Why Is GitLab (GTLB) Stock Rising 7% Today?
Amid another down day in the equities sector, software specialist GitLab (NASDAQ:GTLB) provided a much-needed jolt of energy. Gitlab, which focuses on DevOps – a portmanteau of development and operations – posted surprisingly strong results for its third quarter. In addition, management forecasted key Q4 metrics that surpassed Wall Street’s expectations. The subsequent lift in GTLB stock comes amid a possible resurgence in the software space.
For Q3, GitLab reported a loss of $48.5 million, translating to 33 cents per share. In the year-ago period, the company posted a loss of $41.2 million, or 62 cents per share. When adjusted for non-recurring items, the loss came out to 10 cents per share. This figure compared favorably to an adjusted loss of 34 cents per share in Q3 2021.
On the revenue front, the software provider generated $113 million. In the year-ago quarter, the company mustered only $66.8 million. Prior to the financial disclosure, analysts surveyed by FactSet forecasted a loss of 15 cents per share on revenue of $106 million.
Bolstering GTLB stock further was management’s optimism for the current quarter. Per MarketWatch, “GitLab forecast an adjusted fourth-quarter loss of 15 cents to 14 cents a share on revenue of $119 million to $120 million, and an adjusted loss of 56 cents to 55 cents a share on revenue of $420.5 million to $421.5 million for the year.”
For Q4, covering analysts anticipated a loss of 17 cents per share on revenue of $119.3 million. For the year, it forecasted a loss of 65 cents per share on revenue of $412.8 million.
GTLB Stock Provides Additional Confirmation of Software Resilience
Following the earnings results, GTLB stock popped more than 11% in the morning session before settling down to around 7% up in the afternoon. Still, with the benchmark S&P 500 index suffering a 1.8% loss during the same period, both GitLab and the underlying software segment appear reassuringly robust.
Nearly a week ago, human-capital management software firm Workday (NASDAQ:WDAY) posted impressive results for its Q3. At the time, Evercore analyst Kirk Materne stated in a research note that “Workday delivered a perfect ‘holiday cocktail’ for investors.”
Moreover, at the end of last week, shares of robotic process automation software provider UiPath (NYSE:PATH) jumped double digits. Similar to both Workday and GitLab, UiPath posted Q3 earnings results that beat top-and-bottom-line targets. In addition, the robotics specialist disclosed a Q4 forecast that exceeded expectations.
Further, GTLB stock enjoys a burgeoning total addressable market. According to Allied Market Research, the DevOps sector reached a valuation of $6.78 billion in 2020. Experts project that by 2030, the segment can hit $57.9 billion, representing a compound annual growth rate (CAGR) of 24.2% from 2021 to 2030.
Still, a word of caution is warranted. Overall, GTLB stock remains a risky proposition, with shares suffering a 49% loss since the beginning of this year.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.
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