GitLab Stock Drops as Weak Guidance Overshadows Q2 Earnings Beat
Shares fell approximately 9% in after-hours trading despite strong Q2 results, as full-year revenue forecast falls short of Wall Street estimates.
GitLab Inc. (NASDAQ: GTLB) saw its shares tumble in after-hours trading Wednesday, as the company's disappointing full-year forecast overshadowed an otherwise strong second-quarter earnings report.
The DevOps software provider , with revenue climbing 29% year-over-year to $236.0 million and an adjusted earnings per share of $0.24. Both figures comfortably surpassed Wall Street expectations, which had pegged revenue at $227.2 million and EPS at $0.16. The company also highlighted significant growth in operating and free cash flow.
Despite the robust quarterly performance, investors focused on the company’s forward-looking statements. The primary driver for the negative sentiment was of $939 million at the midpoint, which fell just shy of analysts' consensus estimate of $943 million. This slight miss signaled a potential revenue deceleration in the latter half of the fiscal year, spooking the market and sending the stock down by approximately 9% in extended trading.
Adding to investor concerns, the company also announced a CFO transition, a move that can often create uncertainty. The stock initially plunged as much as 12% following the release before paring back some losses during the company's conference call, where executives aimed to soothe investor fears by clarifying that the guidance was conservative due to go-to-market strategy changes.
CEO Bill Staples focused on the company's innovation, stating, “This quarter’s results demonstrate the strength of GitLab’s AI-native DevSecOps platform as we continue to drive customer-focused innovation.” He pointed to the public beta launch of the GitLab Duo Agent Platform as a key step in advancing its AI capabilities. However, on a night when other SaaS stocks also faced pressure, the market was more focused on the financials, proving that even a solid earnings beat can't always prevent a slide when future guidance raises questions.