GitLab: Top Earning Guidelines | The Pied Fool

GitLab (GTLB -5.74%)an expert in software development platforms with tightly integrated security policies (DevSecOps), released solid financial results in its fiscal 2025 Q2 earnings release on September 3, 2024.

The company reported revenue of $182.6 million, beating management’s guidance of $176.0-177.0 million. Non-GAAP (generally accepted accounting principles) operating income was $18.2 million, beating guidance of $10.0-11.0 million. In addition, non-GAAP diluted net income per share was $0.15, higher than the estimated range of $0.09-$0.10.

This quarter reflects strong operational execution and strategic progress.

Source: SEC documents. Expectations based on management guidance as provided in the 2024-06-03 earnings report.

Overview of GitLab

GitLab Inc. is a comprehensive DevSecOps platform that integrates software development, operations, IT, security and business teams in one tool. The company aims to address inefficiencies and fragmentation in the software development lifecycle with its all-in-one platform. GitLab recently released GitLab Duo Enterprise, an AI-powered add-on, and was recognized as a leader in Gartner’s Magic Quadrant for Artificial Intelligence (AI) code assistants. This highlights GitLab’s commitment to innovation and market leadership.

The company is focused on widespread adoption of its platform, evidenced by its substantial customer base and key growth metrics. GitLab reported a 19% increase in customers with at least $5,000 ARR (annual recurring revenue) and a 33% increase in customers with more than $100,000 ARR. The net dollar retention rate was 126%, reflecting strong customer retention and recurring revenue.

Quarterly highlights

GitLab’s revenue for Q2 FY 2025 was $182.6 million, up 31% from $139.6 million in Q2 FY 2024. This beat management’s guidance by $5.6 million. Significant revenue growth indicates continued strong market adoption and customer retention. The company’s GAAP operating margin improved to (22%) from (39%) in Q2 FY 2024, showing improved operating efficiencies. Non-GAAP operating margin also changed sharply to a positive 10% from (3%) in the year-ago period, indicating effective cost management and profitability.

Furthermore, non-GAAP diluted net income per share was reported at $0.15, compared to management’s guidance of $0.09 – $0.10 per share, marking a 50% performance above the high end of the range. Non-GAAP net income was $24.5 million, up significantly from $1.9 million in Q2 FY 2024. These financials highlight GitLab’s successful strategies for growth and profitability.

GitLab also released GitLab Duo Enterprise, an AI-powered add-on, priced at $39 per user per month. The release coincided with GitLab’s designation as a Leader in Gartner’s Magic Quadrant for AI Code Assistants. This honor underscores the company’s focus on integrating AI into its DevSecOps platform, enhancing its competitive advantage.

Customer engagement remained robust, with customers generating more than $5,000 ARR growing to 9,314, up 19% over last year, and those generating at least $100,000 ARR growing to 1,076, up 33%. The net dollar retention rate was 126%, demonstrating strong customer growth and retention. However, the company’s GAAP gross margin fell slightly to 88% in Q2 FY2025 from 89% in the same period in FY2024, while non-GAAP gross margin remained flat at 91%.

Operating cash flow was $11.7 million for Q2 FY 2025, down from $27.1 million in Q2 FY 2024. This decline appears to be a point of concern, although substantial gains in other financials may offset this trend for now. GitLab delivered positive operating cash flow and notable margin expansion, supported by strategic innovations and effective cost management.

Looking ahead

For Q3 FY 2025, GitLab’s guidance includes revenue of $187 million to $188 million, non-GAAP operating income of $19 million to $20 million, and non-GAAP diluted net income per share of $0.15 to $0.16. These forecasts reflect management’s confidence in continued strong performance. Additionally, the company raised its guidance for the full year, now expecting revenue of $742 million to $744 million (up from $733 million to $737 million) and non-GAAP operating income of $55 million to $58 million (up from 34.0 – 38 million USD). The upward revision highlights management’s optimistic outlook.

Investors should watch for further advancements in GitLab’s AI capabilities, customer growth metrics and strategic partnerships. Integrating AI into its DevSecOps platform and expanding through strategic alliances are key to future growth. Also, paying attention to any changes in gross margins and cash flow will be crucial as GitLab navigates its rapid growth phase.