GitLab's Q2 FY2026 Results: Solid Growth Amidst AI Integration and Leadership Changes

GitLab delivers solid quarter with revenue up 29% but guidance and CFO exit weigh on stock - SiliconANGLE

GitLab delivers solid quarter with revenue up 29% but guidance and CFO exit weigh on stock Shares in GitLab Inc. were down more than 6% in late trading today after the DevSecOps platform provider forecast lower-than-expected revenue and its chief financial officer resigned alongside otherwise solid fiscal year 2026 second quarter earnings and revenue. For the quarter that ended on July 31, GitLab reported adjusted earnings per share of 24 cents, up from 15 cents per share in the same quarter of the previous fiscal year, on revenue of $236 million, up 29% year-over-year. Both figures were ahead of the 16 cents per share and revenue of $227 million expected by analysts. Through the quarter, GitLab saw customers with more than $5,000 in annual recurring revenue grow to 10,338, up 11% year-over-year and customers with $100,000 or more in annual recurring revenue grow 25% year-over-year to 1,344. The company's customers are also sticking around, with GitLab reporting a highly impressive retention rate of 121%. Business highlights in the quarter included the public beta launch of GitLab Duo Agent Platform, an artificial intelligence orchestration platform designed for human-AI collaboration across the software development lifecycle. The platform works with various third-party AI services, including Anthropic Claude Code, Cursor, Amazon Q, Google Gemini CLI and opencode, to allow developers to collaborate with AI agents that autonomously handle complex development tasks using rich project context for more intelligent AI outcomes. GitLab also signed a three-year strategic collaboration agreement with Amazon Web Services Inc. that expands access to GitLab Dedicated, a single-tenant offering that enables organizations in highly regulated industries and the public sector to leverage cloud infrastructure while meeting complex compliance requirements, including data residency, isolation, and private networking. "This quarter's results demonstrate the strength of GitLab's AI-native DevSecOps platform as we continue to drive customer-focused innovation," said Bill Staples, chief executive officer of GitLab, in the company's earnings release. "GitLab Duo Agent Platform represents our vision for human-AI collaboration across the software development lifecycle." For its fiscal 2026 third quarter, GitLab expects adjusted earnings per share of 19 cents to 20 cents on revenue of $238 million to $239 million. The earnings outlook was ahead of the 16 cents expected by analysts, but the revenue outlook fell short of an expected $241.5 million. For its full fiscal year, the company expects adjusted earnings of 82 cents to 83 cents per share on revenue of $936 million to $942 million. Along with the quarter earnings report, GitLab also announced that its CFO Brian Robins will be leaving the company on Sept. 19 to pursue another opportunity.

GitLab Reports 29 Percent Revenue Growth | The Motley Fool

GitLab(GTLB -1.64%) reported results for Q2 FY2026 on September 2, 2025, delivering 29% year-over-year revenue growth to $236 million and expanding non-GAAP operating margin to 16.8%. Management sustained its full-year revenue guidance but raised its profit outlook, citing robust non-GAAP operating leverage and the initiation of a hybrid seat plus usage-based monetization model tied to its AI-powered Duo Agent platform. The following analysis highlights major operational shifts, product innovation progress, and evolving go-to-market execution with clear implications for the long-term investment thesis. Annual recurring revenue (ARR) expansion was concentrated within the enterprise and mid-market, with 10,338 customers contributing at least $5,000 in ARR and the $100,000-plus cohort grew by 25% year over year to 1,344 accounts. Non-GAAP gross margin remained at a strong 90%, and adjusted free cash flow reached $46 million, or a 20% margin. "Second quarter revenue reached $236 million, an increase of 29% from Q2 of the prior year. We now have 10,338 customers with ARR of at least $5,000, which contributed over 95% of total ARR in Q2. Our larger customer cohort of $100,000 plus in ARR increased 25% year over year and reached 1,344. We continue to have a diversified customer base both by industry and geography and no single customer accounts for more than 2% of ARR. On the expansion front, we ended the quarter with a dollar-based net retention rate or DBNRR of 121%. Q2 DBNRR was driven by a combination of seat expansion at approximately 80%, increased customer yield at approximately 5%, and the balance due to tier upgrades. I'd like to reiterate some of the one-time disclosures on seats that Bill discussed. Over 70% of our revenue growth in FY 2026 is due to paid seat growth, and over the last four quarters, we've seen an accelerating double-digit rate of paid seat year-over-year growth. Less than 10% of the FY 2026 revenue growth was derived from the premium price increase. -- Brian Robbins, CFO Durable expansion within existing accounts, a low customer concentration risk, and a resilient ARR mix support stable long-term revenue compounding, while subdued reliance on price increases underscores the quality of GitLab's value proposition. GitLab's launch of the Duo Agent platform and new integrations with major AI providers extended its security and automation capabilities, while product stickiness improved, with 53% of total ARR now coming from the high-value Ultimate tier. The adoption of GitLab Dedicated now contributes approximately $50 million in ARR, growing 92% year over year, and Ultimate was chosen in eight of the ten largest deals. "With the Duo agent platform, we are enabling engineers to collaborate with AI agents and do many tasks automatically and in parallel instead of manually or one at a time as they do today. We plan to charge for all of this work done via usage charges whether that work is done by our agents or our partner's agents hosted and integrated into our platform. This means our business model will evolve from a purely seat-based model to a hybrid seat plus usage-based model. When launched, customers will receive some included usage with their base subscriptions so they can easily begin to adopt DuoAgent platform pay as they go beyond the included amount and commit in advance to additional usage to receive the very best pricing." -- Bill Staples, CEO The transition to a hybrid seat and usage-based pricing model is driven by platform automation and AI-powered features. The company initiated a dual sales-led and product-led growth (PLG) strategy: a new global sales organization focused on first orders and post-sales value, alongside PLG driven by the appointment of Manav Khurana as chief product and marketing officer, to counter the decline in new customer cohort sizes. Leadership changes accompany these shifts, with the newly appointed CRO and PLG head tasked to ramp new logo acquisition and accelerate module adoption -- critical for reaching the next revenue inflection as the company approaches the $1 billion scale. "It's really important that we do that because if you look at the cohort data that we shared, our 2016 cohort has grown at 100x. And every quarter, we build new cohorts of future growth. And it has been decelerating. I would say that probably the primary cause of it is we have not incentivized or created a specialized Salesforce focused on first order. And we've let our reps bring in net ARR growth. The way that they're able to do that each quarter. And over time, as our revenue base has grown, obviously, that has come in more and more through expansion as opposed to first order. That's why I mentioned in the prepared remarks, it's time to balance our investments there and have more specialized sellers focused on first order as well as a new product-led growth. Approach. To bringing customers through a self-service experience. Both of those in terms of timeline will begin ramping now throughout H2. And we hope to see early returns on that in FY 2027." -- Bill Staples, CEO This explicit strategic pivot to specialized new business development and PLG is designed to counterbalance a recent trend of slower customer additions, which, if reversed, would restore multi-year growth durability and diversify future sources of ARR expansion. Management projects Q3 FY2026 revenue of $238 million to $239 million, up approximately 23% year-over-year and FY2026 revenue of $930 million to $942 million, reflecting around 24% year-over-year growth, with full-year non-GAAP operating income expected at $133 million to $136 million. GitLab will hold revenue guidance flat to reflect ongoing sales and organizational transitions, while raising profit outlooks due to margin leverage. The initial launch and ramp of the hybrid usage-based Duo Agent platform are set for general availability by year-end, positioning GitLab for early adoption impacts in fiscal 2027; no additional quantifiable long-term guidance or strategic milestones were specified.

GitLab Revenue Jumps 29% in Fiscal Q2

GitLab (GTLB -9.14%), a leading provider of an integrated platform for software development, security, and operations, reported its Q2 FY2026 results on Sept. 3, 2025. Revenue reached $236 million, exceeding management's revenue guidance range of $226 million-$227 million. Adjusted EPS came in at $0.24, up from $0.15 in the same period last year and also ahead of guidance offered back in the Q1 report. Adjusted operating margin moved to 17% in Q2 FY2026, up from 10% one year ago. The quarter underscored robust customer and enterprise expansion and continued focus on AI-driven innovation, although leadership transitions and slight margin pressures introduced areas to watch for the coming quarters. Source: GitLab. Note: Fiscal 2026's second quarter ended July 31, 2025. Fiscal 2025's Q2 ended July 31, 2024. Business Overview and Strategic Focus GitLab serves organizations ranging from startups to multi-national enterprises with its all-in-one DevSecOps platform, reflecting GitLab's core proposition -- a single application that helps customers manage every step of the software development lifecycle, from planning to code writing to deployment and monitoring. The platform streamlines workflows, increases code delivery speed, and helps reduce security risks by integrating all these functions into a unified experience. The company's open-core approach encourages thousands of community members to contribute improvements and new features, supporting rapid innovation. In recent years, GitLab has moved to enhance its artificial intelligence (AI) capabilities inside its platform, aiming to give customers smarter automation, better code suggestions, and advanced security features. Expanding into enterprise accounts, deepening cloud partnerships, and furthering AI integration have been key areas of focus. Quarter Highlights: Growth Drivers and Product Developments The reported quarter saw GitLab achieve a 29% increase in GAAP revenue. Those generating over $100,000 in recurring annual revenue now total 1,344, up 25 % from last year's reporting period. Total customers spending more than $5,000 annually rose 11% to 10,338. The platform's subscription-based model, combining both software as a service (SaaS) and self-managed options, generated $212.7 million (GAAP), up from $163.2 million in Q2 FY2025. Remaining performance obligations, a measure of future contracted revenue not yet recognized, increased by 32% year-over-year. The dollar-based net retention rate, which measures how much recurring revenue is retained from existing customers after accounting for churn, upgrades, and downgrades, held steady at a healthy 121%. It launched a public beta of GitLab Duo Agent Platform, described as an AI orchestration layer that integrates with multiple external artificial intelligence tools. This product is meant to help customers quickly adopt AI-driven development through their preferred large language models. Strategic expansion continued with a three-year partnership with Amazon's AWS to broaden the Dedicated (single-tenant) service, specifically targeting compliance-heavy and public sector environments. Gross margin, a key profitability indicator measuring the percentage of revenue remaining after direct costs, slipped slightly to 90% on a non-GAAP basis, down from 91% in Q2 FY2025. Although operating margins improved, the company reported a GAAP net loss, influenced by stock-based compensation and other non-cash accounting charges. The cash position strengthened, with cash and equivalents rising to $261.4 million, providing flexibility for ongoing investment and operations. Looking Ahead: Guidance and Key Watch Areas For Q3 FY2026, management projects revenue of $238 million to $239 million, implying year-over-year growth of about 30%. Full-year guidance for FY2026 forecasts revenue of $936 million to $942 million. The company provided guidance for non-GAAP operating income of $133 million-$136 million for FY2026, and similarly raised its forecast for non-GAAP diluted earnings per share to $0.82-$0.83 for FY2026. Revenue guidance, however, was maintained at its previous level. Leadership changes are a notable point going forward. GitLab's Chief Financial Officer is stepping down as of September 19, 2025, with the interim CFO promoted from within the finance function. Additional new executive appointments may support scaling as the company grows. Investors will likely monitor how the company manages its margin trends, continued enterprise customer gains, and execution on its AI strategy, all while facing strong competition in developer and security software markets. GTLB does not currently pay a dividend. Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

Why GitLab Stock Was Sliding Today | The Motley Fool

Shares of GitLab (GTLB -8.27%), the cloud-based DevSecOps platform, were pulling back today after the company delivered a solid second-quarter earnings report but offered weak guidance. GitLab continued to deliver strong growth with revenue up 29% to $236 million, which topped estimates at $227.2 million. Gross margin remained strong at 88% per generally accepted accounting principles (GAAP), and adjusted operating income more than doubled from $18.2 billion to $39.6 billion. On the bottom line, the company reported adjusted earnings per share of $0.24, up from $0.15 in the year-ago quarter and ahead of the consensus at $0.16. Remaining performance obligations (RPO) rose 32% to $988.2 million, showing stable growth in the backlog, and the dollar-based net retention rate was 121%, meaning existing customers increased their spend by 21% over the last four quarters. CEO Bill Staples said the company's new artificial intelligence (AI) agent was performing well, noting, "This quarter's results demonstrate the strength of GitLab's AI-native DevSecOps platform as we continue to drive customer-focused innovation. GitLab Duo Agent Platform represents our vision for human-AI collaboration across the software development lifecycle." Duo is now in beta and integrates with a wide range of large language models such as Anthropic's Claude and Google's Gemini. Looking ahead, GitLab called for basically flat sequential growth in the third quarter, forecasting revenue of $238 million to $239 million, or a 21.7% increase from the quarter a year ago, which was below estimates at $239.7 million. Full-year revenue guidance was also below the mark as the company called for revenue of $936 million to $942 million, below the consensus at $942.9 million. Given that guidance, the sell-off is understandable, but the long-term picture still looks promising. The price-to-sales ratio is also much more attractive than it was before, now at just around 7 based on forward guidance.