GitLab Stock Slumps Despite an Earnings Beat. Why Analysts Are Concerned.

GitLab beat analysts’ quarterly earnings targets, but its revenue guidance looked a little light. (Rafael Henrique/Dreamstime)

GitLab stock was plummeting on Thursday after the provider of software development tools issued weaker-than-expected revenue guidance, spooking analysts.

Shares tumbled 8.3% to $43.04 in early trading. The S&P 500 was 0.2% higher.

GitLab topped Wall Street’s quarterly earnings and revenue targets, but its guidance came in a little light.

Created with Highcharts 9.0.1GitLabSource: FactSetAs of Sept. 5, 4 p.m. ET

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GitLab is yet to get much of a boost from artificial intelligence, and it’s tough to see where upside to revenue would come from given the “near-term dynamics around pricing,” D.A. Davidson analyst Lucky Schreiner said in a research note. He maintained a Neutral rating on the stock, and cut his price target to $45 from $50 previously.

For the quarter, the company expects adjusted earnings of between 19 cents and 20 cents a share, and sales of $238 million to $239 million. Analysts were looking for adjusted per-share earnings of 19 cents on sales of $241.1 million, according to a FactSet poll.

Billings growth decelerated to 21% over the quarter, down from 35% previously. That could be a sign of sluggish future sales growth for GitLab, which makes the vast generates the vast majority of its revenue from selling subscriptions that give companies and developers access to its platform.

As of Wednesday’s close, shares were down 17% this year. The S&P 500 is up 9.6% in 2025.

Write to George Glover at george.glover@dowjones.com