EPS of $0.19 increased by 109.8% from previous year
Gross margin of 88.7%
Net income of 29.57M
"We anticipate the next evolution in AI will be agentic, where AI will be autonomous and proactive rather than pump based and reactive. Agentic AI is the foundation of GitLab Duo workflow." - Sid Sijbrandij
GitLab Inc (GTLB) Q3 FY2025 Results Analysis: 31% YoY Revenue Growth to $196.0M; Record Non-GAAP Margin; AI-Driven Expansion Across Ultimate, Duo and Enterprise
Executive Summary
GitLab reported a strong QQ3 2025 quarter, delivering 31% year-over-year revenue growth to $196.0 million and a record non-GAAP operating margin of 13.2%, supported by sustained enterprise demand and the rapid expansion of the Ultimate/SaaS mix. Management highlighted ongoing AI-driven momentum through GitLab Duo Pro and Duo Enterprise, with notable customer wins and a growing ecosystem of AI-enabled workflows across the software development lifecycle. The company reaffirmed its multi-pronged growth thesis, anchored by an end-to-end DevSecOps platform, a broad AI roadmap (including agentic AI and self-hosted models), and strategic partnerships (notably AWS) to accelerate adoption across enterprises and regulated industries.
Financially, GitLab generated a GAAP net income of $29.6 million in Q3, but reported negative cash flow from operations (-$177.0 million) driven by one-time APA-related cash outlays and a Dutch tax payment. On a non-GAAP basis, gross margin remained best-in-class at 91% with SaaS accounting for 29% of revenue and continued leverage in operating expenses, resulting in a record non-GAAP operating margin of 13.2% and non-GAAP net income per share of $0.22–$0.23 for Q4 FY25 guidance and $0.63–$0.64 for the full year. The company also disclosed ongoing JiHu expenses with a plan to deconsolidate, implying a potential FY25 impact of roughly $14 million vs $18 million in the prior year.
Looking ahead, GitLab is guiding Q4 revenue of $205–$206 million (approximately 25–26% YoY growth) and full-year revenue of $753–$754 million, underscoring a disciplined approach to profitable growth amid AI-driven product expansion, security/compliance integration, and platform-wide adoption. The management team framed AI evolution as agentic, with the end-to-end platform as a clear differentiator, and signaled a measured path to monetization of AI-enabled workflows as the mix broadens across customers and geographies.
Key Performance Indicators
Revenue
196.05M
QoQ: 7.37% | YoY:30.99%
Gross Profit
173.92M
88.71% margin
QoQ: 7.88% | YoY:29.23%
Operating Income
-28.73M
QoQ: 29.93% | YoY:28.65%
Net Income
29.57M
QoQ: 128.32% | YoY:110.37%
EPS
0.18
QoQ: 121.95% | YoY:109.78%
Revenue Trend
Margin Analysis
Key Insights
Revenue: $196.047 million; YoY +~31%; QoQ data implied by quarterly trend but not explicitly provided in the release (approx. +7.4% QoQ from the four-quarter view).
Net Income: $29.565 million; Net Margin 15.08%; YoY net income up meaningfully (per provided YoY metric of ~110%), QoQ up strongly (≈128%).
Financial Highlights
Summary of critical QQ3 2025 metrics with YoY and QoQ context:
- Revenue: $196.047 million; YoY +~31%; QoQ data implied by quarterly trend but not explicitly provided in the release (approx. +7.4% QoQ from the four-quarter view).
- Gross Profit: $173.922 million; Gross Margin 88.7% (vs. 88.7% reported); YoY gross profit growth ~29.2%; QoQ ~7.9%.
- Operating Income: -$28.732 million; Operating Margin -14.66%; YoY improvement in margin (over 1,000 bps), reflecting operating leverage.
- EBITDA: -$25.541 million; EBITDA Margin ≈ -13.03%.
- Net Income: $29.565 million; Net Margin 15.08%; YoY net income up meaningfully (per provided YoY metric of ~110%), QoQ up strongly (≈128%).
- EPS: $0.18; Diluted EPS: $0.19.
- Non-GAAP metrics: Non-GAAP gross margin 91% (best-in-class). Non-GAAP operating income: $25.9 million; Non-GAAP operating margin 13.2% (vs. 3.1% prior year).
- ARR and customer metrics: 9,519 customers with ARR ≥ $5,000; 1,144 customers with ARR ≥ $100,000; DBNRR 124% (driven by ~50% seat expansion, ~40% higher yields, ~10% tier upgrades).
- RPO/CRPO: RPO $811.8 million (↑ 48% YoY); CRPO $515.2 million (↑ 39% YoY).
- SaaS mix: SaaS revenue represents 29% of total revenue and grew 44% YoY.
- Cash and liquidity: Cash and equivalents $176.6 million; Short-term investments $740.3 million; Total cash & investments $916.97 million; Total assets $1.2526 billion; Total liabilities $482.416 million; Total equity $724.705 million; Net debt position -$176.376 million (net cash).
- Cash flow: Net cash from operating activities -$177.0 million; Free cash flow (GAAP-adjusted) -$178.085 million; Adjusted free cash flow for the quarter $9.7 million (FY'25 context).
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
196.05M
30.99%
7.37%
Gross Profit
173.92M
29.23%
7.88%
Operating Income
-28.73M
28.65%
29.93%
Net Income
29.57M
110.37%
128.32%
EPS
0.18
109.78%
121.95%
Key Financial Ratios
currentRatio
2.57
grossProfitMargin
88.7%
operatingProfitMargin
-14.7%
netProfitMargin
15.1%
returnOnAssets
2.36%
returnOnEquity
4.08%
debtEquityRatio
0
operatingCashFlowPerShare
$-1.1
freeCashFlowPerShare
$-1.1
priceToBookRatio
11.96
priceEarningsRatio
73.32
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Key takeaways from the Q3 FY'25 earnings call:
- Growth momentum and profitability: Sid Sijbrandij and Brian Robins highlighted that third-quarter revenue was $196 million, up 31% YoY, and non-GAAP operating margin reached 13.2%, marking a record level and a >1,000 bps YoY improvement. Quote: We exceeded both revenue and profitability guidance and Ultimate now represents 48% of total ARR (Sid). Bill Staples emphasised the opportunity ahead and AI acceleration in software development, underscoring the team’s confidence in the platform’s long-term potential (Bill).
- AI strategy and agentic AI: The management reiterated a multi-faceted AI roadmap spanning Duo Pro, Duo Enterprise, and agentic AI as the foundation for GitLab Duo workflow, with plans to embed AI across the lifecycle and enable autonomous AI actions within GitLab deployments (Sid’s commentary on agentic AI development).
- Customer adoption and ARR expansion: The company reported 9,519 customers with ARR ≥ $5k and 1,144 with ARR ≥ $100k, with DBNRR at 124%. Management noted strong land-and-expand dynamics and notable upsell from Duo integrations. A notable customer example was Indeed upgrading to Ultimate; Emirates adopted Ultimate and Duo Pro.
- AI partnerships and product ecosystem: GitLab announced a bundled Duo offering with AWS (Amazon Q) to accelerate AI-powered secure code development on AWS and highlighted self-hosted AI model deployments as a differentiator for security-conscious customers. The AWS collaboration and Dedicated offering on AWS were cited as accelerants for enterprise adoption.
- JiHu deconsolidation and FY25 outlook: The call disclosed JiHu-related expenses of about $3.5 million in Q3 FY25 and forecast $14 million for FY25, reflecting ongoing deconsolidation efforts that may affect modeling. Management guided Q4 revenue of $205–$206 million and full-year revenue of $753–$754 million, with non-GAAP EPS of $0.22–$0.23 for Q4 and $0.63–$0.64 for the year, signaling confidence in the growth trajectory despite one-time tax-related cash outlays.
We anticipate the next evolution in AI will be agentic, where AI will be autonomous and proactive rather than pump based and reactive. Agentic AI is the foundation of GitLab Duo workflow.
— Sid Sijbrandij
I'm convinced that we have a significant opportunity ahead of us.
— Bill Staples
Forward Guidance
Assessment of near-term and longer-term outlook based on management guidance and industry dynamics:
- Q4 FY25 guidance implies revenue of $205–$206 million, or roughly 25–26% YoY growth, and non-GAAP operating income of $28–$29 million, with non-GAAP EPS of $0.22–$0.23 assuming 170 million weighted-average diluted shares. Full-year FY25 guidance targets revenue of $753–$754 million, implying ~30% YoY growth and non-GAAP operating income of $69–$70 million with non-GAAP EPS of $0.63–$0.64 on about 168 million diluted shares.
- Growth drivers: The cadence of impact from the dual-enterprise SKU, GitLab Dedicated, and the new enterprise agile planning module should incrementally lift ARR and contribute to cross-sell of Duo across broader Ultimate deployments. The Duo Enterprise attachment rate and higher-priced bundles (Ultimate + Duo) were cited as meaningful drivers of net ARR expansion and gross margin stability.
- AI trajectory and pricing considerations: The company described an agentic AI trajectory and potential pricing evolution for AI-enabled workflows. While management did not commit to specific pricing changes, they indicated a consumption-oriented pricing direction could be explored under Bill Staples’ leadership, contingent on how workflows and agents scale across customers.
- Risks and uncertainties: JiHu deconsolidation remains uncertain in timing; management expects to incur around $14M in JiHu-related expenses for FY25, which may subtly affect operating margins. Macro softness, customer concentration in large deals, and the transition to AI-driven pricing/prioritization also warrant monitoring.
- Key factors for investors to monitor: (1) progress on Ultimate/Duo mix and associated AR growth; (2) the ramp of GitLab Dedicated and AWS-based offerings; (3) adoption rate and operational impact of agentic AI and ecosystem partnerships; (4) JiHu deconsolidation pacing; (5) free cash flow trajectory and working capital dynamics amidst APA-related cash outlays.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
GTLB Focus
88.71%
-14.70%
4.08%
73.32%
MNDY
89.70%
-10.90%
-1.24%
-289.50%
DDOG
80.00%
2.94%
1.97%
187.83%
BILL
81.20%
-1.72%
-0.30%
-101.19%
ASAN
89.20%
-32.70%
-24.00%
-11.96%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Outlook: GitLab's QQ3 2025 performance reinforces a constructive long-term investment thesis centered on the AI-enabled DevSecOps platform and an expanding enterprise footprint. The combination of Ultimate/Duo adoption, a scalable land-and-expand model, and AI-driven workflow enhancements supports durable revenue growth and improving profitability. Short-term headwinds include JiHu deconsolidation timing and APA-related cash outlays that weigh on GAAP cash flow, but operating leverage and high gross margins offset this to a degree. The company's guidance for FY25 implies ~30% revenue growth with strong non-GAAP profitability, supported by a diversified mix of high-ARR customers and resilient renewals (DBNRR 124%). Key catalysts to watch include (1) the ramp of Duo Enterprise across large enterprises, (2) the success of the AWS bundling and other hyperscaler partnerships, (3) monetization progress of agentic AI and self-hosted model deployments, and (4) completion of JiHu deconsolidation improving revenue visibility. Given these dynamics, GitLab appears well-positioned to extend its leadership in the DevSecOps space, albeit with a valuation that reflects strong growth, solid margins, and the strategic optionality of AI-driven platforms.
Key Investment Factors
Growth Potential
Catalysts include sustained expansion of Ultimate and Duo adoption among large enterprises, ramp of GitLab Dedicated in the enterprise, and the broadening of AI capabilities (including agentic AI and self-hosted models) across the DevSecOps lifecycle. The AWS Duo bundle and ongoing partnerships with hyperscalers can accelerate multi-year ARR growth and cross-sell opportunities. JiHu deconsolidation, if successfully completed, could improve long-term financial visibility and reduce non-operating liabilities embedded in the consolidated P&L.
Profitability Risk
Key risks include (i) execution risk in scaling AI-enabled workflows and maintaining best-in-class margins as the mix shifts toward higher-SaaS and AI-enabled offerings; (ii) integration and adoption risks as customers migrate from legacy point tools to an end-to-end platform; (iii) JiHu deconsolidation timing uncertainty; (iv) macroeconomic headwinds that may impact enterprise spending on software platforms; (v) competitive pressures from GitHub, Datadog, and other large software toolchains; (vi) potential pricing and consumption-based model changes that could affect short-term revenue visibility.
Financial Position
GitLab maintains a strong liquidity position with cash and short-term investments totaling approximately $917 million and negative net debt of about $176 million, supporting ongoing investments in AI, GTM expansion, and platform enhancements. The company reported best-in-class gross margins (~91% non-GAAP) and healthy ARR expansion indicators (RPO up 48% YoY, CRPO up 39% YoY), but still posted negative GAAP cash flow in the quarter due to one-time APA-related payments and JiHu expenses. The balance sheet shows minimal long-term debt and a robust equity base (~$725 million).
SWOT Analysis
Strengths
End-to-end DevSecOps platform with integrated security, compliance and AI across planning, coding, building, testing and deployment.
Best-in-class gross margin (non-GAAP 91%) and robust profitability trajectory via operating leverage.
Growing Ultimate adoption (48% of total ARR) and strong Duo traction with enterprise upsells.
Heavy emphasis on AI integration (Duo Pro, Duo Enterprise, self-hosted models) and agentic AI roadmap.
Large enterprise customer base with high retention (DBNRR 124%) and high ARR concentration in large deals.
Strategic ecosystem partnerships (AWS bundling) and GitLab Dedicated driving value for regulated industries.
Weaknesses
GAAP cash flow negative in QQ3 2025 due to one-time APA payments and JiHu expenses, posing near-term liquidity pressure.
JiHu deconsolidation adds modeling uncertainty and potential variability to FY25 forecasts.
Long ramp to fully monetize AI-enabled workflows and potential pricing transitions could affect near-term revenue consistency.
Opportunities
Agentic AI and end-to-end workflows to further reduce developer toil and accelerate software delivery.
AWS and hyperscaler partnerships to accelerate adoption and scale in cloud environments.
Expansion of GitLab Advanced SaaS and Oxeye integration to improve security accuracy and reduce false positives.
Public sector and FedRAMP opportunities through GitLab Dedicated and government-centric deployments.
Threats
Competition from GitHub and other suites that offer converged toolchains and security features.
Macro slowdown and uncertain enterprise spend on software platforms.
Regulatory and data privacy risks in AI, including data localization and model training concerns.