Investing.com -- Gitlab Inc (NASDAQ: GTLB) shares slid 8.5% in after-hours trading Tuesday despite the company delivering better-than-expected third-quarter results and showing solid progress in key customer and cash flow metrics. The selloff came as investor enthusiasm cooled amid AI scrutiny and a high bar for outperformance.

The DevSecOps platform provider posted non-GAAP EPS of $0.25 in the fiscal third quarter, beating consensus estimates by $0.05. Revenue rose 25% year-over-year to $244.4 million, also topping Wall Street’s forecast of $239.09 million.

Customer expansion remained strong, with GitLab ending the quarter with 1,405 clients generating more than $100,000 in ARR, up 23% annually. Dollar-Based Net Retention Rate held steady at 119%, indicating sustained upsell momentum and platform engagement.

“More code means more of a need for GitLab,” said CEO Bill Staples. “We’ve architected GitLab and Duo Agent Platform to provide intelligent orchestration across the software lifecycle.” Interim CFO James Shen added, “I am pleased with GitLab’s strong third quarter results for fiscal year 2026, which resulted in 25% year-over-year revenue growth.”

Profitability metrics showed continued operational leverage, with a non-GAAP operating margin of 18%, up from 13% a year ago. GitLab also generated $31.4 million in operating cash flow and $27.2 million in adjusted free cash flow, highlighting improved capital efficiency.

The company announced Jessica Ross will take over as CFO in January, bringing experience from Frontdoor, Salesforce and Stitch Fix. GitLab also continued to deliver AI advancements, including integrations with Claude Code, OpenAI Codex, and Google Gemini, enhancing its Duo Agent Platform and DevOps automation.

While GitLab’s numbers underscore business strength, the share reaction reflects a more cautious sentiment heading into year-end.