Core Viewpoint - GitLab's stock is expected to potentially break out in 2026, despite a significant decline in share price over the past two years, with a drop of over 10% in 2024 and an additional 33% in 2025 [1] Company Overview - GitLab operates a DevSecOps platform, transitioning towards an end-to-end software development life cycle (SDLC) platform that incorporates AI agents to assist developers throughout the software development process [2] - The company has a market capitalization of $6.0 billion, with a current stock price of $34.98, and a gross margin of 88.01% [2] Financial Performance - GitLab has experienced consistent revenue growth between 25% and 35% over the past two years, driven by both new customer acquisition and expansion among existing customers [4] - The company boasts a dollar-based net retention rate of 119% over the past 12 months, primarily due to seat expansion and upgrades to higher-tier services [4] Pricing Model and Revenue Generation - GitLab is shifting to a hybrid seat-plus-usage-based pricing model, which is expected to enhance average revenue per user (ARPU) [3] - The platform's value proposition is reinforced by its role as a secure repository for source code and data, which is critical in the context of AI development [5] Market Trends and Challenges - Concerns exist regarding the impact of AI on the demand for programmers, which some believe could negatively affect GitLab's business model [5] - However, the rise of AI is also leading to increased software creation, suggesting that GitLab may benefit from this trend as secure environments for code storage remain essential [6] Valuation and Investment Potential - GitLab's stock is currently trading at a forward price-to-sales (P/S) multiple of approximately 5.5 and a forward price-to-earnings (P/E) ratio of 24.5, indicating a potentially attractive valuation [7] - The overall sentiment suggests that AI presents more opportunities than risks for GitLab, positioning the stock for potential upside [7]

Core Viewpoint - GitLab Inc. (NASDAQ:GTLB) is facing downgrades from multiple financial institutions due to concerns over growth potential and competition, particularly from AI startups, despite its position in the software industry [2][3][4]. Group 1: Downgrades and Price Objectives - Morgan Stanley downgraded GitLab from Overweight to Equal Weight, reducing its price target from $55 to $42, citing exaggerated concerns about competition and a transition year ahead [2]. - Barclays also downgraded GitLab from Equal Weight to Underweight, lowering its price target from $42 to $34, indicating expectations of slowed growth despite solid IT spending and low valuations [3]. Group 2: Market and Competitive Landscape - The company operates an advanced DevSecOps platform for software innovation, but there are concerns that AI stocks may offer better investment opportunities with less downside risk [4]. - The changing market dynamics and frequent management changes are complicating the establishment of GitLab's stock value [3].

Group 1: AI Stock Performance - The strong performance in AI stocks has been primarily driven by large technology companies involved in AI infrastructure, but smaller AI stocks present overlooked growth potential [1] - There are three small AI stocks identified with significant potential for outsized growth [1] Group 2: UiPath - UiPath is positioned to capitalize on the emerging phase of agentic AI, which involves performing tasks rather than just generating content [3] - The company has a strong foundation in robotic process automation (RPA) and has developed an orchestration platform to manage AI agents from various vendors [4][5] - UiPath's stock is currently trading at a forward price-to-sales multiple of around 5, with accelerating revenue, indicating potential for significant growth if it leads in AI agent orchestration [5] Group 3: GitLab - GitLab has experienced revenue growth of 25% to 35% over the past two years, yet its stock valuation has fallen to a forward price-to-sales below 5.5 due to market perceptions of being an AI loser [6] - The company continues to add new customers and expand existing client subscriptions, countering fears that AI will replace coders [7] - GitLab has launched its own AI agents to assist programmers throughout the software development cycle and is transitioning to a hybrid model to enhance customer value [8]

Group 1: Stocks Added to Zacks Rank 1 (Strong Buy) List - Baytex Energy (BTE) has seen a 33.3% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [1] - BHP Group Limited (BHP) has experienced a 13% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [2] - Samsara Inc. (IOT) has had an 8.5% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [3] - Gitlab (GTLB) has seen a 7.2% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [4] - Cummins (CMI) has experienced a 6.7% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [5]

Core Viewpoint - GitLab is positioned for a potential rebound in 2026 despite a significant drop in share price, attributed to investor concerns over its SMB segment and perceived threats from AI [1][14]. Financial Performance - GitLab reported a 25% year-over-year revenue increase for fiscal Q3 2026, reaching $244.4 million, surpassing its forecast [6]. - Subscription revenue rose by 27% to $223.3 million, while license revenue increased by 1% to $21.1 million [7]. - The company achieved an adjusted operating income of $43.7 million, a 69% increase, with operating margins improving to 17.9% from 13.2% [10]. - Adjusted free cash flow was $27.2 million, up from $9.7 million a year ago, with over $1.2 billion in cash and short-term investments and no debt [11]. Customer Base and Market Dynamics - GitLab's dollar-based net retention rate is 119%, indicating existing customers are increasing their spending [8]. - The number of customers generating over $100,000 in annual recurring revenue grew by 23% to 1,405, with the SMB segment contributing only 8% of total ARR [9]. Future Outlook - GitLab raised its full-year fiscal 2026 revenue forecast to between $946 million and $947 million, and adjusted EPS guidance to $0.95 to $0.96 [11]. - For fiscal Q4, revenue is projected to be between $251 million and $252 million, reflecting approximately 19% growth [12]. Strategic Initiatives - The company is transitioning to a comprehensive end-to-end software development lifecycle platform, with the Duo Agent platform set to enhance developer productivity through AI [5][4]. - GitLab is shifting to a hybrid seat plus usage-based business model, which is expected to drive long-term growth [16]. Valuation - GitLab's stock is currently trading at a price-to-sales multiple of 5.5 times fiscal year 2027 estimates, and an enterprise value-to-sales ratio of about 4.5 times, indicating it is undervalued given its strong revenue growth and high gross margins [17].

Core Insights - GitLab reported third-quarter fiscal 2026 non-GAAP earnings of 25 cents per share, exceeding the Zacks Consensus Estimate by 25% and up from 23 cents per share in the same quarter last year [1] - Total revenues reached $244.35 million, surpassing the consensus mark by 2.41% and reflecting a 25% year-over-year increase, driven by strong demand for its DevSecOps platform [1] Revenue Breakdown - Subscription revenues, which include self-managed and SaaS, accounted for 91.4% of total revenues, increasing 27.4% year over year to $223.3 million, beating the Zacks Consensus Estimate by 3.92% [2] - SaaS revenues contributed 31% to total revenues and surged 36% year over year, fueled by the adoption of GitLab Dedicated, AI integration, and expanding customer engagement [2] Customer Metrics - Customers with more than $5K of Annual Recurring Revenue (ARR) rose to 10,475, a 10% increase year over year [3] - Customers with more than $100K of ARR increased to 1,405, up 23% year over year, indicating GitLab's success in attracting and retaining large enterprise customers [3] - The dollar-based Net Retention Rate was 119% in the reported quarter [3] - Total Remaining Performance Obligation (RPO) surged 27% year over year to $1 billion, with current RPO increasing 28% year over year to $659.1 million [3] Operating Expenses - Non-GAAP research & development expenses rose 13.2% year over year to $53.2 million [4] - Sales and marketing expenses increased 12% year over year to $87.6 million [4] - General and administrative expenses grew 17% year over year to $32 million [4] - Non-GAAP operating income was $43.7 million, compared to $25.9 million in the year-ago quarter [4] Financial Position - As of October 31, 2025, cash and cash equivalents and short-term investments totaled $1.20 billion, up from $1.16 billion as of July 31, 2025 [5] - Cash flow from operations for the reported quarter was $31.4 million, down from $49.4 million in the previous quarter [5] - Adjusted free cash flow was $27.24 million, compared to $49.4 million as of July 31, 2025 [5] Future Guidance - For the fourth quarter of fiscal 2026, GitLab expects revenues between $251 million and $252 million, indicating approximately 19% year-over-year growth [6] - Non-GAAP operating income for the fourth quarter is expected to be in the range of $38-$39 million, with non-GAAP earnings projected between 22 cents and 23 cents per share [8] - For fiscal 2026, GitLab anticipates revenues between $946 million and $947 million, reflecting a growth of approximately 25% year over year [8]

Core Insights - GitLab has appointed Jessica Ross as Chief Financial Officer, effective January 15, 2026, succeeding Interim CFO James Shen [1][2] - The company reported a strong momentum with a 25% revenue growth in the third quarter of fiscal year 2026 [2] Company Overview - GitLab is recognized as the most comprehensive, intelligent DevSecOps platform, aimed at enhancing software innovation and operational efficiency [5] - The platform is trusted by over 50 million registered users, including more than 50% of the Fortune 100 companies [5] Leadership and Experience - Jessica Ross brings over 25 years of experience in finance and operational leadership, having held senior roles at Frontdoor and Salesforce [3][4] - The leadership team believes Ross's experience in driving growth and operational excellence will support GitLab's expansion and market leadership [3]

Core Insights - GitLab Inc. will have its CEO Bill Staples and Interim CFO James Shen present at the UBS Global Technology and AI Conference on December 4, 2025 [1] Company Information - The presentation will take place in Scottsdale, Arizona, at 10:15 a.m. Mountain Time [1] - The event will be available for live webcast [1]

Core Insights - Zacks Premium provides tools for investors to enhance their stock market engagement and confidence, including daily updates, research reports, and stock screens [1][2] Zacks Style Scores - Zacks Style Scores rate stocks based on value, growth, and momentum, serving as complementary indicators to the Zacks Rank, helping investors identify securities likely to outperform the market in the short term [3][4] - Each stock receives a rating from A to F, with A indicating a higher likelihood of outperformance [4] Value Score - The Value Style Score focuses on identifying undervalued stocks using financial ratios such as P/E, PEG, and Price/Sales [4] Growth Score - The Growth Style Score assesses a company's financial health and future outlook based on projected and historical earnings, sales, and cash flow [5] Momentum Score - The Momentum Style Score identifies optimal times to invest based on price trends and earnings estimate changes [6] VGM Score - The VGM Score combines all three Style Scores, providing a comprehensive indicator for investors seeking attractive value, growth, and momentum [7] Zacks Rank - The Zacks Rank is a proprietary model that utilizes earnings estimate revisions to guide investors in building successful portfolios [8] - Stocks rated 1 (Strong Buy) have historically produced an average annual return of +23.81% since 1988, significantly outperforming the S&P 500 [9] Stock Selection Strategy - To maximize returns, investors should focus on stocks with a Zacks Rank of 1 or 2 and Style Scores of A or B [10] - Stocks with lower ranks, even with good Style Scores, may still face downward price pressure due to negative earnings outlooks [11] Company Spotlight: GitLab Inc. (GTLB) - GitLab is a leading provider of a DevSecOps platform, currently rated 3 (Hold) with a VGM Score of B [12] - The company has a strong Momentum Style Score of A, with shares increasing by 2.6% over the past four weeks [12] - Analysts have revised GitLab's earnings estimate upwards, with the Zacks Consensus Estimate rising by $0.08 to $0.83 per share, and an average earnings surprise of +37.6% [13]

Core Insights - GitLab's recent earnings report showed strong performance, with shares increasing by approximately 7% since the last report, outperforming the S&P 500 [1] - The company reported non-GAAP earnings of 24 cents per share for Q2 fiscal 2026, exceeding estimates by 50%, and total revenues of $236 million, a 29.2% year-over-year increase [2] Financial Performance - Subscription revenues, which include self-managed and SaaS, accounted for 90.1% of total revenues, rising 30.3% year over year to $212.7 million [3] - SaaS revenues specifically surged 39% year over year, driven by strong adoption of GitLab Dedicated and AI integration [3] - Customers with over $5K in Annual Recurring Revenue (ARR) increased by 11% to 10,338, while those with over $100K in ARR rose by 25% to 1,344 [4] - The dollar-based Net Retention Rate was reported at 121% [4] Operating Expenses - Non-GAAP research and development expenses increased by 16.8% year over year to $52.3 million, while sales and marketing expenses rose by 15.5% to $89.6 million [5] - General and administrative expenses increased by 20.7% year over year to $30.2 million, resulting in an operating income of $39.6 million compared to a loss of $18.2 million in the previous year [5] Balance Sheet and Cash Flow - As of July 31, 2025, GitLab had cash and cash equivalents of $1.16 billion, up from $1.10 billion in April 2025 [6] - The company generated a cash flow from operations of $49.4 million, a significant improvement from an operating cash outflow of $106.3 million in the previous quarter [6] Guidance - For Q3 fiscal 2026, GitLab expects revenues between $238 million and $239 million, indicating approximately 23% year-over-year growth [8] - The company anticipates non-GAAP operating income of $31-$32 million and earnings per share between 19 cents and 20 cents [8] - For the full fiscal year 2026, GitLab projects revenues between $936 million and $942 million, reflecting a growth of approximately 24% year over year [8][9] Market Sentiment - There has been a positive trend in estimates revisions, with the consensus estimate shifting by 25.19% in the past month [10] - GitLab currently holds a Zacks Rank 3 (Hold), indicating expectations for an in-line return in the coming months [12] Industry Comparison - GitLab operates within the Zacks Internet - Software industry, where another player, BILL Holdings, reported a revenue increase of 11.5% year over year [13] - BILL Holdings has a Zacks Rank 3 (Hold) and a VGM Score of D, contrasting with GitLab's stronger growth score of A [11][14]