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GitLab (GTLB -7%) is under pressure today despite reporting EPS upside with its Q1 (Apr) report last night. This provider of software development tools, also known as DevOps Platforms, also reported healthy revenue growth of +26.8% yr/yr to $214.5 mln, which was above analyst expectations. GitLab also guided Q2 (Jul) EPS and revs in-line. GitLab did raise FY26 EPS guidance and reaffirmed revs.

• A few things stand out to us. This was GitLab's smallest EPS upside since its IPO in October 2021. Also, while it did report upside revenue, the beat was notably smaller than what we have seen in recent quarters. Some analysts did make note of this skinnier-than-normal beat during the Q&A part of the call, which tells us it was an issue for them.
• Drilling down a bit more, customers with more than $5,000 of ARR reached 10,104, an increase of 13% yr/yr. That was a bit of a deceleration from +15% yr/yr in Q4 (Jan). Customers with more than $100,000 of ARR reached 1,288, an increase of 26% yr/yr, which was also down from +29% in Q4. Total RPO grew a healthy 40% yr/yr to $955.1 mln, while cRPO grew 34% to $584.8 mln. These last two metrics were roughly in-line with Q4's +40% and +35%, respectively.
• GitLab was asked about the slight customer growth deceleration. The company said it is seeing some price sensitivity at the low end of the market, mostly SMB, but it's not impacting the financials. That is impacting the new customer add metrics. But GitLab was not concerned.
• GitLab mentioned two issues to explain the customer metrics: 1) there was a mix that favored SaaS. From a revenue recognition perspective, GitLab recognizes more upfront on SaaS. 2) Linearity was a little bit more backend-weighted. From a macro perspective, customers remains cautious. However, people are still buying its offerings. GitLab has not really seen too much difference from a macroeconomic perspective. On a final note, Federal had a great quarter, exceeding internal expectations.

Overall, two things seem to be weighing on shares today: the smaller-than-usual upside and the new customer metrics decelerated a bit from Q4. Whenever a company that has a history of robust beats reports just modest upside, that can be a concern for investors. Perhaps investors need to reset expectations for future quarters. We will watch Q2 results to see if GitLab goes back to its historical beats. The customer metrics are a bit of a concern as well. It's important to keep adding new customers at a good clip to fuel future growth.