By Kit Norton

Shares of GitLab jumped late Tuesday after the provider of software development tools reported better-than-expected fiscal first-quarter earnings and raised full-fiscal year guidance as it expects business momentum from artificial intelligence.

GitLab stock rose 6.8% in after-hours trade after ending trading on Tuesday down 5.8% to $31.82. The stock is down 15% this year, despite surging 40% last month, amid the AI-driven software selloff due to broad disruption fears.

Software stocks have experienced a recent rebound, buoyed by several positive earnings reports from software names. However, the rally appeared to come to a halt on Tuesday with Oracle, ServiceNow, Gartner, and Workday all sliding.

GitLab posted adjusted earnings of 23 cents a share for the quarter ended April 30, compared with 17 cents a share a year ago and slightly above Wall Street's call for 21 cents a share. Revenue grew 23% to $264.2 million, beating the analyst consensus view of $254.2 million, according to FactSet.

GitLab CEO Bill Staples said in the earnings release that the AI "agentic era is creating structural tailwinds for GitLab" and that the first-quarter financials show it is "accelerating platform activity and promising traction from GitLab Duo Agent Platform."

"As our largest customers come to us with new needs around security, governance, and orchestration at machine scale, we are evolving GitLab to be the trusted enterprise platform for software creation in the AI era," Staples added.

Looking ahead, the software company expects fiscal second-quarter earnings of 17 cents a share to 18 cents a share on revenue totaling between $272 million and $274 million. Analysts predict second-quarter profit of 19 cents a share with sales totaling $273.2 million, according to FactSet.

GitLab also raised its full-fiscal year outlook. The company now forecasts profit of 79 cents a share to 82 cents a share with sales between $1.112 billion and $1.118 billion. Wall Street expects earnings of 80 cents a share on $1.11 billion in revenue.

GitLab's full-fiscal guidance compares with the company's initial fiscal 2027 guidance from March for revenue of $1.099 billion to $1.118 billion and profit between 76 cents a share and 80 cents a share.

That fiscal-year guidance from March underwhelmed Wall Street, prompting investor concern that the customer use of AI-driven code generation could dent the company's future revenue streams.

However, GitLab appears to have flipped the script.

Like many in the software space, GitLab hopes to make AI a strength rather than a weakness. Its own Duo Agent Platform is designed to allow humans to work alongside AI agents, or programs that can perform multistep tasks. However, Duo Agent Platform isn't expected to provide a significant contribution to revenue this year.

In April, GitLab announced it was expanding its collaboration with Alphabet's Google Cloud. As part of the deal, Google Cloud users will be able to access GitLab's Duo Agent Platform with Google's Vertex AI models, which should make coding tasks faster.

Gitlab also confirmed Tuesday plans to reduce its full-time workforce by about 14%, or 350 employees, and exit 22 countries to realign its focus on "strategic priorities." GitLab expects to incur around $30 million to $35 million in restructuring costs. The company forecasts $19 million in costs in the fiscal second quarter, with the restructuring plan to be completed by the end of the fiscal year.

Write to Kit Norton at kit.norton@barrons.com

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June 02, 2026 16:38 ET (20:38 GMT)

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