GitLab — Second Quarter Fiscal Year 2027 Earnings Summary

Financial Performance

• Total revenue reached $286.3 million, representing a 21% year-over-year increase compared to $236.0 million in Q2 FY 2026.
• GAAP operating margin was (20)%, while non-GAAP operating margin was 15% (down from 17% in the prior year period).
• GAAP operating loss was $56.9 million, compared to a loss of $18.4 million in Q2 FY 2026.
• Non-GAAP operating income was $42.6 million, an increase of $3.0 million year-over-year.
• GAAP net loss attributable to GitLab was $36.8 million, compared to a loss of $9.2 million in the prior year period.
• Non-GAAP net income attributable to GitLab was $42.1 million, an increase of $1.2 million year-over-year.
• GAAP net loss per share (basic and diluted) was $0.22, compared to $0.06 in the prior year period.
• Non-GAAP net income per share (basic) was $0.25, unchanged from the prior year period; diluted was $0.24.
• GAAP net cash provided by operating activities was $(3.1) million, a decrease of $52.5 million year-over-year.
• Non-GAAP adjusted free cash flow was $9.8 million, a decrease of $36.7 million year-over-year.
• GAAP gross margin was 84% (down from 88%), and non-GAAP gross margin was 86% (down from 90%).

Guidance and Future Outlook

• Q3 FY 2027 revenue is expected to be between $281 million and $283 million.
• Q3 FY 2027 non-GAAP operating income is expected to be between $35 million and $37 million.
• Q3 FY 2027 non-GAAP diluted net income per share is expected to be between $0.19 and $0.20.
• Full-year FY 2027 revenue is expected to be between $1,129 million and $1,133 million.
• Full-year FY 2027 non-GAAP operating income is expected to be between $148 million and $152 million.
• Full-year FY 2027 non-GAAP diluted net income per share is expected to be between $0.85 and $0.87.
• Guidance assumes approximately 172 million weighted average shares outstanding for both Q3 and full-year FY 2027.

Business Segments and Product Lines

• Introduced GitLab Flex, a new commercial model covering platform seats, GitLab Credits, and eligible capabilities with a single annual commitment and monthly reservations.
• Launched GitLab Secrets Manager as a usage-based add-on for Premium and Ultimate customers on GitLab.com.
• Expanded AI agent context with GitLab Orbit, available in public beta, connecting code, work items, pipelines, and production signals.
• Internal testing for GitLab Orbit showed agents responding up to 11x faster with up to 45x fewer hallucinations.
• First Order growth exceeded 100% year-over-year.
• Customers with more than $5,000 of ARR reached 11,114, an 8% increase year-over-year.
• Customers with more than $100,000 of ARR reached 1,571, a 17% increase year-over-year.
• Dollar-Based Net Retention Rate was 117%.
• Total Remaining Performance Obligation (RPO) grew 16% year-over-year to $1.2 billion.
• Contract RPO (cRPO) grew 20% year-over-year to $744.7 million.
• Net ARR growth exceeded 40% year-over-year.

Market and Competitive Landscape

• Recognized as a Leader in the Gartner® Magic Quadrant™ for DevSecOps Platforms for the fourth consecutive year.
• An independent Forrester Consulting Total Economic Impact™ study quantified the potential business value of the GitLab Duo Agent Platform, finding a 400% return on investment and $7.5 million in net present value (NPV) over three years with payback in under six months.
• The company notes that AI is driving more software creation and work through the development lifecycle, increasing the value of GitLab's context, security, governance, and control.

Risks and Challenges

• Forward-looking statements indicate risks including the ability to effectively manage growth, achieve and sustain profitability, and respond to rapid technological changes.
• Potential risks include security and privacy breaches, intense competition, loss of market share, and a decline in customer renewals and expansions.
• Risks also include the effects of ongoing armed conflict, general economic conditions, regulatory uncertainty, and volatile capital markets.
• The company noted restructuring charges primarily consisting of severance, retention costs, and asset write-downs associated with a restructuring announced in May 2026.

Management Commentary and Tone

• CEO Bill Staples described Q2 as an "exceptional quarter" with record gross bookings and net ARR growth exceeding 40%.
• CFO Jessica Ross highlighted "sequential acceleration in dollar-based net retention and meaningful operating leverage," reflecting the strength of execution and increasing scalability.
• Management expressed confidence in the durability of the growth opportunity and the ability to create long-term value as humans and agents build software together.

Other Key Points

• In the quarter, GitLab repurchased approximately 3.5 million shares.
• The company hosts a conference call on September 1, 2026, to discuss results and guidance.
• Non-GAAP financial measures exclude stock-based compensation, amortization of acquired intangible assets, restructuring charges, and other non-recurring items.
• The company utilizes a fixed long-term projected tax rate of 22% for non-GAAP income tax provision calculations for FY26 and FY27.
• GitLab reported a consolidated variable interest entity, GitLab Information Technology (Hubei) Co., LTD ("JiHu"), included in its balance sheets with assets of $46.1 million and liabilities of $7.6 million as of July 31, 2026.
• Non-GAAP guidance for operating income and net income per share does not include a reconciliation to GAAP measures due to the uncertainty of future expenses.