GitLab (NASDAQ:GTLB) witnessed a 16% decline in its shares on Tuesday following its announcement of full-year 2025 revenue and profit forecasts below Wall Street’s expectations. The software developer attributed this to a cautious spending environment amidst economic uncertainty.
CFO Brian Robbins indicated a shift towards a “less conservative” approach to providing forecasts as GitLab enters its third year as a public company. Despite this, analysts and investors had anticipated more robust figures for the company’s growth trajectory.
Ophir Gottlieb, CEO at Capital Market Laboratories, interpreted the lower guidance as a prudent measure amidst uncertainties surrounding the Federal Reserve and economic indicators, rather than an indication of slowed business expectations.
If the losses persist, GitLab stands to lose approximately $1.9 billion from its market value of $11.59 billion as of Monday’s close.
The company projected a first-quarter loss ranging from $12 million to $13 million, including a $15 million expense associated with hosting an in-person company-wide summit, marking the first such event since 2019, for its predominantly remote workforce.
Despite the less-than-expected forecasts, GitLab reported increased adoption of its platform, which aids users in managing, and developing code, automating processes, and testing programs.
However, revenue projections for the first quarter and fiscal year 2025 fell short of analysts’ estimates. GitLab cautioned that these projections did not account for potential price hikes.
Gil Luria, a senior software analyst at D.A. Davidson, noted that GitLab has observed significant conversions from free to paid tiers following stricter limitations on its free tier.
The company raised prices for its Premium tier in April 2023, marking the first increase in five years, and anticipates generating $10 million to $20 million in incremental revenue for the fiscal year, as stated by Robbins.
Comparatively, GitLab’s stock trades at 241.09 times forward profit projections, while peers Atlassian (NASDAQ:TEAM) and Splunk (NASDAQ:SPLK) trade at 69.42 and 26.99 times forward profit projections, respectively.
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Author Faith Yakubu 
