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GitLab (GTLB) earnings report for the first quarter of 2024

People celebrate the Gitlab IPO on the Nasdaq on October 14, 2021.

Source: Nasdaq

GitLab shares surged 33% on Tuesday, after the code distribution software provider reported a narrower loss than analysts expected and raised its full-year forecast.

The stock was on track for its best day since GitLab’s Nasdaq debut in 2021. It’s still about 65% below its peak from November of that year, the month tech stocks hit record highs. After that, investors started moving money out of risky assets due to concerns about slowing growth and rising interest rates.

GitLab said revenue in the quarter ended April 30 jumped 45% to $126.9 million from $87.4 million a year earlier. The company had an adjusted loss of 6 cents per share, according to a statement. Analysts surveyed by Refinitiv had expected sales of $117.8 million and an adjusted loss of 14 cents per share.

GitLab’s net loss widened to $52.9 million from $26.6 million in the year-ago quarter.

For fiscal 2024, GitLab sees an adjusted loss of 14 cents to 18 cents per share on revenue of $541 million to $543 million. Analysts had expected an adjusted loss of 26 cents a share and sales of $532.6 million. In March, GitLab had asked for an adjusted loss per share of 24 cents to 29 cents on revenue of $529 million to $533 million.

During the quarter, GitLab raised the price of its premium tier to $29 per user per month from $19.

“To date, churn is unchanged for the premium customers that renewed in April,” GitLab CFO Brian Robins said on Monday’s call with analysts. He added that average annual recurring revenue per customer “increased in line with our expectations.”

Sid Sijbrandij, GitLab’s CEO, said more revenue could come from a generative artificial intelligence add-on that would cost $9 per user per month when billed annually.

Sijbrandij, who co-founded the company over a decade ago, had some encouraging personal news to share. Three months after announcing that he had chosen to undergo treatment for osteosarcoma, Sijbrandij said on the phone call that there were “no signs of detectable disease,” adding that he is excited about the company’s future and “will retain my role as CEO and chairman of the board.”

The business still has challenges. Sales cycles took longer than usual during the quarter and customers reduced the number of seats they bought, Robins said.

But the financial numbers prompted several analysts to raise their price targets on GitLab stock.

“The quarter was stronger than most expected and the company was able to maintain a very positive and conservative outlook — a contrast to the previous quarter,” Piper Sandler analysts Rob Owens and Ethan Weeks wrote in a note to clients.

The analysts have correspondingly a buy rating on the company’s shares and raised the price target to $52 from $50. GitLab shares were trading near $47 as of mid-afternoon New York time.

SEE: The ongoing slowdown in IT spending is not reflected in technology revenues, says Jefferies’ Brent Thill

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