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GitLab Inc. (Nasdaq: GTLB) shares are plummeting over 12% in premarket trading following the company’s first quarter fiscal year 2026 earnings report. Despite beating earnings expectations and posting strong 27% revenue growth, investors are reacting negatively to the company’s disappointing revenue guidance for the coming quarters. The DevSecOps platform provider’s stock dropped from $48.51 at close to $42.30 in premarket trading, representing a significant $6.21 decline that has wiped out recent gains.

GitLab’s Earnings Disappoint Despite Strong Fundamentals

GitLab delivered a mixed earnings report that showcased both strengths and concerns for investors. The company reported first-quarter earnings of $0.17 per share on a non-GAAP basis, beating Wall Street’s estimate of $0.15 per share. Revenue surged 27% year-over-year to $214.5 million, surpassing analyst expectations of $213.2 million. The company also significantly narrowed its net loss to $36.2 million from $55.4 million in the prior year period.

Key business metrics showed healthy momentum with customers generating more than $100,000 in annual recurring revenue growing 26% year-over-year to 1,288. The company’s Dollar-Based Net Retention Rate remained strong at 122%, while total remaining performance obligations grew 40% to $955.1 million. GitLab also achieved record adjusted free cash flow of $104.1 million, demonstrating improved operational efficiency.

However, the positive earnings performance was overshadowed by disappointing guidance that failed to meet investor expectations. For the second quarter, GitLab projected revenue of $226-227 million, with the midpoint falling short of Wall Street’s $226.6 million estimate. More concerning was the company’s reiteration of its full-year revenue guidance of $936-942 million, where the midpoint of $939 million trails analyst expectations of $939.7 million.

GitLab’s Stock Brief: Premarket Carnage and Key Metrics

GitLab’s stock is experiencing significant premarket volatility, trading at $42.30 as of 5:28 AM EDT, down $6.21 or 12.80% from the previous close of $48.51. This dramatic decline erases recent gains and pushes the stock deeper into negative territory for 2025, with year-to-date returns now at -13.91% compared to the S&P 500’s positive 2.67% return. The stock’s 52-week range spans from $37.90 to $74.18, indicating substantial volatility over the past year.

The company maintains a market capitalization of approximately $8.01 billion with an enterprise value of $7.02 billion. GitLab trades at a forward price-to-earnings ratio of 67.57 and a price-to-sales ratio of 10.29, reflecting its growth premium despite profitability challenges. The stock carries significant analyst support with an average price target of $66.44, suggesting potential upside from current premarket levels.

Trading volume surged following the earnings announcement, with institutional investors and retail traders reacting to the guidance disappointment. The premarket selloff reflects broader concerns about growth sustainability in the competitive DevSecOps market, where GitLab faces pressure from Microsoft-owned GitHub and other rivals. Despite the near-term weakness, analysts maintain a generally positive outlook with most ratings remaining at “Buy” or “Hold,” though some have recently trimmed price targets.

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