $163.181 $175.257
License — self-managed and other$18.008 $19.403 $20.790
Total Revenue$169.187 $182.584 $196.047

KPIs and leading indicators (oldest → newest)

KPIQ1 FY25Q2 FY25Q3 FY25
Customers >$5k ARR8,976 9,314 9,519
Customers >$100k ARR1,025 1,076 1,144
Dollar-Based Net Retention Rate129% 126% 124%
Total RPO ($M)$681.2 $747.9 $811.8
cRPO ($M)$436.1 $475.0 $515.2
SaaS % of Revenue——29%
Ultimate % of ARR——48%

Notes: Q3 cash flow reflects BAPA-related tax payment ($188M) included in adjusted FCF reconciliation .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueQ4 FY25N/A (initial)$205.0–$206.0M —
Non-GAAP Operating IncomeQ4 FY25N/A (initial)$28.0–$29.0M —
Non-GAAP Diluted EPSQ4 FY25N/A (initial)$0.22–$0.23 (170M WADSO) —
RevenueFY25$742.0–$744.0M $753–$754M Raised
Non-GAAP Operating IncomeFY25$55–$58M $69–$70M Raised
Non-GAAP Diluted EPSFY25$0.45–$0.47 (168M WADSO) $0.63–$0.64 (168M WADSO) Raised

Q3 actual vs prior Q3 guidance (for context)

MetricPrior Q3 FY25 Guide (from Q2)Q3 FY25 ActualResult
Revenue$187.0–$188.0M $196.0M Beat
Non-GAAP Operating Income$19.0–$20.0M $25.9M Beat
Non-GAAP Diluted EPS$0.15–$0.16 $0.23 Beat

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3)Trend
AI strategy (Duo)Duo Enterprise GA; AI embedded across SDLC Self-hosted models for Duo Enterprise; agentic AI (Duo Workflow) preview; Duo + Amazon Q integration Improving
Platform/Ultimate consolidationEmphasis on end-to-end DevSecOps; security integration Ultimate reached 48% of ARR; multiple competitive wins; toolchain consolidation savings Improving
Public sector/FedRAMPFedRAMP “In Process” (Moderate) “Best quarter in pub sec” in company history; Dedicated for Government momentum Improving
SaaS/Dedicated mix—SaaS now 29% of revenue, +44% YoY; Dedicated driving SaaS Improving
Macro—Macro cautious but stable; platform value/payback driving resilience Stable
Pricing/seat dynamics for AIDuo Enterprise $39/user/mo (Q2) Duo often ~25% of net ARR in year 1 of attached deals; phased seat rollouts Improving monetization

Management Commentary

  • Strategic positioning: “We executed well and once again, we exceeded both revenue and profitability guidance… non-GAAP operating margin reached 13.2%” .
  • AI differentiation: “GitLab Duo Enterprise customers can now deploy self-hosted models… lowers the risk of security breaches and enables adherence to data protection laws” .
  • Agentic AI roadmap: “We anticipate the next evolution in AI will be agentic… Duo Workflow… an autonomous agent for end-to-end software development” .
  • Platform consolidation and ROI: “A large insurance and financial services company… will have replaced 4 point-products… saving over $2 million… expect up to 45% less time on mundane tasks” .
  • Business mix: “SaaS now represents 29% of total revenue and grew 44% year-over-year… Dedicated is helping drive this momentum” .
  • CEO transition: “Bill Staples was named CEO… Sid Sijbrandij to Executive Chair… ‘right time to focus on my cancer treatment and health’” .

Q&A Highlights

  • Beats and drivers: Broad-based execution, record public sector quarter, Ultimate >50% of bookings, DBNRR 124%, best churn/contraction in 12 quarters; pass-through of outperformance to margins .
  • Macro and pipeline: Demand resilient given fast payback and consolidation value; pipeline healthy; cautious but stable environment .
  • Duo monetization/seats: Duo attached to top new/expansion deals; in attached deals Duo ~25% of net ARR in year 1; customers buy broadly then phase rollouts .
  • Margin outlook: Continued operating leverage with best-in-class non-GAAP gross margins despite SaaS mix; growth still priority but with “responsible” investment .
  • Agile planning module: Early but enabling replacements (e.g., reduce reliance on Jira/Bamboo) as part of Ultimate .

Estimates Context

  • S&P Global consensus (revenue, EPS) for Q3 FY25 was not available at time of analysis due to data access limits, so we cannot quantify beat/miss vs Street. Management stated Q3 exceeded company guidance on both revenue and profitability .

Key Takeaways for Investors

  • Revenue outperformance with record profitability suggests improving operating leverage while maintaining >30% growth; FY guide was raised across revenue, operating income, and EPS .
  • Strong enterprise momentum: $100k+ ARR cohort +31% YoY and 48% of ARR now in Ultimate indicate accelerating platform consolidation and upsell capacity .
  • AI differentiation likely durable: self-hosted models, agentic AI roadmap, and AWS integration expand TAM and strengthen enterprise/security positioning .
  • Mix shift toward SaaS (29% of revenue; +44% YoY) and Dedicated supports durability of growth, while management maintained best-in-class non-GAAP gross margins .
  • Cash flow volatility in Q3 from one-time tax settlements (BAPA) is non-recurring; adjusted FCF remained positive .
  • Catalysts: Continued Duo attach, public sector (FedRAMP momentum), Dedicated wins, and new CEO stewardship (Bill Staples) with enterprise scaling experience .
  • Watch items: Sustaining DBNRR amid macro caution, managing SaaS gross margin pressures, and timeline/impact of JiHu deconsolidation .