Summary
GitLab's third quarter fiscal 2023 revenue reached $113.0 million, up 69.1% from the prior-year quarter. Gross profit was $98.4 million, up 65.1%, while gross margin was 87.1%, down 2.1 percentage points from the prior-year quarter. The company posted an operating loss that widened to $57.0 million, and its operating margin was negative 50.4%, down 1.7 percentage points. GAAP net loss attributable to GitLab widened to $48.5 million, but GAAP net loss per share improved to $(0.33). On a non-GAAP basis, operating loss was $21.6 million and net loss per share was $(0.10). Operating cash flow was negative $1.2 million for the quarter, an improvement from the prior-year quarter. Capital expenditures were $1.78 million, up from zero in the prior-year quarter.
Customer metrics kept expanding. Customers with more than $5,000 of ARR reached 6,469, up 59% from the prior-year quarter. Customers with more than $100,000 of ARR reached 638, up 49%. The dollar-based net retention rate again exceeded 130%. Remaining performance obligations were $392.7 million, up 61.9% from the prior-year quarter. Deferred revenue, current, was $217.8 million, up 47.8%. GitLab announced GitLab Govern, released its sixth annual global DevSecOps survey, introduced TeamOps, and partnered with Google Cloud on Cloud Seed. The company also said its partners completed 594 product certifications and that it ranked #14 on Fortune's Best Workplaces in Technology list.
For the fourth quarter of fiscal year 2023, GitLab guided revenue to $119.0 million to $120.0 million. For the full fiscal year 2023, revenue guidance is $420.5 million to $421.5 million. The company expects a non-GAAP operating loss of $27.0 million to $26.0 million for the fourth quarter and $100.0 million to $99.0 million for the full fiscal year. Non-GAAP net loss per share guidance is $(0.15) to $(0.14) for the fourth quarter and $(0.56) to $(0.55) for the full fiscal year, assuming approximately 150 million and 148 million weighted average shares outstanding for the fourth quarter and full fiscal year, respectively. GitLab does not provide a reconciliation of non-GAAP guidance to the corresponding GAAP measures because certain items are out of its control or cannot be reasonably predicted.
Several risks could pressure results. GitLab faces intense competition and potential loss of market share. The market for its services may not grow. Customer renewals and expansions may decline, and operating results can fluctuate. The company must manage growth effectively and protect against security and privacy breaches. Customers may stay on the open-source or free SaaS offering. GitLab has a limited operating history and must respond to rapid technological changes. It may not accurately predict the long-term rate of customer subscription renewals or adoption, or the impact of these renewals and adoption. Its hiring model, the armed conflict in Ukraine, and general economic conditions including changes in interest rates and inflation could affect the business. Slow or negative growth of its markets is another risk. COVID-19 has caused a lengthening in the sales cycle for some prospective customers and delays in delivering professional services and trainings. Customers or partners facing downturns may decrease or delay spending, request pricing discounts, or seek contract renegotiations. Customer losses from bankruptcy or ceased operations could hurt collections. The company may need additional equity or debt financing, which may not be available on acceptable terms or at all.
Management framed the quarter around cost savings and efficiency. The CEO said companies cannot afford to slow software innovation and are turning to GitLab to reduce costs, drive efficiencies, and meet customer demands. The CFO said revenue grew 69% organically and non-GAAP operating margin improved by approximately 1,700 basis points year-over-year. The dollar-based net retention rate again exceeded the reporting threshold of 130%. Those comments sit against a backdrop of widening GAAP losses and a gross margin that slipped from the prior-year quarter.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2023 | Q2 FY2023 | QoQ | Q3 FY2022 | YoY |
|---|---|---|---|---|---|
| Revenue | $113.0M | $101.0M | +11.8% | $66.8M | +69.1% |
| Gross profit | $98.4M | $88.0M | +11.8% | $59.6M | +65.1% |
| Gross margin | 87.1% | 87.1% | +0.0 pp | 89.2% | -2.1 pp |
| Research & development | $41.1M | $39.5M | +4.0% | $24.7M | +66.7% |
| Sales & marketing | $81.1M | $80.7M | +0.5% | $50.5M | +60.4% |
| General & administrative | $33.2M | $33.1M | +0.2% | $16.9M | +95.9% |
| Total operating expenses | $155.4M | $153.3M | +1.3% | $92.1M | +68.6% |
| Operating income (loss) | -$57.0M | -$65.3M | +12.8% | -$32.5M | -75.0% |
| Operating margin | -50.4% | -64.6% | +14.2 pp | -48.7% | -1.7 pp |
| Net income (loss) | -$48.5M | -$59.0M | +17.9% | -$41.2M | -17.5% |
| Net margin | -42.9% | -58.4% | +15.5 pp | -61.7% | +18.8 pp |
| Diluted EPS | -$0.33 | -$0.40 | +$0.07 | -$0.62 | +$0.29 |
| Customers | 638 | — | — | — | — |
| Net retention rate | 130.0% | 130.0% | ±0.0 pp | 130.0% | ±0.0 pp |
Risks
Risk factors emphasize intense competition with limited barriers to entry across ten stages of the software development lifecycle, naming Atlassian and Microsoft and noting many competitors are larger with more capital. Pricing pressure could reduce sales, margins, or market share.
Base Customers grew to 6,469 as of October 31, 2022 from 4,057 as of October 31, 2021, and headcount increased significantly with expected further growth. Failure to improve systems, processes, and controls could impair forecasting and operations.
Net loss attributable to GitLab was $48.5 million for the quarter ended October 31, 2022 and $133.6 million for the nine months ended October 31, 2022, and operating loss widened to $57.0 million for the quarter. The company expects operating expenses to increase in the foreseeable future and may not achieve or sustain profitability.
The business model depends on converting free users to paid, but the company has limited historical data on conversion rates. It discontinued starter and bronze tiers and announced a SaaS Free tier user limit and storage and transfer limitations in Q1 FY2023 that are not yet implemented, which may cause customers to switch to free or stop using products.
MD&A states COVID-19 has caused a lengthening in the sales cycle for some prospective customers and delays in professional services and trainings, and customers may decrease or delay spending, request pricing discounts, or seek contract renegotiations. This could pressure revenue and cash receipts even as total revenue was up 69.1% in the quarter ended October 31, 2022 versus the prior-year quarter.
MD&A states that as SaaS makes up an increasing percentage of total revenue, increased cloud-related hosting and managing costs may adversely impact gross margins. Gross margin was down 2.1 percentage points in the quarter ended October 31, 2022 versus the prior-year quarter.
Growth depends on channel partners for enterprise, governmental, and international sales, but partners are not exclusive, may prioritize competing products, and may deliver poor service or selling experiences that delay purchases or hurt the brand.
GitLab's core value of transparency includes a public Handbook and public use of The DevSecOps Platform, which may expose confidential information to competitors, lead to litigation or reputational harm, and create Regulation FD or disclosure control risk.
The DevSecOps Platform is built using open-source technology, which may be a vector for supply-chain cyber-attacks and may be perceived as leaving GitLab more vulnerable. The company has previously been and may in the future become a target of cyber-attacks.
Changes in U.S. and international tax laws, including the Inflation Reduction Act's 15% minimum tax on adjusted financial statement income beginning in 2023, and OECD transfer pricing proposals could adversely affect effective tax rates and cash flows.
SaaS KPIs
All quarters →Dollar-Based Net Retention Rate
Customers with more than $100,000 of ARR
Customers with more than $5,000 of ARR
Non-GAAP Gross Margin
Non-GAAP Operating Margin
Summary, forecast, risks and KPIs are extracted from Gitlab Inc.'s SEC filings for Q3 FY2023 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 1, 2026.