GitLab Stock: Pioneering the AI-Powered DevSecOps Platform

Key Points

• GitLab is a DevSecOps platform provider that enables collaboration between software developers and IT operations using embedded security testing tools.
• GitLab reported a solid fiscal Q1 2025 EPS beat by 7 cents on 33.3% YoY revenue growth accompanied by raised fiscal full-year 2025 EPS guidance.
• GitLab shares are severely underperforming the benchmark indexes, trading down 30% year-to-date (YTD).

Software development platform provider GitLab Inc. NASDAQ: GTLB stock is in a slump, trading down 30% year-to-date (YTD) and nearing 52-week lows. While the artificial intelligence (AI) trend is causing AI-related stocks to surge, GitLab stock has clearly been left out. The company has been a pioneer in the development, security, and operations (DevSecOps) platform segment. GitLab has been implementing more AI features to enhance its platform.

GitLab operates in the computer and technology sector, competing with DevOps platform providers, such as Microsoft Co. NASDAQ: MSFT, Oracle Co. NYSE: ORCL, and Atlassian Co. NASDAQ: TEAM.

What is DevOps?

DevOps are software platforms that help enable collaboration and automation processes between software development and IT operations teams. DevOps enables continuous integration and continuous delivery (CI/CD), as well as infrastructure management and automated testing capabilities to enhance and streamline the software development lifecycle. This helps to speed up software development and delivery, improving quality and maintaining accountability. DevOps platforms help to alleviate silos, reduce operational costs and bolster agility and scalability with software development.

GitLab: Evolving into DevSecOps

Security is usually something that's considered after software is developed and operational. However, this is one of the reasons for the proliferation of security breaches. GitLab took an approach that weaves security into the development process, and thus DevSecOps was born. GitLab integrates AI-powered security testing tools throughout the CI/CD pipeline, enabling security practices throughout the entire software development lifecycle. DevSecOps is an evolution of DevOps that makes security an essential cornerstone of the development process.

GTLB Stock Breaks Down From the Rectangle Channel

The daily candlestick chart on GTLB demonstrates what a rectangle channel breakdown looks like. GTLB was trading in a sideways range between the $59.45 upper trendline resistance and $52.04 lower trendline support for nearly 3 months. The breakdown occurred on May 30, 2024, as shares collapsed through the lower trendline support heading into its fiscal Q1 2025 earnings release. Despite the solid quarterly top and bottom line performance, GTLB continued to sell off after rejecting a bounce attempt at $46.96. The daily relative strength index is attempting to bounce again off the oversold 30-band to form a divergence bottom. This pattern occurs when consecutive bounce attempts occur at higher levels. Pullback support levels are at $41.61, $40.19, $37.40, and $34.74.

GitLab Achieves Top and Bottom Line Beats in Fiscal Q1 2025

GitLab reported fiscal Q1 2025 EPS of 3 cents, beating analyst estimates by 7 cents. Consensus estimates called for an EPS loss of 4 cents. Revenues climbed 33.3% YoY to $169.19 million, beating $165.89 million consensus estimates. Operating cash flow was $38.1 million, and non-GAAP adjusted free cash flow was $37.4 million.

The company raised fiscal Q2 2025 EPS of 9 cents to 10 cents, beating 5 cents consensus analyst estimates. Revenues are expected to be between $176 million to $177 million versus $176.75 million. GitLab raised fiscal full year 2025 EPS to 34 cents to 37 cents, up from previous guidance of 19 cents to 23 cents, versus 21 cents consensus estimates. Full-year revenues were raised from $733 million to $737 million, up from previous estimates of $725 million to $731 million versus $731.42 million consensus estimates.

GitLab CEO Cites the AI Difference with Its Platform

GitLab Co-Founder and CEO Sid Sijbrandij commented, “GitLab continues to differentiate our platform with AI-driven software innovations that are streamlining how customers build, test, secure, and deploy software.”

Sijbrandij added, “Our results show that customers see the value of our end-to-end DevSecOps platform, which enables them to leverage AI throughout the software development lifecycle and enhance productivity while creating better and more secure code.”

GitLab Customer Base Expanded in Double-Digits

GitLab saw its customers with over $5,000 in annual recurring revenue (ARR) grow 21% YoY to 8.976. Customers with over $100,000 ARR grew 35% YoY to $1,025. Dollar-based net retention was an impressive 129%. Total remaining performance obligations (RPO) grew 48% YoY to $681.2 million, while calculated Recognized Potential Obligations (RPO), an estimate for future revenue from customer contracts, rose 34% to $436.1 million.

GitLab'sBusiness Highlights in the Quarter

GitLab had many highlights in the quarter. They announced an integration with Google Console, which helps improve developer experience and lowers context switching across GitLab and Google Cloud. The company was awarded the 2024 Google Cloud Technology Partner of the Year in Application Development. Launched GitLab Duo Chat, enabling customers to integrate AI throughout the software development lifecycle using a single natural language chat interface.

The company released GitLab 17, which features an end-to-end AI add-on called GitLab Duo Enterprise to secure AI capabilities across the development cycle. GitLab also launched the AI Transparency Center so customers can understand how it upholds ethics and transparency in its AI-powered features.

GitLab analyst ratings and price targets are at MarketBeat. With a $67.70 consensus price target, GTLB has a 54.49% upside.