26% 'AI rally' on GitLab shares after Q1 earnings and forecasts 📈

4:04 PM June 6, 2023

AI company Gitlab (GTLB.US), which operates in the software development (DevOps) industry, delivered a better-than-expected Q1 report and gave a strong outlook for the future. The market sees the company as another candidate for a potential 'AI rally.

Revenues: $126.88 million vs. $117 million forecast and $87.41 million in Q1 2022 (8% above forecasts of 45% y/y)

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Loss per share: $0.06 loss vs. $0.14 forecasts ($0.18 in 2022) (57% above forecasts)

Wall Street, in particular, was surprised by a smaller-than-forecast loss per share, but the previous report from this site also had a positive disappointment (the market expected a $0.15 loss, the company presented $0.03 beating forecast by 80%). Along with GitLab, shares of Smartsheet (SMAR.US), a company operating in the same development industry, are also gaining today.

The company has beaten consensus EPS estimates four times in the last four quarters. Needham & Company applauded management's actions and said the results showed improved momentum and booking predictability.

  • The number of the company's smaller clients (above $5,000) rose 43% year-on-year to 7,406
  • The number of large clients (above $100,000) rose 39% y/y to 760

GitLab CEO Sid Sijbrandij pointed out that AI is revolutionizing the way companies create, operate and secure their software by which GitLab can become a beneficiary of the new trend - thanks to AI in DevSecOps. The company's ambition is to help companies develop software faster and more efficiently in the context of the growing AI trend. Among other things, GitLab added 5 new AI features in Q1 and another 5 were made available at the end of May.

For the next two quarters, the company expects a loss per share in the range of $0.03 to $0.02, versus a consensus of $0.08, and higher revenues in the range of $129-130 million versus a forecast of $127 million. Full-year loss per share is expected to be in the range of $0.14 to $0.18 - Wall Street's estimate was $0.26. Revenues may settle in the range of $541 million to $543 million versus $533 million estimates.

GitLab (GTLB.US) shares opened with a massive upward gap and broke above the SMA200 (red line). Source: xStation5

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