GitLab is laying off approximately 350 employees, representing 14% of its workforce, and exiting 22 countries as part of a restructuring plan that CEO Bill Staples attributes to the rise of the "agentic era" in software development. The DevSecOps company announced the cuts on Tuesday alongside a first-quarter earnings report that exceeded Wall Street expectations, with revenue climbing 23% to $264.2 million and adjusted earnings two cents above estimates. Shares rose 7% in after-hours trading to $34.05, pushing the company's market capitalization past $5 billion.
Restructuring Details and Costs
The restructuring will reduce GitLab's geographic footprint by approximately 37%. The company expects to incur between $30 million and $35 million in severance, termination benefits, and retention costs. About $19 million of that amount will be recorded in the current quarter ending in late July, with the remainder spread across the following three quarters. The plan is expected to be substantially complete by the end of fiscal 2027. Customers in the 27 exited countries will continue to be served through GitLab's partner network.
Despite the layoffs, GitLab insists this is not a distress cut. Staples told investors that most of the savings will be reinvested into research and development, particularly its AI products. The company raised the low end of its full-year adjusted earnings outlook to 79 to 82 cents per share, up from 76 to 80 cents, while maintaining the revenue ceiling at $1.12 billion. GitLab also repurchased approximately 2.4 million shares during the quarter. Subscription revenue jumped to $239.3 million from $194.5 million a year earlier, and the number of customers with more than $100,000 in annual recurring revenue grew 18%.
Duo Agent Platform: The Core Bet
The growth thesis now hinges on GitLab's Duo Agent Platform, which became generally available in January. The company has deepened its integration with Anthropic's Claude models and signed partnerships with Amazon Web Services and Google Cloud to run agentic features on Bedrock and Vertex AI. Staples said the agentic era is creating "structural tailwinds" for the platform, with Q1 showing "accelerating platform activity and promising traction" from the Duo rollout. The pitch to investors is that GitLab is transitioning from a DevSecOps vendor to the trusted enterprise platform for software creation in the AI era.
GitLab joins a growing list of software companies pairing solid results with significant cuts, recasting layoffs as bets on a leaner, AI-first operating model rather than cost-cutting. This framing has drawn skepticism, particularly from affected employees. GitLab has operated as an all-remote company since its founding, with staff across more than 60 countries, which is why unwinding employment in 22 jurisdictions stretches the restructuring charge across four quarters. Notice periods and severance rules vary by country, and the company said further costs may emerge as the plan progresses. Net loss for the quarter narrowed to $5 million from $35.9 million a year earlier.
CEO's Full Memo: GitLab Act 2
In a letter to customers and investors, CEO Bill Staples outlined the strategic rationale behind the changes. He described the agentic era as the largest opportunity in GitLab's history and detailed the operational and strategic decisions being made to meet it.
Operational Changes
- Geographic footprint reduction: The company plans to reduce the number of countries where it has small teams by up to 30%, continuing to serve those markets through partners.
- Flattening the organization: Up to three layers of management will be removed in some functions to bring leaders closer to the work.
- Reorganizing R&D: Approximately 60 smaller, more empowered teams with end-to-end ownership will be created, nearly doubling the number of independent teams.
- AI-driven internal processes: Internal processes will be rewired with AI agents to automate reviews, approvals, and handoffs, with roles right-sized accordingly.
Core Beliefs
Staples outlined 10 core beliefs underpinning the strategy, including that software will be built by machines directed by people, that the agentic era multiplies demand for software, and that engineering skills will become even more valuable. Architectural bets include machine-scale infrastructure, orchestration across the full lifecycle, context as a superpower, governance built into the core, and a one-platform, three-modes approach. The company also plans a flexible business model combining subscriptions with consumption pricing for agent work.
Customer and Investor Assurance
Staples assured customers that support, roadmap commitments, and contractual terms remain unchanged. For investors, he emphasized that the restructuring is a deliberate move to lead in a market undergoing its largest shift in 20 years, with most savings reinvested into growth initiatives. The company will share further updates on its June 2 earnings call.
