Why GitLab Stock Soared Today

Actions of GitLab (GTLB 18.08%) rose today after the cloud software DevOps specialist posted strong results in its fiscal second quarter 2025 earnings report, beating top and bottom estimates.

As of 12:17 p.m. ET, the stock was up 17% on the news.

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GitLab continues to grow

In a challenging environment for cloud software companies, GitLab continues to deliver solid growth.

Revenue for the quarter rose 31% to $182.6 million, beating estimates of $177 million. Adjusted gross margin remained strong at 91%, and the company continued to gain operating cost leverage as sales and marketing expenses rose just 6% to $97.8 million.

Customers with annual recurring revenue of more than $100,000 increased 33% to 1,076, showing that the business is expanding with high-end customers, and the dollar-based net retention rate was 126%, showing that existing customers increased their spending by 26% over the last four quarters.

Adjusted operating income, which excludes stock-based compensation, swung from a loss of $4.3 million in the year-ago quarter to a profit of $18.2 million.

Bottom line, the company reported adjusted operating income of $0.15, up from $0.01 in the year-ago quarter and better than the consensus estimate of $0.10.

CEO Sid Sijbrandij said: “Our results show that the combination of our end-to-end platform and AI solutions is driving results for our customers by aligning with business objectives, delivering measurable results and improving security.”

Where does GitLab go from here?

Looking ahead, GitLab expects revenue of $187 million to $188 million, up 25.2% at the midpoint from a year ago and slightly above estimates.

Bottom line, the company called for adjusted earnings per share of $0.15-$0.16, up from $0.09 a year ago and better than the $0.11 consensus.

GitLab also reported strong growth in remaining performance obligations at 51%, a proxy for its stock.

The company’s valuation has fallen sharply from its post-IPO peak, making the price seem more reasonable. If it can continue to deliver solid growth and improve its margins, the stock should move higher from here.