GitLab (NASDAQ:GTLB) delivered stronger-than-expected first-quarter results for fiscal 2027, posting robust revenue growth and raising its full-year adjusted earnings outlook. However, investor sentiment remained cautious, sending the stock lower in premarket trading as the company outlined workforce reductions and issued guidance that pointed to slower revenue growth ahead.
Class A shares were down roughly 5% before Wednesday’s market open, suggesting concerns over the company’s outlook outweighed the quarterly earnings beat.
AI-Powered Development Tools Continue to Drive Demand
Based in San Francisco, GitLab provides a DevSecOps platform that combines software development, security and operational workflows into a single environment, enabling organizations to build and manage applications more efficiently.
The results arrive at a time when software companies face increasing scrutiny from investors amid expectations that artificial intelligence could eventually automate many traditional software functions.
To capitalize on the shift toward AI, GitLab has expanded its product offering with GitLab Duo Agent Platform, which incorporates AI agents into software development workflows. Demand for agentic AI solutions has accelerated as businesses seek systems capable of taking initiative and completing goal-oriented tasks rather than simply responding to prompts.
Commenting on the trend, Chief Executive Officer Bill Staples said the company is benefiting from the growing adoption of AI-driven automation.
“The agentic era is creating structural tailwinds for GitLab, and Q1 showed it clearly with accelerating platform activity and promising traction from GitLab Duo Agent Platform,” Staples said in a statement.
Quarterly Revenue and Earnings Top Expectations
For the first quarter of fiscal 2027, GitLab generated revenue of $264.2 million, an increase of 23% from the same period a year earlier.
Adjusted earnings came in at $0.23 per share, exceeding analyst expectations of $0.21 per share. Revenue also surpassed consensus forecasts of $254.3 million.
The performance reflected continued customer demand for the company’s software development tools and growing interest in AI-enhanced capabilities.
Company Raises Full-Year Earnings Outlook
Looking ahead, GitLab forecast second-quarter adjusted earnings of $0.17 to $0.18 per share on revenue ranging from $272 million to $274 million.
Management also lifted its fiscal 2027 adjusted earnings guidance to between $0.79 and $0.82 per share, up from its previous forecast of $0.76 to $0.80 per share.
The lower end of its full-year revenue outlook was increased to $1.112 billion from $1.099 billion previously. Analysts currently expect annual earnings of $0.79 per share on revenue of approximately $1.11 billion.
Analysts Focus on Signs of Growth Moderation
Despite the strong quarter, analysts pointed to indications that revenue growth could slow over the coming quarters.
Bank of America described the results as a “good quarter” but noted that management’s outlook implies a step-down in growth rates.
“The F2Q revenue guide implies 15.7% revenue growth, lower than 23.1% in F1Q, and implied 2H guide implies more deceleration to 14% which is challenging in this environment. We see a balanced risk-reward until GitLab establishes a growth reacceleration trend,” analysts led by Koji Ikeda wrote.
Morgan Stanley expressed a similar view, highlighting a more cautious tone in the company’s forward guidance.
“Despite solid Q1, FY27 guide raised by less than Q1 beat, reflecting incremental caution around tech layoffs/seat contraction and ’Act Two’ restructuring risk.”
Workforce Reduction and Geographic Consolidation Underway
Investors were also watching for additional details regarding GitLab’s restructuring program, which was first announced in May.
The company confirmed plans to reduce its workforce by approximately 350 full-time employees, representing about 14% of its staff.
In addition, GitLab intends to exit operations in 22 countries, reducing its global footprint by roughly 37% as part of a broader effort to streamline operations and improve efficiency.
Management expects the restructuring initiative to generate pre-tax charges of between $30 million and $35 million, with approximately $19 million expected to be recognized during the second quarter.
More About GitLab
GitLab Inc. is a software development platform provider specializing in DevSecOps solutions that integrate development, security and operations into a single application lifecycle platform. The company has increasingly focused on artificial intelligence capabilities through products such as GitLab Duo Agent Platform, helping organizations automate workflows, improve developer productivity and accelerate software delivery.