What Happened:
Shares of software development tools maker GitLab (NASDAQ:GTLB) jumped 11.5% in the morning session after the company reported an impressive "beat and raise" quarter. First quarter results exceeded analysts' revenue, gross margin, non-GAAP operating income, and earnings per share estimates. In addition, customer growth remained strong, with a noteworthy 43% year on year increase in customers generating over $5,000 in ARR (annual recurring revenue). However, the company continued to burn cash. Moving ahead, guidance was strong. Revenue guidance for the next quarter exceeded Consensus estimates, while full-year guidance also surpassed expectations and was revised upward. Profitability guidance for the next quarter and full year were in line. Management also touched on the company's readiness for the growing AI revolution adding that "Today, we deliver more AI-powered capabilities to customers than any other DevSecOps platform." Overall, it was a solid quarter with a decent beat on key performance metrics and a strong outlook for the full year.
What is the market telling us:
GitLab's shares are very volatile and over the last year have had 67 moves greater than 5%. But moves this big are very rare even for GitLab and that is indicating to us that this news had a significant impact on the market's perception of the business.
GitLab is up 5.17% since the beginning of the year, but at $46.25 per share it is still trading 33.9% below its 52-week high of $69.94 from August 2022. Investors who bought $1,000 worth of GitLab's shares at the IPO in October 2021 would now be looking at an investment worth $444.70.
Is now the time to buy GitLab? Access our full analysis of the earnings results here, it's free.