Investing.com
Published Jun 11, 2025 12:56PM ET
Macquarie maintained its Outperform rating on GitLab Inc (NASDAQ:GTLB) while lowering its price target to $75.00 from $90.00 following what it described as a "disappointing" first quarter. According to InvestingPro data, GitLab maintains impressive revenue growth of 31% year-over-year, though the stock currently trades above its Fair Value.
The research firm noted GitLab delivered a relatively modest $1.5 million revenue beat with no change to full-year revenue guidance. Sequential subscription revenue growth was approximately $8.9 million, roughly flat compared to the same quarter last year, with management attributing the smaller beat to a mix favoring SaaS and back-end weighted quarter. InvestingPro subscribers can access 8 additional key insights about GitLab's financial health and growth prospects.
Despite the revenue concerns, GitLab showed positive metrics with remaining performance obligation (RPO) growing 40% year-over-year and current RPO growing 34%. The company also maintained a healthy dollar-based net retention rate of 122%, driven primarily by seat expansions. The company's strong operational performance is supported by an exceptional gross profit margin of 89%.
GitLab expanded its non-GAAP operating margin by 14 percentage points year-over-year to 12%, beating earnings per share expectations and raising its full-year operating income and EPS guidance. On the product front, the company announced Duo Enterprise will be available to both Premium and Ultimate customers.
Macquarie addressed competitive concerns in the code creation space, noting that while enterprise CTOs show enthusiasm for code creation startups, GitLab's interoperability positions it to coexist with these tools as third-party AI code creation tools drive more code into GitLab's DevOps platform.
In other recent news, GitLab Inc reported a 27% revenue growth in its first-quarter fiscal 2026 results, slightly surpassing expectations but marking its smallest revenue beat to date. Despite this, GitLab maintained its fiscal year 2026 revenue guidance. UBS, TD Cowen, RBC Capital, and Truist Securities all lowered their price targets for GitLab, citing various concerns including macroeconomic impacts and the company's mixed quarterly performance. UBS adjusted its price target to $73, TD Cowen to $67, RBC Capital to $62, and Truist Securities to $75, while all maintaining positive ratings on the stock. DA Davidson reiterated a Neutral rating with a $45 price target, noting that GitLab's current growth trajectory appears reasonably priced. GitLab's management highlighted consistent demand and bookings execution trends, despite some challenges related to a higher Software-as-a-Service mix and linearity issues. The company continues to focus on enterprise expansion with its premium offerings, such as Ultimate, Dedicated, and Duo. Analysts expressed confidence in GitLab's fundamental business position, with some noting potential growth opportunities in consolidating the software development market.
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Written By: Investing.com
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