GitLab faces stock decline despite beating earnings expectations

In the United States, GitLab Inc. reported its first-quarter financial results on June 10, 2025, after the market had closed. The results indicated a positive performance in terms of earnings and sales compared to the analysts' consensus estimates. GitLab achieved adjusted earnings per share of 17 cents, surpassing expectations of 15 cents, alongside sales reaching $214.51 million, which was above the anticipated $213.16 million. This represented a significant year-over-year increase of 27%. The company's CEO, Bill Staples, emphasized the impact of their AI-native DevSecOps platform in assisting customers in delivering critical software. Looking ahead, GitLab provided its second-quarter guidance, forecasting adjusted earnings per share between 16 cents and 17 cents, with the midpoint aligning closely with the consensus estimate of 16 cents. Sales projections for the upcoming quarter are expected to fall between $226 million and $227 million, slightly below the consensus estimate of $227.16 million. Additionally, GitLab adjusted its fiscal-year outlook, now predicting adjusted earnings per share of 74 to 75 cents, better than an earlier forecast of 68 to 72 cents and exceeding the consensus estimate which was 72 cents. Even with these positive earnings figures, GitLab's stock traded lower by 9.43% on June 11, 2025, landing at $43.94. The decline followed multiple analysts' adjustments to their price targets after the earnings report was released. Analysts from Needham, BTIG, Wells Fargo, and UBS all maintained their ratings on GitLab but reduced their price targets significantly, indicating some concern about the company's future stock performance despite the strong earnings figures. This reaction in the stock market points to a possible disconnect between immediate market sentiment and the fundamental financial performance of GitLab. While the company's reported earnings and sales have outperformed expectations, the lowered sales guidance and analyst revisions may have tempered investor enthusiasm. The market's reaction could reflect overall caution amid broader market trends or skepticism about GitLab's ability to sustain its momentum in a competitive landscape.