GitLab Inc. Shares Drop 14 % on Mixed Q3 Earnings

GitLab Inc. (NASDAQ: GTLB) experienced a sharp decline in its share price following the release of its third‑quarter earnings for fiscal year 2025. The stock fell 14 % on the day of the announcement, trading near $42.60, below the 52‑week low of $37.90 and close to the 52‑week high of $74.18.

Earnings Overview

  • Revenue: The company reported revenue that beat analysts’ estimates, but the growth rate decelerated compared with the previous quarter.
  • Net Revenue Retention (NRR): NRR fell, a key metric for subscription‑based software firms, signaling weaker recurring revenue growth.
  • Profitability: GitLab reported a loss, with the price‑to‑earnings ratio at –848.47, reflecting ongoing investment in product development and market expansion.

Market Reaction

Analysts across the market noted that the earnings beat was offset by concerns about growth momentum:

  • BTIG lowered its price target to $52 from a higher previous target, citing the mixed results.
  • Truist Securities reduced its target to $42, highlighting growth concerns.
  • Cantor Fitzgerald and Piper Sandler maintained Overweight ratings, but reiterated that the stock’s valuation remains high relative to its earnings prospects.

Sector and Macro Factors

  • Federal Reserve Policy: Rising interest rates and tightening monetary policy have weighed on technology valuations, particularly subscription‑based SaaS companies.
  • SMB Softness: The small‑to‑medium business segment, a core customer base for GitLab, has shown signs of slower spending, further dampening revenue expectations.

Trading Volume and Volatility

The day’s trading volume exceeded the 50‑day moving average, indicating heightened investor interest. Despite the drop, the stock’s 52‑week range remains wide, reflecting continued uncertainty about the company’s ability to sustain growth at current levels.

Outlook

While GitLab’s product suite—encompassing authentication, authorization, DevOps scoring, audit, and value‑stream management—continues to attract global customers, the recent earnings results underscore the challenge of translating revenue growth into profitability. Analysts advise monitoring the company’s quarterly performance for signs of sustained revenue acceleration and improved margins before adjusting investment theses.