GitLab shares have lost one-third of their value, and Wall Street is not pleased with the company's poor forecast

Despite the fact that this week is not the best time to spook jittery stock markets with weaker-than-anticipated financial forecasts, GitLab has done so in the wake of Silicon Valley Bank’s collapse.

Last night, the source shack reported profit and loss for the fourth quarter of its fiscal year 2023, which ended on January 31, showing a turnover increase of 58 percent year-over-year to $122.9 million, exceeding analyst expectations.

However, this was slower than previous quarters. In the third quarter, revenue increased by 75%, 74%, and 75%, respectively.

In comparison to the $40.6 million recorded a year earlier, operating losses increased to $46.3 million. Working costs leaped to $155 million from $109 million.

Greater deal scrutiny on some deals, lower expansion rates than historical trends, and a slight uptick in contraction were all mentioned by CFO Brian Robbins during an earnings call with analysts.

He stated, We believe that the uncertain macroeconomic environment affected us in two ways. To begin, we observed that some of our clients’ businesses underwent transformations that either slowed hiring or reduced workforces. Our Premium tier expansions were impacted most by this. Additionally, it resulted in an increase in customer churn and contraction.

Second, businesses reevaluated their overall spending plans heading into the new year, so we encountered greater deal scrutiny at the end of the year. Additionally, there were more people involved in approval processes, which resulted in longer sales cycles.

GitLab increased the monthly cost of the Premium version from $19 to $29 during the quarter. According to the company, this was done to reflect recent platform enhancements.

GitLab was one of the vendors this year who cut 7% of its own staff to reduce overhead costs in response to the shift in technology sentiment. This was less significant than Microsoft, Meta, or Google’s actions because it only affected 110 jobs.

Chief Sid Sijbrandij, who is being treated for bone malignant growth, said clients are being constrained to sort out some way to accomplish more with less and improve with less assets.

He said that GitLab is doing things that align with developers who are consolidating their DevSecOps tools to save money and increase productivity despite these obstacles.

They have the ability to reduce or eliminate the cost of tool chain integrations. By speeding up the deployment of their software, their engineers can accelerate revenue growth and increase productivity.

He stated that it was open core, had 3,000 new capabilities added in the past year through contributions from the wider community, and is not financially motivated to sell cloud services in a pitch to developers using rival platforms.

Our customers are not concerned about vendor lock-in because we are not compelled to encourage them to use any cloud provider.

GitLab reported a revenue of $424.3 million for the year, an increase of 68% from the previous year, and an operating loss of $211 million, down from $129 million.

Concerning its outlook, which alarmed market analysts?

Robbins stated: We have reevaluated our outlook for near-term revenue growth in light of the challenging macroeconomic headwinds, assuming that the patterns seen in the fourth quarter continue.

Revenue for fiscal 2024 is anticipated to range from $529 million to $533 million, or a 25% increase on average. Analysts were obviously extremely disappointed by this, which reduced GitLab’s value by more than a third.

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