• Revenue: $211.4 million for Q4, a 29% increase year over year.
• Non-GAAP Operating Margin: 17.7% for Q4, an increase of 960 basis points year over year.
• Non-GAAP Gross Margin: 91% for Q4.
• Adjusted Free Cash Flow: $62.1 million for Q4, compared to $24.5 million in the prior-year period.
• Dollar-Based Net Retention Rate (DBNRR): 123% for Q4.
• Total RPO: $945 million, a 40% increase year over year.
• CRPO: $579.2 million, a 35% increase year over year.
• Customers with ARR of $100,000+: 1,229, a 29% increase year over year.
• Full Year FY25 Revenue: $759.2 million, a 31% increase year over year.
• Full Year FY25 Non-GAAP Operating Margin: 10.2%, an increase of 1,050 basis points year over year.
• Full Year FY25 Adjusted Free Cash Flow: $120 million, a 259% increase.
• Guidance for Q1 FY26 Revenue: $212 million to $213 million, representing 25% to 26% growth year over year.
• Guidance for Full Year FY26 Revenue: $936 million to $942 million, approximately 24% growth year over year.

• Warning! GuruFocus has detected 3 Warning Signs with GTLB.

Release Date: March 03, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• GitLab Inc (NASDAQ:GTLB) reported a 29% year-over-year increase in fourth-quarter revenue, reaching $211 million, surpassing expectations.
• The company's non-GAAP operating margin improved significantly, reaching 18%, an increase of 960 basis points year over year.
• GitLab Inc (NASDAQ:GTLB) saw strong adoption of its Ultimate product, which now accounts for 50% of total ARR, driven by its security and compliance features.
• The company experienced a record quarter for net adds of customers with over $100,000 in ARR, indicating strong enterprise demand.
• GitLab Inc (NASDAQ:GTLB) reported a 90% year-over-year growth in its Dedicated offering, highlighting its competitive advantage in providing single-tenant SaaS solutions.

Negative Points

• Despite strong results, the guidance for FY26 reflects a slower growth rate of approximately 24% year over year, indicating potential challenges in maintaining high growth.
• The company faces increasing competition in the AI and code generation market, with notable competitors like GitHub Copilot and standalone tools like Cursor.
• GitLab Inc (NASDAQ:GTLB) is still navigating typical growing pains of a public company, with a desire to scale faster and reduce friction.
• The macroeconomic environment remains cautious, which could impact customer spending and growth prospects.
• The company's joint venture in China, JiHu, continues to incur expenses, with $18 million forecasted for FY26, compared to $13 million last year, without a clear timeline for deconsolidation.

Q & A Highlights

Q: Can you provide insights into the contribution of Duo and Duo Enterprise to your financial results, and how do you differentiate Duo Enterprise in the competitive code generation market? A: Brian Robins, CFO: Duo exceeded expectations this quarter, with about a third of the deals including Duo ARR. While it will take time for Duo to significantly impact our financials, it has been performing well. Bill Staples, CEO: Our differentiation lies in our platform approach. GitLab provides comprehensive context for AI models, covering the entire software lifecycle from planning to deployment. Our Duo Workflow, an autonomous AI agent, enhances productivity by leveraging this context.

Q: Despite your optimism about AI and other initiatives, the financial outlook seems conservative. Can you explain the gap between your enthusiasm and the reported results? A: Bill Staples, CEO: My optimism is based on customer feedback and the transformative potential of AI. While the financial results reflect current market conditions, the enthusiasm stems from the long-term opportunities AI presents for software development and GitLab's role in it.

Q: How do you view the potential for AI to increase the number of software developers, and what feedback have you received from customers on this? A: Bill Staples, CEO: Customers often feel resource-constrained, and AI offers a way to raise the abstraction level, making software development more accessible. While AI will make code generation easier, GitLab's strength lies in managing the entire software lifecycle, ensuring quality, security, and compliance.

Q: What is driving the strong performance of GitLab Ultimate, and do you expect this trend to continue? A: Brian Robins, CFO: Ultimate's success is driven by its security and compliance features, offering a quick payback period and high ROI. The enterprise segment is increasingly adopting Ultimate, and we expect this trend to continue as more customers recognize its value.

Q: With the hiring of Ian as CRO, do you anticipate any significant changes to your go-to-market strategy? A: Bill Staples, CEO: Ian brings extensive experience and operational rigor to our go-to-market strategy. While we will make incremental changes, such as incentivizing first orders and expanding globally, the core strategy remains focused on scaling and leveraging our partner ecosystem.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.