Shares of GitLab (NASDAQ: GTLB) were soaring today after the DevOps cloud software specialist posted strong results in its fiscal 2025 second-quarter earnings report, beating estimates on the top and bottom lines.
As of 12:17 p.m. ET, the stock was up 17% on the news.
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GitLab keeps growing
In a difficult environment for cloud software companies, GitLab keeps delivering solid growth.
Revenue in the quarter rose 31% to $182.6 million, topping estimates at $177 million. Adjusted gross margin remained strong at 91%, and the company continued to gain leverage on its operating costs as sales and marketing expenses were up just 6% to $97.8 million.
Customers with more than $100,000 in annual recurring revenue rose 33% to 1,076, showing the business is scaling up with higher-end customers, and dollar-based net retention rate was 126%, showing that existing customers have increased their spending by 26% over the last four quarters.
Adjusted operating income, which excludes stock-based compensation, flipped from a $4.3 million loss in the quarter a year ago to an $18.2 million profit.
On the bottom line, the company reported adjusted operating income of $0.15, up from $0.01 in the quarter a year ago and better than the consensus of $0.10.
CEO Sid Sijbrandij said, "Our results show the combination of our end-to-end platform and AI solutions are driving results for our customers by aligning to business goals, providing measurable results, and improving security."
Where does GitLab go from here?
Looking ahead, GitLab expects revenue of $187 million-$188 million, up 25.2% at the midpoint from a year ago and slightly ahead of estimates.
On the bottom line, the company called for adjusted earnings per share of $0.15-$0.16, up from $0.09 a year ago and better than the consensus of $0.11.
GitLab also reported strong growth in remaining performance obligations at 51%, a proxy for its backlog.
The company's valuation has come down sharply from its post-IPO peak, making the price look more reasonable. If it can keep delivering solid growth and improving its margins, the stock should move higher from here.
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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends GitLab. The Motley Fool has a disclosure policy .
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