What Happened?

Shares of software development tools maker GitLab (NASDAQ:GTLB) fell 9.5% in the afternoon session after the company reported mixed first quarter 2025 (fiscal 2026) results: its full-year revenue guidance was in line, and investors were likely hoping for more. Notably, while sales grew 27%, it was a slowdown from prior quarters and signaled potential moderation in customer expansion.

For bears, this was the smallest revenue beat in recent history. Weak $5K and $100K customer adds also kept concerns about seat growth and competition alive.

On the other hand, GitLab raised its full-year EPS guidance. In addition, the quarter's EPS and adjusted operating income exceeded Wall Street's estimates.

Overall, this quarter could have been better, and expectations were likely running a bit too high.

The shares closed the day at $43.37, down 10.6% from previous close.

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What The Market Is Telling Us

GitLab’s shares are extremely volatile and have had 35 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The biggest move we wrote about over the last year was 9 months ago when the stock gained 22.5% on the news that the company reported a "beat and raise" quarter. GitLab beat analysts' revenue, adjusted operating income, and EPS expectations. Net revenue retention rate clocked in at 126%, indicating that customers were not only staying but also expanding their use of GTLB's services. Looking ahead, GTLB lifted its full-year revenue and earnings guidance, which came in higher than Wall Street's estimates. Zooming out, we think this was a solid quarter.

GitLab is down 22.9% since the beginning of the year, and at $43.45 per share, it is trading 40.6% below its 52-week high of $73.14 from February 2025. Investors who bought $1,000 worth of GitLab’s shares at the IPO in October 2021 would now be looking at an investment worth $418.23.

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