GitLab Inc. sank after the software company reported revenue forecasts for the first-quarter and full year that fell short of expectations.
(Bloomberg) — GitLab Inc. sank after the software company reported revenue forecasts for the first-quarter and full year that fell short of expectations.
Shares of the San Francisco-based tech firm dropped as much as 38% in afterhours trading Monday after it said it expected quarterly revenue guidance in the $117 million to $118 million range, while the average analyst estimate was $126.7 million. Its full year forecast was for $529 million to $533 million, coming in well below the $587.3 million estimate.
“The guidance suggests a meaningful slowdown in growth, even with the steep price hikes on midtier plans,” said Bloomberg Intelligence analyst Sunil Rajgopal. “We see continued risk to free-cash-flow turnaround targets.”
See also: Gitlab Slumps as Outlook Points to Weaker Growth: Street Wrap
Earlier this month, GitLab said it was increasing the list price of GitLab Premium from $19 to $29 per user per month, effective April 3 — its first price increase in more than five years.
The price hike was included in its forecasts, and the company reassessed its near-term revenue growth outlook assuming trends it saw in the fourth quarter will continue, Chief Financial Officer Brian Robins said during the earnings conference call. Hiring freezes and workforce reductions impacted GitLab’s expansion, particularly in its premium tier, and the company also saw greater deal scrutiny at the end of the calendar year, with more people involved in the approval cycle, leading to longer sales cycles.
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