Shares of Gitlab (GTLB) surged in after-hours trading after the company reported earnings for its second quarter of Fiscal Year 2025. Earnings per share came in at $0.15, which beat analysts’ consensus estimate of $0.10 per share.
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Sales increased by 30.8% year-over-year, with revenue hitting $182.6 million. This beat analysts’ expectations by $5.5 million. Revenue growth was primarily driven by an increase in large customers. Indeed, the number of clients that are providing over $5,000 of annual recurring revenue (ARR) jumped 19% year-over-year to 9,314. When looking at customers with over $100,000 of ARR, this cohort grew by 33% to 1,076.
Looking forward, management now expects revenue and adjusted earnings per share for FY 2025 to be in the ranges of $742 million to $744 million and $0.45 to $0.47, respectively. For reference, analysts were expecting $737.8 million in revenue along with an adjusted EPS of $0.36.
Hedge Funds Are Negative on GTLB Stock
When it comes to “smart money,” money managers don’t seem to be all that confident in Gitlab. Indeed, hedge funds decreased their holdings in GTLB stock by 592,600 shares in the past quarter. As a result, they have a very negative confidence signal, as indicated by the graphic below. Nevertheless, they might be willing to change their minds following today’s results.
Is GTLB a Good Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on GTLB stock based on 16 Buys, four Holds, and zero Sells assigned in the past three months. After a 26% year-to-date decline, the average GTLB price target of $62.69 per share implies 34.76% upside potential. However, it’s worth noting that estimates will likely change following today’s earnings report.
