GitLab Stock Q3 Earnings: GTLB blasts off more than 19% on revenue beat

• GitLab reported third quarter results late Monday.
• GTLB stock ran up 19.5% based on solid revenue results ahead of expectations.
• GitLab reported a beat on top and bottom lines for Q3.
• NASDAQ Composite dropped 1.9% in Monday's regular session, and GTLB lost more than 7%.

GitLab (GTLB) surged 19.5% in Monday's afterhours session after the programming and developer platform reported Q3 revenue well above Wall Street consensus. The surge, if it can be retained in Wednesday's regular session, would push GTLB above the descending top trendline that has kept the share price falling since August. The impressive rally was doubly watched, because the market was so pessimistic to start the week. The NASDAQ lost 1.9% in Monday's session.

GitLab stock news

GitLab reported third quarter adjusted earnings per share of $-0.10 and revenue of $113 million. Both figures turned out to be better than Wall Street expectations for $-0.15 and $106 million in sales. GTLB stock had already sold off more than 7% on Monday, so the shock of considerably better than predicted results worked wonders in the post-market session with shares rising above $45.

Management also cheered on the stock by guiding for between $119 and $120 million in sales for the fourth quarter. The guidance on adjusted EPS though was somewhat worse at $-0.14 to $-0.15 compared with Q3. 

“Our third quarter results continue to demonstrate our ability to drive high growth with improving margins,” said GitLab CFO Brian Robins.

In addition to the headline figures, GitLab improved its adjusted operating margins by 17% and reported a dollar-based net retention rate above 130%, which has become the industry gold standard.

As a top DevOps platform, executives at GitLab pointed to a high percentage of recent corporate survey respondents reporting impending adoption of DevOps platforms despite the worrying macro picture.

In addition to 69% revenue growth reported in the third quarter, GitLab showcased the total number of its customers with more than $5,000 a year in recurring revenue spend growing 59% YoY to 6,469. On top of that, clients spending more than $100,000 per year on the GitLab platform in recurring revenue rose 49% YoY to 638. 

GitLab stock forecast

The most important part of the GTLB rally is that the price broke straight through the descending trend line that has existed since late August. A close above that trendline would signal a continuance of the present rally. From here bulls will produce a trial run at $47.50, $50 and $52. These levels have coincided with both resistance and support thresholds over the past eight months. The Moving Average Convergence Divergence (MACD) indicator was already in a bullish crossover pattern, so the possibility is there for a larger move to the upside if the market allows. 

GTLB 1-day stock chart