GitLab (NASDAQ:GTLB) reported first quarter financial results that exceeded Wall Street expectations for revenue and earnings, but shares fell about 4% after the company announced a restructuring plan that includes workforce reductions and a smaller geographic footprint.
Alongside its earnings release, GitLab disclosed a restructuring initiative aimed at aligning its operating structure with strategic priorities. The company plans to reduce its full-time workforce by approximately 14%, affecting about 350 employees, and exit 22 countries, reducing its geographic team footprint by roughly 37%.
GitLab expects to incur between $30 million and $35 million in pre-tax restructuring charges, primarily related to severance, employee termination benefits, and retention costs.
About $19 million of those charges are expected to be recognized in the second quarter of fiscal 2027, with most of the remaining costs recorded over the following three quarters.
The company expects the plan to be substantially completed by the end of fiscal 2027.
For the quarter ended April 30, 2026, GitLab reported revenue of $264.2 million, up 23% from $214.5 million a year earlier and ahead of analysts' consensus estimate of $254.2 million.
Adjusted earnings were $0.23 per diluted share, topping expectations of $0.20 per share.
Among other operating metrics, customers generating more than $100,000 in annual recurring revenue (ARR) increased 18% year-over-year to 1,519, while customers with more than $5,000 in ARR rose 7% to 10,831. The company's dollar-based net retention rate was 117%.
GitLab reported total remaining performance obligations (RPO) of $1.1 billion, up 18% from a year earlier, while current RPO increased 24% to $724.1 million.
GitLab CEO Bill Staples said the company is benefiting from growing demand driven by artificial intelligence and automation.
"The agentic era is creating structural tailwinds for GitLab, and Q1 showed it clearly with accelerating platform activity and promising traction from GitLab Duo Agent Platform," Staples said in a statement.