Shares of GitLab (GTLB 1.17%) started Wednesday's trading 13.5% below last night's closing bell. Since then, the software development platform's stock has wavered, down 7% at 1:20 p.m. ET.
GitLab's Q4 2026 report smashed analyst targets across the board, but investors focused on modest bottom-line guidance for the next fiscal year.
NASDAQ: GTLB
Key Data Points
What the earnings report actually said
Let's start with the simple headline numbers. The average analyst expected adjusted earnings near $0.23 per share on revenue in the neighborhood of $252 million. GitLab's actual sales rose 23% year over year to $260 million. Adjusted earnings fell from $0.33 to $0.30 per diluted share -- still comfortably ahead of Wall Street's consensus projection.
Looking ahead, management's revenue guidance for 2027 centered on $1.1 billion, 16% above the just-reported 2026 total. Here, the current Street view points to $1.0 billion. But GitLab's earnings guidance was more cautious with a midpoint of $0.78 per share. That's far short of the $1.03 analyst consensus.
Image source: Getty Images.
Can GitLab survive this attack of the robot coders?
A strong report with mixed guidance wasn't enough for GitLab this time. Investors are on edge, widely expecting artificial intelligence (AI) tools to undermine the value of traditional software development systems such as GitLab.
CEO Bill Staples tried to soothe those fears on the earnings call.
"When every developer has access to the same models, code generation becomes a commodity," Staples said. "The bottleneck shifts to everything after the code: reviews, security, pipelines, compliance, deployment. That is precisely where we live, and that position gets harder to replicate as AI proliferates."
In other words, even the best AI tools still require human supervision and quality assurance reviews, and that's what GitLab does for a living.
The stock dropped to new all-time lows this morning, regardless. It's down 60% over the last year and trades at a reasonable 17 times free cash flow (yes, the company generates cash profits). Growth investors could see this price drop as a buying opportunity, though share prices might drop further in the short term.
