TLDR
- GitLab shares declined approximately 8% during premarket hours following weaker-than-expected fiscal 2027 forecasts
- Full-year EPS guidance of 76–80 cents significantly trailed the analyst consensus of $1.05
- Fiscal 2027 revenue outlook of $1.10–$1.12 billion missed the $1.12 billion Street estimate
- Management indicated the Duo Agent Platform won’t generate significant revenue in the current fiscal year
- Multiple brokerage firms lowered their price targets on GTLB following the earnings release
Shares of GitLab have tumbled approximately 57% in the past year, with Wednesday’s premarket decline extending losses after the DevOps platform provider delivered fiscal 2027 guidance that failed to meet investor expectations.
For its fiscal fourth quarter ending in January, the company reported adjusted earnings of 30 cents per share. Revenue climbed 23% from the year-ago period to $260.4 million, surpassing the analyst consensus of $252.2 million. The quarterly performance itself wasn’t the issue.
The disappointment centered on forward guidance.
For fiscal 2027, GitLab forecast revenue between $1.10 billion and $1.12 billion. Wall Street analysts had anticipated $1.12 billion, implying approximately 17% year-over-year expansion. That growth rate marks a notable deceleration from the 26% increase achieved in the previous fiscal year.
The earnings guidance presented an even larger shortfall. GitLab expects adjusted EPS between 76 and 80 cents, compared to the Street’s $1.05 estimate. The magnitude of this discrepancy proved difficult to overlook.
Multiple Wall Street firms, including at least five brokerages, responded by reducing their price targets on GitLab stock.
AI: Friend or Threat?
The core issue revolves around artificial intelligence. GitLab’s Duo Agent Platform centers on collaborative workflows between human developers and AI agents. However, during the earnings conference call, company leadership cautioned analysts against expecting the platform to materially impact fiscal 2027 revenue.
This messaging proved challenging to deliver in an environment where investors scrutinize every software company for evidence that AI capabilities are enhancing rather than threatening their business models.
Analysts at TD Cowen highlighted the rapidly evolving AI landscape as a critical factor to monitor. They emphasized that GitLab must demonstrate its competitive standing in what they termed the “AI 2.0 era,” as AI-native development tools increasingly penetrate the market.
The wider software industry has faced similar headwinds. MongoDB shares plummeted 22% on Tuesday following its own conservative guidance and acknowledgment that AI hasn’t yet become a material business contributor. GitLab’s results arrived into this already anxious market environment.
Analysts Still See a Path
Despite the setback, not all analysts are abandoning the stock. William Blair analyst Jackson Ader maintained an Outperform rating, arguing that GitLab maintains a robust enterprise customer base and that artificial intelligence is expanding the company’s total addressable market over the long term.
Ader conceded that the guidance fell short and that management essentially “reset the bar” for expectations. However, he also highlighted the fourth-quarter results themselves as solid, suggesting that successful execution of product development and go-to-market initiatives will be critical moving forward.
GitLab’s stock traded down 7.2% in Wednesday’s premarket session, hovering around $24.35 per share.
