We came across a bullish thesis on GitLab Inc. (GTLB) on Substack by Compounding Your Wealth. In this article, we will summarize the bulls’ thesis on GTLB. GitLab Inc. (GTLB)'s share was trading at $47 as of March 31st. GTLB’s forward P/E was 65.36 according to Yahoo Finance.
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GitLab reported strong financial results for Q4 FY2025, with revenue reaching $211.4 million, representing a 29% year-over-year growth that exceeded expectations. For the full year, revenue grew 31% to $759.2 million, driven primarily by strong enterprise expansion. Non-GAAP operating margin for the quarter increased by 960 basis points to 18%, while for the full year, it reached 10.2%, up 1,050 basis points from the previous year. Adjusted free cash flow surged 259% year-over-year to $120 million, showcasing the company's ability to generate cash efficiently. The company's net dollar-based retention rate (DBNR) was 123%, driven by strong seat expansion and increased customer yield. Remaining performance obligations (RPO) grew 40% year-over-year to $945 million, and current RPO increased 35% to $579.2 million, reflecting the company's strong booking momentum.
GitLab’s customer base continues to expand, with 9,893 customers generating at least $5,000 ARR, contributing to 95% of total ARR. High-value customers are also increasing, with those generating $100,000+ ARR growing 29% year-over-year to 1,229, and customers contributing $1 million+ ARR increasing by 28% to 123. Looking ahead, GitLab projects FY2026 revenue to be between $936 million and $942 million, a 24% year-over-year increase, with Q1 FY2026 revenue expected to be in the range of $212 million to $213 million. Non-GAAP operating income for the quarter is forecasted at $21 million to $22 million, with EPS ranging from $0.14 to $0.15.
GitLab's Duo product has been a standout performer, accounting for one-third of ARR in deals where it was included. This AI-powered tool is embedded throughout the software development lifecycle, offering automation beyond code generation. Despite increased competition from GitHub Copilot, Cursor, and Anthropic's Claude Code, GitLab differentiates itself by integrating AI into security, compliance, and governance, providing a comprehensive DevSecOps platform. GitLab Ultimate, which now makes up 50% of total ARR, reflects strong demand for integrated security and compliance tools, with an ROI of 480% over three years. The company has seen record levels of new enterprise deals, including displacements of competitors like Zscaler, highlighting its growing market share.
Another key growth driver is GitLab Dedicated, a solution that has seen a 90% year-over-year revenue growth in Q4, driven by demand for single-tenant SaaS solutions. This product has strong adoption in industries like financial services, embedded software, and government. GitLab has continued to expand its enterprise footprint with large customers like Delta Airlines and NatWest, both of which have expanded their use of GitLab Dedicated and Duo Enterprise products.
GitLab is also strategically positioned in the AI-powered DevSecOps market, with its platform integrating AI across the entire software development lifecycle. Unlike competitors like GitHub Copilot, GitLab’s AI-driven approach covers not only code generation but also security and compliance, which is critical for enterprises looking to scale securely. GitLab’s partnerships with AWS and Google Cloud further bolster its AI capabilities, and its focus on expanding these relationships is likely to continue driving growth.
In terms of leadership, GitLab has made notable additions to its executive team, including Ian Stewart as Chief Revenue Officer and David Henshall, former CEO of Citrix, to the Board of Directors. These hires are expected to enhance GitLab’s go-to-market strategy and help scale its enterprise business further. GitLab’s focus for FY2026 will be on responsible growth, AI innovation, and expanding its market leadership in DevSecOps.
Looking ahead, GitLab remains well-positioned for continued growth, with strong demand for its products across enterprise customers. The company is also investing heavily in R&D to enhance its core DevOps platform, security, compliance capabilities, and AI-driven offerings like Duo Enterprise and Duo Workflow. With a projected 24% revenue growth in FY2026, GitLab’s strategy to expand enterprise accounts, drive AI adoption, and further integrate its products across the software development lifecycle presents a compelling investment opportunity.
GitLab Inc. (GTLB) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 51 hedge fund portfolios held GTLB at the end of the fourth quarter which was 43 in the previous quarter. While we acknowledge the risk and potential of GTLB as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than GTLB but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
