GitLab (GTLB) shares experienced a significant premarket decline of over 22% on Tuesday following the release of the software company's full-year profitability guidance, which fell short of Wall Street's expectations.
For the fiscal fourth quarter of 2024, GitLab reported earnings per share (EPS) of $0.15, exceeding the forecasted $0.08. The quarter's revenue reached $163.8 million, surpassing the anticipated $157.89 million. The company achieved an 8% non-GAAP operating margin during this period.
Looking ahead to the first quarter of fiscal 2025, GitLab anticipates a loss per share ranging from $0.05 to $0.04, falling short of the consensus estimate of $0.06. Revenue is projected to be between $165 million and $166 million, exceeding the analyst-expected $162 million.
For the full year 2025, GitLab forecasts EPS in the range of $0.19 to $0.23, which is below the consensus projection of $0.35. The company expects full-year revenue to land between $725 million and $731 million, slightly below the forecasted $732 million.
Despite the conservative guidance, Goldman Sachs analysts maintain a positive outlook on GTLB. They reiterated their buy rating and set a price target of $80 on the stock.
In a note, the analysts mentioned that the market's reaction (-22% after hours) appears exaggerated, driven by a demanding setup (GTLB +26% since 3Q24 results vs NASDAQ +14%). They believe the softer profitability estimates and in-line FY25 revenue growth expectations are overstated.
The analysts noted that while management indicated a more restrained revenue upside in the future, the company has various top-line levers (pricing, AI, new product rollouts), and potential macro stabilization could lead to outperformance.
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