Shares of GitLab (GTLB 0.19%) were up 13.5% as of 11:50 a.m. ET Tuesday after the software development, security, and operations (DevSecOps) platform provider announced strong third-quarter 2023 results.
For its third quarter ended Oct. 31, 2023, GitLab's revenue grew 32% year over year to $149.7 million, translating to adjusted (non-GAAP) net income of $14.4 million, or $0.09 per share. Analysts, on average, were expecting a net loss of $0.01 per share on revenue of $141 million.
NASDAQ: GTLB
Key Data Points
GitLab is driving profitable growth
GitLab saw strong adoption from both small and large clients alike. The number of customers generating at least $5,000 of annual recurring revenue (ARR) increased 26% year over year, to 8,175, while the number generating over $100,000 of ARR grew 37% to 874. GitLab's dollar-based net retention rate (DBNRR) also expanded by 4 percentage points sequentially, to 128%, meaning existing customers spent an average of 28% more on GitLab's solutions after their first year.
Speaking about the company's huge bottom-line beat, GitLab CFO Brian Robins said the company continued "to grow responsibly," delivering over 2,200 basis points of adjusted operating margin expansion and its first-ever adjusted operating profit. Indeed, GitLab's quarterly adjusted operating income swung to $4.7 million from a loss of $21.6 million in the same year-ago period.
What's next for GitLab stock?
For the current fiscal fourth quarter, GitLab provided guidance for revenue of $157 million to $158 million, adjusted operating income of $5 million to $6 million, and adjusted earnings per share of $0.08 to $0.09. Both the top- and bottom-line ranges easily outpaced analysts' consensus estimates, which called for a fiscal Q4 loss of $0.01 per share on revenue closer to $150 million.
Finally, GitLab raised its full fiscal-year outlook to call for revenue of $573 million to $574 million (up from $555 million to $557 million previously), an adjusted operating loss of $10 million to $9 million (up from a loss of $33 million to $30 million before), and adjusted income per share of $0.12 to $0.13 (up from previous guidance for a loss of $0.08 to $0.05).
In the end, this was a straightforward beat-and-raise performance. GitLab stock is responding in kind.
