GitLab Q2 Earnings Beat on Revenue Growth and Sales Productivity

GitLab GTLB reported second-quarter fiscal 2027 non-GAAP earnings of 24 cents per share, which remained unchanged year over year and 33.33% above the Zacks Consensus Estimate. 

Revenues of $286.25 million rose 21.3% year over year and beat the consensus mark by 4.74%.

Broad-based strength across new and existing customers supported the quarter. Net annual recurring revenue (ARR) growth accelerated to 42% year over year, while the dollar-based net retention rate was 117%.

GTLB’s Revenue Mix Shows Broad-Based Growth

Subscription, self-managed and SaaS revenues increased 21.5% year over year to $258.31 million. License, self-managed and other revenues rose 20.1% year over year to $27.94 million.

GitLab Inc. Price, Consensus and EPS Surprise

GitLab Inc. price-consensus-eps-surprise-chart | GitLab Inc. Quote

SaaS revenues represented 34% of total revenues and increased 36% year over year. Calculated billings grew 24%, while total remaining performance obligations rose 16% to $1.2 billion and current RPO increased 20% to $744.7 million.

GitLab’s Customer Expansion Accelerates

Customers generating more than $5,000 of ARR reached 11,114, up 8% year over year. Customers with more than $100,000 of ARR increased 17% year over year to 1,571. Ultimate ARR grew roughly 35% and accounted for 59% of total ARR. Eight of GitLab’s 10 largest second-quarter deals purchased Ultimate, while gross retention remained above 90%.

GitLab recorded approximately 1,700 first orders, more than double the year-ago level, while first-order net ARR increased 39%. Deals worth at least $500,000 grew more than 150% year over year. Account executive capacity increased about 30%, while productivity per rep improved about 10%.

GitLab's Flex and AI Products Gain Traction

GitLab Flex attracted more than 130 customers with over $20 million in commitments during its first six weeks in market. Paid consumption run rate exceeded $40 million at quarter-end, up from $15 million exiting the first quarter. Management is targeting more than $100 million by fiscal year-end.

Duo Agent Platform paid consumption run rate increased roughly 50% sequentially. GitLab Orbit, which entered public beta in June, had more than 2,200 organizations enabled indexing and generated more than 170,000 customer queries. Roughly 80% of query volume came from customers connecting Orbit to external agents.

GTLB's Operating Details

In the second quarter of fiscal 2027, non-GAAP gross margin was 86%, down from 90% in the prior year. 

On a non-GAAP basis, sales and marketing expenses rose 15.8% year over year to $103.82 million, research and development costs increased 24.6% year over year to $65.17 million, and general and administrative expenses advanced 19.1% year over year to $36.00 million.

Non-GAAP operating income increased 7.6% year over year to $42.57 million. However, the corresponding operating margin was 15%, down from 17% in the year-ago quarter.

GTLB's Cash Flow Weakens on Collection Timing

As of July 31, 2026, cash and cash equivalents and short-term investments were $1.26 billion compared with $1.36 billion as of April 30, 2026.

Operating cash outflow was $3.09 million compared with operating cash flow of $49.37 million in the year-ago quarter. Adjusted free cash flow declined to $9.75 million from $46.45 million.

The company repurchased approximately 3.5 million shares during the quarter and had about $245 million remaining under its current authorization.

GitLab Raises Fiscal 2027 Outlook

For the third quarter of fiscal 2027, GitLab expects revenues of $281-$283 million, implying 15%-16% year-over-year growth. Non-GAAP operating income is projected to be $35-$37 million, while non-GAAP earnings are expected to be between 19 cents and 20 cents per share.

For fiscal 2027, revenues are now projected to be $1.129-$1.133 billion, representing 18-19% growth. Non-GAAP operating income is expected to be $148-$152 million, and earnings are likely to be between 85 cents and 87 cents per share. The outlook assumes a normalized bookings pace, modest Duo Agent Platform revenue contribution and excludes the potential revenue-timing impact of Flex. Management estimates a maximum $13 million fiscal 2027 revenue-timing impact from Flex adoption.

GTLB’s Zacks Rank & Stocks to Consider

GitLab currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader Zacks Computer and Technology sector include Ciena CIEN, Docusign DOCU and Micron Technology MU. Each stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Ciena shares have surged 268.4% in the year-to-date period. Ciena is set to report third-quarter fiscal 2026 results on Sept. 3.

Shares of Docusign have plunged 13.3% year to date. Docusign is set to report second-quarter fiscal 2027 results on Sept. 3.

Shares of Micron Technology have rallied 129.9% year to date. Micron Technology is slated to report fiscal fourth-quarter 2026 results on Sept. 30.

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