GitLab GTLB reported a third-quarter fiscal 2023 non-GAAP loss of 10 cents per share, which surpassed the Zacks Consensus Estimate by 37.50% and was much narrower than the loss of 34 cents reported in the year-ago quarter.
Total revenues of $113 million also beat the consensus mark by 6.86% and jumped 69.1% year over year.
Top-Line Details
Subscriptions- self-managed and SaaS (87.1% of total revenues) revenues surged 64.7% year over year to $98.4 million. License- self-managed and other revenues (12.9% of total revenues) soared 107% year over year to $14.5 million.
Customers with more than $5K of Annual Recurring Revenue (ARR) increased to 6,469, up 59% year over year. Customers with more than $100K of ARR increased to 638, up 49% year over year.
GitLab Inc. Price, Consensus and EPS Surprise
GitLab Inc. price-consensus-eps-surprise-chart | GitLab Inc. Quote
The ultimate tier continues to be GitLab’s fastest growing tier, representing 39% of ARR in fiscal third-quarter 2023.
Moreover, the dollar-based Net Retention Rate was above 130% in the reported quarter.
Total Remaining Performance Obligation (RPO) grew 62% year over year to $393 million, and current RPO grew 67% to $278 million.
GitLab’s expanding clientele includes the likes of UBS, Agoda and CARFAX. Moreover, new product innovations are noteworthy.
In the fiscal third quarter, GitLab announced GitLab Govern, a new solution that brings together GitLab’s security and compliance capabilities. The company also launched TeamOps.
GitLab also launched Suggested Reviewers, its first machine learning-powered feature.
Meanwhile, GitLab partnered with Google Cloud to launch Cloud Seed. The partnership will allow customers to migrate to the cloud using a single platform.
Cloud Seed is built into the GitLab web UI and leverages the company’s CI/CD pipeline capabilities to give developers a frictionless experience and to make it easier to deploy their web applications directly to Google Cloud from GitLab.
Operating Details
Fiscal third-quarter 2023 non-GAAP gross margin contracted 100 basis points from the year-ago quarter to 88.7%. The year-over-year growth was negatively impacted by higher growth in low-margin SaaS revenues.
On a non-GAAP basis, research & development expenses increased 38% year over year to $31.1 million. Sales and marketing expenses were up 42.1% to $68.2 million. General and administrative expenses rose 69.2% to $22.5 million in the reported quarter.
On a non-GAAP basis, the operating loss was $21.6 million compared with the year-ago quarter’s loss of $23.9 million.
Balance Sheet
As of Oct 31, 2022, cash and cash equivalents and short-term investments were $927.8 million.
Guidance
For the fourth quarter of fiscal 2023, GitLab expects revenues between $119 million and $120 million.
Non-GAAP operating loss is expected in the range of $27-$26 million for the fiscal fourth quarter. Loss is expected between 15 cents and 14 cents per share.
For fiscal 2023, GitLab now expects revenues between $420.5 million and $421.5 million.
Non-GAAP operating loss is expected in the range of $100-$99 million for the fiscal year. Loss is expected between 56 cents and 55 cents per share.
For fiscal 2024, GitLab expects revenues to grow 40% year over year. Free cash flow is expected to hit breakeven in fiscal 2025.
Zacks Rank & Stocks to Consider
Currently, GitLab has a Zacks Rank #3 (Hold).
GitLab shares have lost 55.9% year to date, underperforming the Zacks Computer & Technology sector’s decline of 30.4%.
Some better-ranked stocks in the sector are Richardson Electronics RELL, Sanmina SANM and Super Micro Computer SMCI. All three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of Richardson Electronics, Sanmina and Super Micro Computer are up 87.6%, 55.6% and 89.6%, respectively, on a year-to-date basis.
7 Best Stocks for the Next 30 Days
Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."
Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.8% per year. So be sure to give these hand-picked 7 your immediate attention.
See them now >>Richardson Electronics, Ltd. (RELL) : Free Stock Analysis Report
Sanmina Corporation (SANM) : Free Stock Analysis Report
Super Micro Computer, Inc. (SMCI) : Free Stock Analysis Report
GitLab Inc. (GTLB) : Free Stock Analysis Report
To read this article on Zacks.com click here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
