GitLab Q1 Earnings Call Highlights

Key Points

• GitLab delivered a strong Q1 with revenue of $264 million, up 23% year over year, and raised full-year fiscal 2027 guidance. The company also posted non-GAAP operating income of $38 million and ended the quarter with $1.36 billion in cash and investments.
• Enterprise demand remained the main growth driver, with 1,519 customers generating more than $100,000 in ARR, up 18% from a year ago, and GitLab Dedicated topping $70 million in ARR. However, management said smaller, price-sensitive accounts are still under pressure from layoffs and M&A-related contraction.
• GitLab is betting heavily on AI and restructuring, as Duo Agent Platform showed early traction and the company outlined an “Act Two” plan to cut about 14% of staff and shrink its geographic footprint. Management said most savings will be reinvested into AI, R&D, and platform priorities, including new architectural bets and a consumption-based model.

GitLab NASDAQ: GTLB reported first-quarter fiscal 2027 revenue of $264 million, up 23% year over year, as executives pointed to enterprise demand, growth in dedicated deployments and early traction for its agentic AI products.

Chief Executive Bill Staples said the quarter reinforced management’s view that GitLab is positioned to benefit from what it calls the “agentic era” of software development. The company reported non-GAAP operating income of $38 million, representing a 14% non-GAAP operating margin, and dollar-based net retention of 117%.

“Our core enterprise DevSecOps business remains strong,” Staples said, citing the company’s highest gross bookings growth rate in four quarters. GitLab ended the quarter with 1,519 customers generating more than $100,000 in annual recurring revenue, up 18% from a year earlier. Chief Financial Officer Jessica Ross said those larger customers now account for just over 75% of ARR.

Enterprise Strength Offsets Pressure in Smaller Accounts

Ross said performance was strong across geographies, with public sector results ahead of expectations. GitLab Dedicated, the company’s single-tenant offering for customers with security and compliance requirements, surpassed $70 million in ARR.

At the same time, management continued to point to pressure among price-sensitive customers, a group Ross said represents roughly 20% of ARR. She said the company saw more seat contraction than expected, mostly tied to layoffs in GitLab’s customer base, along with additional contraction related to mergers and acquisitions.

“Without those dynamics, the quarter would have been even stronger,” Ross said.

GitLab reported 10,831 customers contributing at least $5,000 in ARR, representing more than 95% of total ARR. Gross retention remained above 90%, consistent with historical trends. Total remaining performance obligations rose 18% year over year to $1.1 billion, while current RPO increased 24% to $724 million.

AI Products and Consumption Model Gain Early Traction

Staples said GitLab Duo Agent Platform, which became generally available shortly before the quarter began, contributed more net new ARR in its first quarter than Duo Pro and Duo Enterprise combined in any prior quarter. He said GitLab plans to transition Duo Pro and Duo Enterprise subscriptions into Duo Agent Platform during fiscal 2027, consolidating the AI portfolio into a single agentic platform and moving it onto a consumption business model.

The company disclosed an internal metric called paid consumption run rate, or CRR, for Duo Agent Platform. Staples said paid CRR was nearly $20 million at the end of the first full quarter of consumption, including minimum usage commitments made before general availability and during the quarter, as well as on-demand credits. Ross cautioned that the figure is an early signal and should not be used as a forecasting input.

Staples said GitLab is seeing AI-driven demand beyond traditional DevSecOps budgets. He also noted expanded relationships with AWS, Google Cloud and Anthropic, saying Duo Agent Platform spending is now eligible against committed cloud budgets on their marketplaces.

Management highlighted use cases including code review, failed pipeline remediation, security vulnerability resolution and Duo developer capabilities that can turn requirements into tasks and merge requests. Staples said early adoption has been strongest among SaaS customers because many self-managed customers may take up to two quarters to upgrade to builds that include Duo Agent Platform.

Act Two Restructuring to Reduce Workforce, Reinvest in Strategy

Ross provided additional detail on GitLab’s “Act Two” plan, which includes a restructuring aimed at aligning the company with its AI and platform priorities. She said approximately 14%, or 350 team members as of Jan. 31, 2026, are expected to be affected. GitLab also expects to exit 22 countries and reduce its geographic footprint by about 37%.

The company is flattening its organizational structure, with up to three layers of management removed. Ross said GitLab expects $30 million to $35 million in pre-tax restructuring charges, with about $19 million expected in the second quarter and most of the remainder over the following three quarters.

Ross said the company plans to reinvest “the vast majority” of savings into initiatives tied to Act Two, including team member investments, R&D resources for architectural priorities and internal AI tooling. In response to an analyst question, she described the reinvestment areas as people, technology and process.

Staples said GitLab took steps to limit customer disruption, including protecting sales capacity. Ross added that customer exposure in exited geographies is limited, with no sales presence in those countries and transition plans in place where customers exist.

Management Outlines Five Architectural Bets

Staples said GitLab is pursuing five architectural priorities: machine-scale infrastructure, orchestration, context, governance and one platform for multiple modes of software engineering.

He said the company has begun a “generational rebuild” of Git to support the scale required by agentic software development, including APIs optimized for agents to store and retrieve context. Staples said GitLab is partnering with an AI lab on the design and implementation of the new service.

GitLab is also building GitLab Orbit, described by Staples as an API-accessible context service intended to improve agentic outcomes and reduce the cost of AI actions. Access to Orbit is expected to be monetized through consumption credits. Staples also said GitLab will introduce GitLab Flex, a buying program allowing customers to mix seat-based and credit-based products.

During the call, Staples said some customers are beginning to consider adding non-engineering users, such as product managers, designers and program managers, to GitLab so they can participate in agentic workflows. He said GitLab is currently using the same seat-based pricing model for those users because the value and requirements are the same.

Guidance Raised for Fiscal 2027

For the second quarter, GitLab expects revenue of $272 million to $274 million, representing approximately 15% to 16% year-over-year growth. The company expects non-GAAP operating income of $30 million to $32 million and non-GAAP net income per share of $0.17 to $0.18, based on 168 million weighted average diluted shares outstanding.

For the full fiscal year, GitLab raised its outlook to revenue of $1.112 billion to $1.118 billion, representing approximately 16% to 17% growth. It expects non-GAAP operating income of $135 million to $141 million and non-GAAP net income per share of $0.79 to $0.82, based on 166 million weighted average diluted shares outstanding.

Ross said the guidance remains prudent, reflecting continued macro uncertainty, no assumed material revenue contribution from Duo Agent Platform in fiscal 2027, layoffs in the tech sector and potential near-term disruption from the restructuring.

GitLab ended the quarter with $1.36 billion in cash and investments. Ross said the company repurchased about 2.4 million shares during the quarter and has $350 million remaining under its buyback authorization.

About GitLab NASDAQ: GTLB

GitLab Inc NASDAQ: GTLB is a leading provider of a unified DevOps platform designed to streamline the software development lifecycle. Founded in 2011 by Dmitriy Zaporozhets and Sid Sijbrandij, the company initially gained recognition for its open-source Git repository manager. Over time, GitLab expanded its offerings to encompass planning, source code management, continuous integration/continuous deployment (CI/CD), security testing, and monitoring in a single application. This integrated approach enables development teams to collaborate efficiently, reduce toolchain complexity, and accelerate release cycles.

The GitLab platform is offered through both cloud-hosted and self-managed deployment models, catering to organizations of all sizes.

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