GitLab Earnings Rise After Strong Q2

GitLab Inc. reported accelerating annual recurring revenue (ARR) growth and record gross bookings for the second quarter of fiscal 2027, prompting the company to raise full-year guidance in a press release on 2026-09-01 while noting mixed cash-flow results.

Quarter Financial Results and Operating Metrics

GitLab Inc. (NASDAQ: GTLB) posted revenue of $286.3 million for the quarter ended July 31, 2026, a 21% increase from the prior year. On a non-GAAP basis, gross margin was 86%, and operating income totaled $42.6 million, representing a 15% margin, slightly down from 17% a year earlier. GAAP gross margin declined to 84% from 88%, and GAAP operating loss widened to $56.9 million, reflecting restructuring charges.

GAAP net loss attributable to GitLab was $36.8 million, with diluted loss per share of $(0.22). Non-GAAP net income was $42.1 million, and diluted EPS was $0.24, roughly flat year over year. Operating cash flow swung to an outflow of $(3.1) million from $49.4 million a year earlier, while non-GAAP adjusted free cash flow was $9.8 million, about a 3% margin. The company held approximately $1.3 billion in cash and investments at quarter-end.

Bookings, ARR Growth, and AI Demand

The quarter’s strength was driven by bookings and recurring revenue. Net ARR growth exceeded 40% year over year; management cited 42%, the company’s second-highest rate in four years. Dollar-based net retention rose to 117%, marking the first sequential improvement since 2024, while gross retention remained above 90%.

Total remaining performance obligations (RPO) reached about $1.2 billion, up 16% year over year. Current RPO for the next 12 months was roughly $744.7 million, a 20% increase. Calculated billings grew 24% year over year, doubling the prior quarter’s 12% growth. New customer transactions, or First Orders, totaled about 1,700, more than twice the prior year’s volume.

Ultimate ARR, representing high-value, platform-wide deployments, rose to 59% of total ARR and expanded 35% year over year. SaaS revenue accounted for 34% of total revenue and grew 36%, led by products such as GitLab Dedicated and GitLab Duo. Management attributed much of the bookings momentum to AI-driven demand for its DevSecOps platform and newer features. The company said its Flex consumption model secured over $20 million in commitments within six weeks, with paid-consumption run rates exceeding $40 million. CEO Bill Staples said, “Q2 was an exceptional quarter, with record gross bookings and net ARR growth exceeding 40% year over year.”

Guidance and Capital Allocation

Following the quarter, GitLab raised full-year fiscal 2027 revenue guidance to approximately $1.129–$1.133 billion and increased targets for non-GAAP operating income and diluted EPS to $148–$152 million and $0.85–$0.87, respectively. The outlook implies a moderation in revenue growth, with the next quarter trending toward mid-to-upper-teen percentage increases year over year.

GitLab repurchased about 3.5 million shares during the quarter and had roughly $245 million remaining under its authorized repurchase program at quarter-end, reflecting an active capital-allocation strategy alongside the raised guidance.