Gitlab Inc. Q3 FY2025 earnings call

• Introduced Bill Staples as the new CEO, succeeding Sid Sijbrandij who remains Executive Chair. • Q3 revenue was $196 million, up 31% Y/Y, with non-GAAP operating margin at 13.2% (increase of over 1,000 basis points Y/Y). • AI initiatives: GitLab Duo Pro and Enterprise seeing strong adoption with customers reporting productivity improvements. Ultimate saw 9 of top 10 largest new first-order customers in Q3 purchase it. • Advanced SaaS became generally available for Ultimate customers, using proprietary detection engine for more accurate vulnerability identification. • GitLab Dedicated is exceeding expectations, driving demand for Ultimate as dedicated customers must be on Ultimate.

Third quarter revenue increased 31% year-over-year to $196 million. Ultimate reached 48% of total ARR. Advanced SaaS became generally available for all Ultimate customers. GitLab Dedicated is driving demand for Ultimate. Q3 non-GAAP expenses related to JiHu were $3.5 million compared to $4.3 million in Q3 of last year.

• Fourth quarter FY'25: Expected total revenue $205M-$206M (25%-26% Y/Y growth), non-GAAP operating income $28M-$29M, non-GAAP net income per share $0.22-$0.23. • Full year FY'25: Expected total revenue $753M-$754M (~30% Y/Y growth), non-GAAP operating income $69M-$70M, non-GAAP net income per share $0.63-$0.64. • JiHu: Goal to deconsolidate, with FY'25 modeling forecasting ~$14M in expenses related to JiHu compared to $18M last year.

• APA with IRS and Dutch tax authority: Reserved $10M to be paid to IRS, expecting finalization in Q4. • Uncertainty around deconsolidating JiHu: Cannot predict likelihood or timing of deconsolidation.

Q: Koji Ikeda asked about what stood out from Q3 that was above less conservative guidance.

A: Brian Robins mentioned strong performance across all fronts, including best pub sec quarter, Ultimate's growth, net dollar retention rate of 124%, and CRPO growth.

Q: Sanjit Singh asked about AI category and GitLab's strategic advantage with agents.

A: Sid Sijbrandij said both copilots and agentic AI will exist in parallel, with GitLab's end-to-end platform providing context and ability for agents to take action as strengths.

Q: Matt Hedberg asked about macro buying trends and enterprise agile planning.

A: Brian Robins said people buy GitLab for value with quick payback, and Sid Sijbrandij mentioned North American professional sports league using GitLab's enterprise agile planning.

Q: Joel Fishbein asked about margins and market saturation.

A: Brian Robins said they're happy with margin improvement, sales and marketing EDR at best, and Sid Sijbrandij stated market is early with vast opportunity.

Q: Kash Rangan asked about Bill Staples' fit.

A: Bill Staples said he's thrilled to be there, excited about GitLab's role in software transformation.

Q: Shrenik Kothari asked about GitLab Ultimate's acceleration.

A: Sid Sijbrandij mentioned advanced SaaS launch and integrated security/compliance as drivers.

Q: Ryan MacWilliams asked about Duo adoption and pricing yield.

A: Brian Robins said Duo has strong deals, making up over 25% of total net ARR in year one.

Q: Gray Powell asked about pipeline visibility.

A: Brian Robins said pipeline is steady with cautious spend environment but enough confidence for beat and raise.

Q: Pinjalim Bora asked about agentic AI and pricing model.

A: Sid Sijbrandij said can't comment on future pricing but mentioned consumption pricing examples.

Q: Nick Altmann asked about ultimate premium mix.

A: Sid Sijbrandij said it varies by customer, with focus on end-to-end usage and more platform adoption.