Key Takeaways
- Shares of GitLab declined approximately 8% in early trading after the company issued fiscal 2027 guidance below Street expectations
- Full-year EPS forecast of 76–80 cents significantly trailed the analyst consensus of $1.05
- Annual revenue outlook of $1.10–$1.12 billion missed the $1.12 billion estimate
- Management indicated the Duo Agent Platform won’t be a material revenue generator in the current fiscal year
- Multiple Wall Street firms reduced their price targets on GitLab following the results
Shares of GitLab have declined approximately 57% from their highs over the trailing twelve months, with Wednesday’s premarket selloff extending losses after the DevOps platform provider delivered forward guidance that fell short of investor expectations.
For its fourth fiscal quarter ending in January, the company reported adjusted earnings of 30 cents per share. Sales climbed 23% compared to the prior-year period, reaching $260.4 million and surpassing the Wall Street consensus of $252.2 million. The quarterly performance itself exceeded expectations.
The disappointment centered on future projections.
For fiscal year 2027, GitLab forecasts revenue between $1.10 billion and $1.12 billion. Wall Street had anticipated $1.12 billion, which would reflect approximately 17% year-over-year expansion. This marks a notable deceleration from the 26% growth rate achieved in the previous fiscal year.
The profitability outlook presented an even larger disconnect. GitLab’s adjusted earnings per share guidance of 76 to 80 cents came in substantially below the $1.05 consensus estimate. The magnitude of this shortfall proved difficult for investors to overlook.
A minimum of five brokerage firms subsequently lowered their price targets for the stock.
The AI Dilemma
Artificial intelligence sits at the heart of the uncertainty. GitLab’s Duo Agent Platform represents the company’s vision for human-AI collaboration in software development. However, during the earnings conference call, executives cautioned analysts against expecting significant revenue contributions from the platform during fiscal 2027.
This messaging creates a challenging dynamic in an environment where investors are scrutinizing every software vendor for evidence that artificial intelligence represents a growth catalyst rather than a competitive threat.
Analysts at TD Cowen highlighted the evolving AI landscape as a critical monitoring point. They emphasized GitLab’s need to demonstrate its competitive standing in what they described as the “AI 2.0 era,” where AI-native development tools are proliferating rapidly.
The broader enterprise software sector faces similar headwinds. MongoDB experienced a 22% stock decline on Tuesday following its own conservative guidance and acknowledgment that AI hadn’t yet emerged as a significant revenue contributor. GitLab’s results arrived against this backdrop of sector-wide caution.
Some Analysts Remain Constructive
Despite the guidance miss, not all analysts are turning bearish. William Blair’s Jackson Ader maintained an Outperform rating, highlighting GitLab’s established enterprise customer base and arguing that AI is expanding the company’s addressable market opportunity over the longer term.
Ader acknowledged the guidance shortfall and noted that management had effectively “reset expectations.” However, he emphasized that the fourth-quarter results demonstrated solid execution, and suggested that delivery on product development and sales initiatives will determine the company’s trajectory going forward.
GitLab shares traded down 7.2% in premarket action Wednesday morning, hovering around $24.35 per share.
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