GitLab's Surprising Quarter: What Are Analysts Whispering About Its Future?

Truist Securities analyst Miller Jump maintained GitLab Inc GTLB with a Buy and raised the price target from $65 to $70.

GTLB produced its third consecutive beat-and-raise quarter, driven by solid execution and an improving demand backdrop. 

The quarter saw stabilizing enterprise demand as their platform vision for DevSecOps resonates in the market, and customers are consolidating tools onto their solution. 

The company expects momentum to continue with improved visibility into their pipeline as they progress through the renewal-heavy 4Q. Given the momentum, Jump noted that the guidance may prove conservative as early tailwinds from multiple growth drivers take hold.

Jump projected 4Q revenue and EPS of $158 million (prior $150 million) and $0.08.

Scotiabank analyst Nick Altmann maintained a Buy rating on Gitlab and raised the price target from $60 to $70.

The 6% upside to consensus estimates, a bounce-back in bookings, improvements in seat contraction, and a guidance raise of 4% led to shares moving higher after hours.

GTLB did not provide FY25 guidance but did note they expect a $10 million - $20 million tailwind from the Premium pricing changes, which seems conservative, and FY25 estimates remain one of the most topical debates. Macro-wise, SMB and MM worsened slightly, though win rates and contraction improved. 

Ultimate is 43% of ARR, which has yet to meaningfully change in the last several quarters. However, management called out Dedicated deals being a focus, and GTLB Duo can help foster more upsell activity in FY25. 

Altmann projected a 4Q revenue of $157 million.

RBC Capital analyst Matthew Hedberg maintained GitLab with an Outperform and raised the price target from $62 to $70.

Gitlab delivered a strong beat-and-raise quarter despite a mixed macro environment. Hedberg noted the model sets up well for additional upside from the Premium tier price increase, Code Suggestion, Gitlab Dedicated, and free-to-pay conversion. 

Hedberg projected 4Q revenue and EPS of $157.5 million (prior $149 million) and $0.08 (prior $0.00).

Needham analyst Mike Cikos maintained a Hold rating.

GitLab reported 3Q earnings, with results ahead of guidance and expectations. 

Management commentary included more focused competitive remarks versus Microsoft Corp's MSFT GitHub and Atlassian Corp's TEAM Jira. 

The most significant incremental takeaway from the earnings call was management highlighting that the Premium SKU price increase would contribute $10 million to $20 million in revenue in FY25. While the company discussed it was early in the planning process for next year, the $10 million - $20 million benefit equates to 1.7%-3.5% of incremental growth next year - a far cry from buy-side expectations for ~10 points ($50 million-plus).

Cikos projected 4Q revenue and EPS of $157.6 million and $0.08 (prior $0.01).

Cantor Fitzgerald analyst Jonathan Ruykhaver reiterated an Overweight and increased the price target from $55 to $65.

GitLab delivered a solid 3Q performance, exceeding FactSet consensus estimates for revenue, operating income, EPS, and adjusted free cash flow. 

As stated in his recent initiation report, high-profile hacks such as SolarWinds Corp SWI in 2020 and Log4j vulnerability in 2021 are daily reminders of the criticality of securing the software supply chain, a core function GitLab is in an ideal position to tackle.

Ruykhaver projected 4Q revenue and EPS of $157.4 million (prior $149 million) and $0.08 (prior $0.03).

Price Action: GTLB shares traded higher by 11.10% at $60.42 on the last check Tuesday.