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GitLab Shares Sink After Q3 Beat as Growth Slowdown Worries Wall Street

MarketDash Editorial Team
5 days ago
GitLab delivered a solid third-quarter earnings beat, but investors weren't impressed. Shares tumbled over 13% as analysts flagged decelerating growth metrics and weakness in key customer segments, despite management raising full-year guidance.

Sometimes beating expectations just isn't enough. GitLab Inc. (GTLB) learned that lesson the hard way on Wednesday, watching its shares plunge even after posting respectable third-quarter results.

The software development platform reported revenue growth of 25% year-over-year to $244.4 million, powered by subscription revenue that jumped 27%. Not bad, right? Wall Street didn't think so, sending the stock down 13.6% to $37.44.

What Analysts Are Saying

Rosenblatt Securities analyst Blair Abernethy maintained his Buy rating but trimmed his price target from $58 to $55. He pointed to "headwinds in federal government and continued SMB weakness" that clouded an otherwise solid quarter.

Canaccord Genuity analyst Kingsley Crane kept his Buy rating and $70 price target intact, but his notes revealed the real concern: GitLab's net recurring revenue growth decelerated to 119%, down from 121% the previous quarter and 124% a year ago. That's still impressive growth, but the trend line isn't moving in the right direction.

The Numbers Behind the Worry

Gross margin remained robust at 88.6%, though it contracted about 240 basis points year-over-year. The customer base continued expanding, with 10,475 customers spending more than $5,000 and 1,405 clients above the $100,000 threshold.

For the fourth quarter, GitLab guided to revenue of $251-$252 million, essentially meeting the consensus estimate of $251.9 million. Management raised full-year fiscal 2026 guidance to $946-$947 million in revenue and 95-96 cents per share in non-GAAP earnings.

The mixed message: results were fine, but growth is slowing. In today's market, that's enough to spook investors.

Back to News

GitLab Shares Sink After Q3 Beat as Growth Slowdown Worries Wall Street

MarketDash Editorial Team
5 days ago
GitLab delivered a solid third-quarter earnings beat, but investors weren't impressed. Shares tumbled over 13% as analysts flagged decelerating growth metrics and weakness in key customer segments, despite management raising full-year guidance.

Sometimes beating expectations just isn't enough. GitLab Inc. (GTLB) learned that lesson the hard way on Wednesday, watching its shares plunge even after posting respectable third-quarter results.

The software development platform reported revenue growth of 25% year-over-year to $244.4 million, powered by subscription revenue that jumped 27%. Not bad, right? Wall Street didn't think so, sending the stock down 13.6% to $37.44.

What Analysts Are Saying

Rosenblatt Securities analyst Blair Abernethy maintained his Buy rating but trimmed his price target from $58 to $55. He pointed to "headwinds in federal government and continued SMB weakness" that clouded an otherwise solid quarter.

Canaccord Genuity analyst Kingsley Crane kept his Buy rating and $70 price target intact, but his notes revealed the real concern: GitLab's net recurring revenue growth decelerated to 119%, down from 121% the previous quarter and 124% a year ago. That's still impressive growth, but the trend line isn't moving in the right direction.

The Numbers Behind the Worry

Gross margin remained robust at 88.6%, though it contracted about 240 basis points year-over-year. The customer base continued expanding, with 10,475 customers spending more than $5,000 and 1,405 clients above the $100,000 threshold.

For the fourth quarter, GitLab guided to revenue of $251-$252 million, essentially meeting the consensus estimate of $251.9 million. Management raised full-year fiscal 2026 guidance to $946-$947 million in revenue and 95-96 cents per share in non-GAAP earnings.

The mixed message: results were fine, but growth is slowing. In today's market, that's enough to spook investors.