GitLab, Inc. (NASDAQ: GTLB) saw its shares plummet 12.27% in pre-market trading on Wednesday, following the release of its first-quarter fiscal year 2026 results. The sharp decline came despite the company reporting better-than-expected earnings and revenue for the quarter, as investors focused on slightly disappointing second-quarter guidance.

For the first quarter, GitLab reported earnings of 17 cents per share, surpassing the analyst consensus estimate of 15 cents. Revenue came in at $214.51 million, also beating the Street estimate of $213.16 million. These results represented significant improvements from the same period last year, with revenue growing by 27% and non-GAAP net income rising to $29.4 million from $4.5 million in the previous year.

However, the company's outlook for the second quarter fell short of expectations. GitLab forecasts Q2 revenue between $226 million and $227 million, slightly below the analyst consensus of $227.16 million. This minor miss in forward guidance appears to have triggered the sell-off, highlighting the current challenging environment for tech stocks where even small disappointments can lead to significant stock price movements. Following the earnings release, several analysts, including JP Morgan, BTIG, and TD Cowen, cut their price targets for GitLab, further pressuring the stock. The market reaction underscores the heightened sensitivity to tech earnings and the importance of meeting or exceeding analyst expectations in the current market climate.