GitLab’s Growth Surge: A Closer Look at Its Success Factors
GitLab (GTLB) shares have increased by 20.6% over the past six months, significantly outperforming the Zacks Computer & Technology sector, which returned 2.8%, and the Zacks Internet Software industry, which saw a 12.5% gain. This success stems from GitLab’s expanding customer base and the growing popularity of its AI-driven DevSecOps platform.
Performance Analysis: GitLab vs. Competitors
GitLab’s achievements stand out in the DevOps industry, especially compared to competitors like Microsoft (MSFT). Despite Microsoft’s efforts, including acquiring GitHub and advancing in cloud and AI technologies, its shares have dipped by 8.1% over the same six-month period.
In the third quarter of fiscal 2025, GitLab reported revenue of $196 million, a 31% increase from the previous year. This growth is attributed to the rising demand for its premium offerings, such as GitLab Ultimate and Duo, alongside greater adoption of SaaS solutions.
GTLB’s Remarkable Growth in Clientele
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Building Partnerships and Client Expansion
GitLab’s growth is closely linked to its expanding client base and the success of its DevSecOps platform. The company has established partnerships with major cloud providers like Alphabet’s (GOOGL) Google Cloud and Amazon (AMZN) through AWS, which has allowed GitLab to increase its reach among large enterprises.
In fiscal Q3 2025, the number of customers generating over $5,000 in Annual Recurring Revenues (ARR) rose by 16% to 9,519, while those with over $100,000 in ARR grew by 31% to 1,144. The dollar-based Net Retention Rate was reported at 124%.
In December 2024, GitLab launched an integrated offering with AWS that combines GitLab Duo with Amazon Q, enhancing DevSecOps workflows with autonomous AI agents. This advancement will streamline software development, optimize code, and bolster security, facilitating faster software delivery.
Innovations Strengthening GitLab’s Portfolio
GitLab is effectively enhancing its portfolio through AI-driven innovations like GitLab Duo Pro and Duo Enterprise, which have improved developer productivity by offering tools for code generation and assistance.
In the recent quarter, GitLab introduced Advanced SAST for Ultimate customers, which integrates Oxeye technology to bolster vulnerability detection in first-party code, further solidifying GitLab’s appeal to developers focused on security.
Additionally, the firm has made inroads into the public sector, securing contracts with agencies like the U.S. General Services Administration, where GitLab provides compliant DevSecOps solutions for sensitive environments.
Positive Growth Forecasts from GitLab
GitLab’s expanding client base and leadership in the DevSecOps market signal positive growth ahead. The company anticipates fourth quarter fiscal 2025 revenues between $205 million and $206 million, reflecting a year-over-year growth of 25-26%. Non-GAAP earnings per share are projected to be between 22 cents and 23 cents.
For the entire fiscal year 2025, GitLab forecasts revenues between $753 million and $754 million, suggesting around 30% growth year-over-year. Non-GAAP earnings per share are expected to fall between 63 cents and 64 cents.
Earnings Estimates Point Toward Growth
The Zacks Consensus Estimate for revenues in the fourth quarter of fiscal 2025 stands at $205.64 million, marking a year-over-year increase of 25.56%. Furthermore, the estimate for earnings is set at 23 cents per share, indicating a 25.56% rise from the previous year.
For the full year 2025, the revenue estimate is $753.46 million, up by nearly 30%. The earnings estimate is also encouraging, projected at 63 cents per share, reflecting a staggering 215% increase year-over-year.
GitLab Inc. Price and Consensus
GitLab Inc. price-consensus-chart | GitLab Inc. Quote
Concerns About Valuation
Despite its success, GTLB stock is currently considered overvalued, holding a Value Score of F. The stock trades at a high premium, with a forward 12-month Price/Sales (P/S) ratio of 10.68X, in contrast to the industry average of 3.10X.
P/S Ratio (F12M)
Image Source: Zacks Investment Research
Final Thoughts
GitLab’s strong portfolio and impressive partner relationships contribute significantly to its valuation. The company currently holds a Zacks Rank #2 (Buy), signaling that investors might find value in accumulating stock at present levels. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
