GitLab, Inc. (GTLB) shares surged 5.07% in pre-market trading on Tuesday, following the company's impressive fourth-quarter fiscal 2025 results and optimistic outlook for leveraging the AI opportunity.

In its Q4 earnings call, GitLab reported a 29% year-over-year increase in revenue to $211.4 million, surpassing expectations. The company's non-GAAP operating margin also improved significantly, reaching 17.7%, an increase of 960 basis points from the previous year.

One of the key drivers behind GitLab's strong performance was the adoption of its Ultimate product, which now accounts for 50% of total annual recurring revenue (ARR). The Ultimate offering's security and compliance features have resonated well with enterprise customers, leading to a record number of net adds for customers with over $100,000 in ARR.

Looking ahead, GitLab's CEO Bill Staples expressed enthusiasm about the transformative potential of AI in software development. The company is actively investing in AI-powered offerings like Duo Enterprise and Duo Workflow to enhance developer productivity and embed AI capabilities throughout the software development lifecycle.

Staples stated that GitLab's comprehensive DevSecOps platform, which provides context across the entire software lifecycle, positions the company well to capitalize on the growing demand for AI-driven software development. As more organizations leverage AI for code generation, GitLab's platform can ensure the quality, security, and compliance of the generated code.