GitLab’s third quarter results saw revenue and adjusted profits come in ahead of Wall Street expectations, but the market responded negatively as investors focused on a slowdown in net revenue retention and persistent U.S. public sector headwinds. CEO Bill Staples pointed to strong adoption of the company’s Ultimate subscription and increased usage of its platform—metrics like CI pipelines and deployments were up 35% to 45% year over year. Management also cited “softness in the US public sector” due to slower government decision-making as a drag on results.
Is now the time to buy GTLB? Find out in our full research report (it’s free for active Edge members).
GitLab (GTLB) Q3 CY2025 Highlights:
- Revenue: $244.4 million vs analyst estimates of $239.1 million (24.6% year-on-year growth, 2.2% beat)
- Adjusted EPS: $0.25 vs analyst estimates of $0.20 (24% beat)
- Adjusted Operating Income: $43.68 million vs analyst estimates of $32.16 million (17.9% margin, 35.8% beat)
- Revenue Guidance for Q4 CY2025 is $251.5 million at the midpoint, roughly in line with what analysts were expecting
- Management raised its full-year Adjusted EPS guidance to $0.96 at the midpoint, a 15.8% increase
- Operating Margin: -5.1%, up from -14.7% in the same quarter last year
- Net Revenue Retention Rate: 119%, down from 121% in the previous quarter
- Annual Recurring Revenue: $893 million vs analyst estimates of $912.5 million (27.4% year-on-year growth, 2.1% miss)
- Billings: $252.9 million at quarter end, up 16.9% year on year
- Market Capitalization: $6.58 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From GitLab’s Q3 Earnings Call
- Koji Akeda (Bank of America): Akeda asked about the Q4 revenue guidance and the demand environment, specifically regarding public sector recovery. Interim CFO James Shen said guidance reflects ongoing SMB and government headwinds, with some deals pushed from Q3 into Q4.
- Matt Hedberg (RBC): Hedberg probed the pace of improvement in first order business and new customer acquisition. CEO Bill Staples explained that a new global sales leader has been hired, but results from expanded hiring will take a few quarters to materialize.
- Sanjit Singh (Morgan Stanley): Singh questioned how GitLab plans to align increased platform activity with revenue growth. Staples replied that the shift to a hybrid seat plus usage-based model, enabled by the Duo Agent platform, is expected to better monetize high activity levels.
- Zach (for Shrenik Kothari, Baird): Zach inquired about monetization of Duo-specific capabilities and its contribution to new business. Staples said usage-based pricing will be introduced with the Duo Agent platform, but monetization is still in the early stages.
- Kingsley Crane (Canaccord): Crane sought clarity on Duo Agent platform readiness and adoption ramp. Staples outlined quality, reliability, and security as readiness criteria, and noted that broad adoption by self-managed customers may take multiple quarters due to upgrade cycles.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory team will monitor (1) the commercial adoption and monetization pace of the Duo Agent platform, especially as usage-based pricing takes hold; (2) the impact of new enterprise sales hires and expanded go-to-market efforts on customer growth; and (3) evidence of stabilization or improvement in U.S. public sector and SMB segments, which continue to weigh on overall momentum. The pace of AI-driven workflow adoption and resulting revenue mix will also be key signposts.
GitLab currently trades at $39.21, down from $43.37 just before the earnings. In the wake of this quarter, is it a buy or sell? Find out in our full research report (it’s free for active Edge members).
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