GitLab shares are down in early trading on a disappointing revenue forecast / Photo: X / GitLab
GitLab, a mid-cap provider of software development tools, fell nearly 9% in the first minutes of Wednesday's premarket trading after warning that revenue growth will slow in the near term. CEO Bill Staples said "we aren’t satisfied with our revenue growth guidance."
Details
GitLab shares dropped nearly 9% to $24.35 apiece in the opening minutes of premarket trading on Wednesday.
Investors were disappointed by the company’s revenue guidance for fiscal 2027, which began February 1. GitLab now expects revenue of $1.10-1.12 billion for the year, implying growth of 14.5-16.7% from fiscal 2026. Analysts surveyed by FactSet had been expecting growth of about 17.3%, the Wall Street Journal reported. In fiscal 2026, the company reported revenue growth of 26% to $955 million.
“We aren’t satisfied with our revenue growth guidance,” GitLab CEO Bill Staples said during a call with analysts following the results, according to the WSJ. He explained that the company’s bookings growth rate has not scaled with revenue growth in the past three years.
Outlook
To accelerate growth, GitLab plans several measures, including investments in its sales organization and executing on its AI strategy, the WSJ wrote.
The company is behind Duo Agent, a platform that embeds AI agents to assist with workflow automation. This, along with hybrid pricing, should drive multi-year growth, CFO Jessica Ross is quoted as saying.
Stock performance
Since the beginning of the year, GitLab shares have fallen almost 29%. Against that backdrop, at least six Wall Street analysts have lowered their target prices for the stock, while two have downgraded their recommendations to “hold,” according to Yahoo Finance data.
GitLab stock currently has 16 “buy” ratings from analysts, 13 “hold” ratings and one “sell” rating. The average target price is $45.84 per share, implying upside of almost 72% from the Tuesday closing price.
