Gitlab jumps, Coupa falls as stock markets remain turbulent

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The stock market has been on a roll of pins and needles lately, and Monday brought no relief to hard-hit investors. Although the Dow Jones Industrial Average (^ DJI 0.00% ) managed to close almost unchanged on the day, the Nasdaq Compound ( ^IXIC 0.00% ) and S&P500 ( ^GSPC -0.74% ) were both down sharply as rising bond yields, geopolitical concerns and macroeconomic fears overwhelmed investors.

Index

Percent Daily Change

Daily point change

Dow

+0.003%

+1

S&P500

(0.74%)

(31)

Nasdaq

(2.04%)

(263)

Data source: Yahoo! Finance.

Tech stocks came under particularly heavy pressure in 2022, but after the market closed, investors got mixed readings on the health of the sector. Gitlab (GTLB -6.76% ) managed to post a solid gain in after-hours trading following the release of its latest financial report, but Coupa Software ( BLOW -9.60% ) was not so lucky, falling sharply. Let’s learn more about what the two companies said.

Image source: Getty Images.

Gitlab is experiencing continuous growth

Gitlab shares rose nearly 13% in after-hours trading on Monday afternoon. The development and operation software platform specialist announced fourth quarter financial results that reassured investors that the company remains on track.

Gitlab’s numbers were solid. Revenue for the quarter jumped 69% year-over-year to $77.8 million, ending fiscal 2022 with a 66% increase in sales. Gitlab remained unprofitable, but adjusted losses of $0.16 per share for the quarter were only about a third of the loss in the year-ago period. Gitlab ended the fiscal year with adjusted losses of $1.20 per share, compared to $2.06 per share in fiscal 2021.

The key metrics looked quite favorable for Gitlab. The company had 39 customers producing at least $1 million in annualized recurring revenue, up from just 20 the previous year. Net dollar retention rates weighed in at over 152% for the quarter, indicating that customers generally remain loyal to Gitlab as they become familiar with the platform.

Even better, Gitlab projected continued growth, including revenue of $385.5 million to $390.5 million for fiscal year 2023. That would represent gains of around 54%, and while that’s a slowdown , it’s not as important as some of the numbers. other companies that have disappointed investors so much in the recent past. After falling more than 70% since its October 2021 IPO, the results were good enough to warrant a rebound for Gitlab.

Coupa cannot satisfy investors

On the other hand, shares of Coupa Software fell nearly 30% in after-hours trading on Monday. The enterprise expense management software specialist’s fourth-quarter financial report fell short of high shareholder expectations.

Coupa’s fourth-quarter numbers weren’t bad, but they weren’t what most shareholders expected of the growth stock. Revenue increased 18% year over year to $193.3 million, with subscription revenue up 28% from prior year levels. Billings also rose 18%, but losses widened to $0.19 per share on an adjusted basis. Fiscal 2022 sales increased 34% with the same modest increase in losses from the prior year.

Additionally, Coupa expects continued slow growth in fiscal 2023. Guidance for the year includes revenue projections of $836 million to $840 million, which would only represent gains of 15 to 16% on Coupa’s turnover.

The company expects to be profitable on an adjusted basis, with earnings of $0.15 to $0.19 per share. However, investors seem unconvinced that Coupa’s longer-term outlook is disruptive. This is a key factor in today’s market, and this lack of confidence is a big part of why Coupa shares are falling so hard.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a high-end consulting service Motley Fool. We are heterogeneous! Challenging an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and wealthier.

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