Shares of GitLab (GTLB 8.54%) jumped today after the DevOps software company posted strong second-quarter results and raised guidance at a time when many of its peers are taking a more conservative approach.
The stock finished the day up 14.3%.
Revenue in the quarter jumped 74% to $101 million, which easily beat estimates at $94 million.
Net retention rate remained high, above 130%, showing existing customers are increasing their spend with Gitlab by at least 30%, and gross margin was also strong at 89% on an adjusted basis. That's a sign that nearly all of its revenue goes to pay for overhead costs like R&D and marketing rather than the product itself.
The company also made progress on the bottom line as its adjusted net loss narrowed from $26.1 million to $21.5 million, showing the company taking steps to profitability. On a per-share basis, it reported a loss of $0.15, which topped estimates of a $0.23 per-share loss.
CEO Sid Sijbrandij said,
We continue to see strong momentum in our business, and our second quarter results indicate that the market is embracing our One DevOps Platform leadership position. Enterprises are navigating economic uncertainty while still needing to embrace the imperatives of digital transformation, cloud migration, and app modernization. Delivering software fast and efficiently in a secure way is essential for success. GitLab empowers them to do exactly that all in one platform.
In its third-quarter guidance, the company called for revenue of $105 million to $106 million, or 78% growth at the midpoint, ahead of the consensus at $103.4 million. It also expects an adjusted per-share loss of $0.15 to $0.16, which is better than estimates at a loss of $0.25.
Gitlab is penetrating a $40 billion addressable market and sees wide-open demand in front of it as the company seems to be experiencing little of the macroeconomic headwinds that some of its peers are facing.
Though the cloud stock is expensive, the latest quarter shows why it deserves a premium.