GitLab Stock is Trying to Put in a Bottom Here

Software development applications platform Gitlab NASDAQ: GTLB stock has fallen over (-60%) from its $137 high on Nov. 9, 2021. The best-of-breed DevOps platform had a strong following heading into its IPO in October 2021. DevOps is a process that optimizes the systems development process combining software development and IT operations, thus the term DevOps. Its application enables enterprises to build and deliver more efficient, secure, and compliant software. GitLab enables digital transformation for companies that develop software. It provides a one-stop interface that combines IT, development, operations, business, and security on a single platform solution. The efficiency can mean months of development being completed in hours generating tons of cost savings for enterprises. GitLab has changed the process of DevOps and continues to gain popularity as evidenced by the growth of its open-source platform which has over 30 million registered user with over 2,600 contributors. The Company is on its way to monetizing as paid users continue to growth over 15,000. It’s dollar-based net retention rose over 152%. Prudent investors interested in a platform that eliminates digital duct tape in the software development process can look for opportunistic pullbacks in shares of GitLab.

Q4 Fiscal 2022 Earnings Release

On March 14, 2022, GitLab released its fiscal fourth-quarter fiscal 2022 results for the quarter ending December 2021. The Company reported adjusted earnings-per-share (EPS) loss of (-$0.16) excluding non-recurring items versus consensus analyst estimates for a loss of (-$0.25) per share, a $0.09 per share miss. Revenues grew 69% year-over-year (YoY) to $77.8 million beating consensus analyst expectations of $70.29 million. GitLab CEO Sid Sijbrandij commented, “We are seeing continued strong momentum for customers adopting our DevOps platform, as revenue increased 69% year-over-year. This growth was broad-based, driven by strong customer additions across all company sizes. We believe these results demonstrate that the market is moving from DIY DevOps composed of different tools to a DevOps Platform. This shift enables organizations to accelerate the time-to-market of their most important software and applications, providing them with a distinct competitive advantage.”

Raised Guidance

GitLab raised guidance for fiscal Q1 2023 EPS between (-$0.28) to (-$0.27) verses (-$0.30) on revenues between $77 million to $78 million versus $72.8 million. GitLab raised full-year fiscal 2023 guidance with EPS expected between (-$1.02) – ($0.97) versus (-$1.04) consensus analyst estimates on revenues of $385.5 million to $390.5 million versus $336.6 million consensus analyst estimates.

Conference Call Takeaways

CEO Sijbrandij highlighted some of the financial metrics and milestones for its fiscal Q4 2022 including a 60% YoY top line growth driven by strong diverse customer additions. Organizations ranging from small businesses to mid-market and enterprise joined up. Both new signups and upgrades to Ultimate is the fastest growth tier for the Company. He covered how GitLab’s differentiation sets it apart from competitors to help drive growth and retention. Its platform eliminated digital duct tape stemming from disjointed tool chains between teams making problems with integration. GitLab eliminates this problem by enabling teams to collaboration efficiently to build, secure, and deploy its software in one user interface, application, and unified data model. As CEO Sijbrandij explains it, “GitLab replaces the need for teams to switch between tools, allowing companies to cut their complex point solution tool chain. We believe our single application helps companies to deliver software faster, improve organizational efficiency and reduce security and compliance risk. The DevOps platform also enables our customers to manage and secure the entire DevOps workflow across any hybrid and multi-cloud environment.”

GTLB Opportunistic Price Levels

Using the rifle charts on the weekly and daily frames provides a precision view of the landscape for GTLB stock. The weekly rifle chart formed an inverse pup breakdown after peaking near the $59.18 Fibonacci (fib) level. The weekly 5-period moving average (MA) resistance is falling at $49.55 and 15-period MA at $54.98. The weekly stochastic stalled just above the 30-band to set up a mini pup or a cross back down on a make or break formation. The weekly market structure low (MSL) buy signal triggers on a breakout above the $62.99 level. The daily rifle chart is attempting a breakdown on flat daily 5-period MA and 15-period MA at $49.94. The daily stochastic is crossing back down under the 40-band. The daily Bollinger Bands (BBs) are starting to expand with lower BBs falling at $42.24. Prudent investors can watch for opportunistic pullback levels at the $39.29 fib, $35.53 fib, $33.29 fib, $30.74 fib, $24.69 fib, $21.49 fib, and the $16.80 fib level. Upside trajectories range from the $59.18 fib up towards the $77.99 fib level.