GitLab Q2 Earnings Call Highlights

Key Points

• Strong Q2 performance: GitLab reported revenue of $286.3 million, up 21% year over year, while non-GAAP operating income reached $42.6 million. Net ARR growth accelerated 42%, and the company raised its full-year revenue outlook to $1.129 billion-$1.133 billion.
• Enterprise demand strengthened: First orders more than doubled to approximately 1,700, new-logo net ARR rose 39%, and deals worth at least $500,000 increased more than 150%. Dollar-based net retention improved to 117%, while current RPO grew 20% to $744.7 million.
• Flex and AI adoption are expanding: More than 130 customers committed over $20 million to GitLab Flex within its first six weeks, helping paid consumption run rate rise to more than $40 million. Duo Agent Platform paid consumption grew about 50% sequentially, though broader Flex adoption could shift up to $13 million of fiscal 2027 revenue into future periods.

GitLab NASDAQ: GTLB reported second-quarter fiscal 2027 revenue of $286.3 million, up 21% from a year earlier, as the company cited record gross bookings, accelerating net annual recurring revenue growth and increased demand for its software development platform.

Non-GAAP operating income was $42.6 million, representing a 15% operating margin, compared with $39.6 million a year earlier. Chief Executive Officer Bill Staples said the company’s sales organization delivered its largest gross bookings quarter on record, while net ARR increased more than 40% year over year.

Chief Financial Officer Jessica Ross said net ARR grew 42% year over year, marking the company’s second-highest quarterly growth rate in the last four years. Revenue exceeded the company’s prior guidance by roughly five percentage points, according to Ross.

New Customer Activity and Enterprise Demand

GitLab said first-order activity strengthened during the quarter. The company recorded approximately 1,700 first orders, more than double the figure from a year earlier, while new-logo net ARR increased 39%. First-order net ARR rose nearly 40%, Staples said.

The company said more than half of its current revenue base exceeding a $1 billion run rate originated from customers whose initial order was below $5,000. Staples said this supports GitLab’s strategy of acquiring customers early and expanding relationships over time.

Large customer activity also contributed to the quarter’s performance. Ross said deals valued at $500,000 or more rose more than 150% year over year, while public-sector activity “rebounded meaningfully.” The company expects public-sector buying patterns to continue normalizing through the second half of the fiscal year.

GitLab increased account executive capacity by approximately 30% year over year, while productivity per representative improved about 10%, according to Staples. He also said sales attrition improved year over year for the second consecutive quarter.

• Dollar-based net retention was 117%, improving sequentially for the first time since 2024.
• Gross retention remained above 90%.
• Total remaining performance obligations rose 16% year over year to $1.2 billion.
• Current RPO increased 20% to $744.7 million.
• Calculated billings grew 24%, compared with 12% growth in the prior quarter.

Flex Adoption and Consumption Strategy

A central focus of the call was GitLab Flex, a commercial model that allows customers to make annual or multiyear dollar commitments and allocate spending across Premium and Ultimate seats, GitLab Credits and other consumption-based offerings.

Staples said that in the first six weeks after Flex entered the market, more than 130 customers committed more than $20 million. The company’s paid consumption run rate, or paid CRR, exceeded $40 million at the end of the quarter, up from $15 million at the end of the first quarter. Paid CRR includes Flex commitments, GitLab Credit commitments and paid on-demand consumption, while excluding trials and promotional credits.

GitLab is targeting more than $100 million in paid CRR by the end of fiscal 2027. Management said Flex is intended to reduce contracting and procurement friction, let customers shift spending away from unused capacity and enable on-demand usage beyond a customer’s committed amount.

Ross cautioned that broader Flex adoption will affect how revenue and RPO appear in reported results. Under a traditional self-managed license, approximately 15% of the license is recognized upfront, she said. Under Flex, the license component is recognized over the contract term because customers can change the mix of products they use.

For every $50 million in self-managed renewals that convert to Flex during fiscal 2027, GitLab estimates that approximately $5 million of revenue that otherwise would have been recognized during the year would shift into future periods. The company estimated a maximum potential fiscal 2027 revenue impact of about $13 million from this timing effect. Ross said the change does not affect customer commitments or cash economics, as customers continue to be billed annually upfront.

AI Products and Platform Usage

GitLab said artificial intelligence is contributing to usage and product demand. Duo Agent Platform paid CRR grew roughly 50% sequentially, including credit commitments, paid on-demand credits and Flex reservations. One top-20 U.S. commercial bank expanded its AI credit pool nearly tenfold during the quarter, Staples said.

The company also highlighted early adoption of GitLab Orbit, its context graph for the software development lifecycle. More than 2,200 organizations enabled Orbit indexing since the beta opened in June, a 70% increase in four weeks. Customers generated more than 170,000 queries, with roughly 80% of query volume coming from organizations connecting Orbit with external agents such as Cloud Code and Codex.

Staples said GitLab is re-architecting its Git infrastructure to support approximately 100 times the scale historically required by human users, citing the potential for individual engineers to invoke dozens or hundreds of agents. The company also launched Secrets Manager and Dedicated Runners in August and expects its artifact management product, currently in private beta, to enter public beta during the current quarter.

Ultimate ARR grew approximately 35% year over year and represented 59% of total ARR. Eight of GitLab’s 10 largest deals during the quarter involved Ultimate, according to management. GitLab also reported year-over-year increases of 60% in secure repositories, 50% in code pushes and 40% in CI/CD pipelines.

Profitability, Cash and Outlook

Non-GAAP gross margin was 86.5%. SaaS revenue represented 34% of total revenue and grew 36% year over year, driven by GitLab Dedicated and Duo, Ross said. The company incurred approximately $23.3 million in restructuring charges during the quarter.

Adjusted free cash flow was $9.8 million, or a 3% margin, which Ross attributed to the timing of collections. GitLab repurchased approximately 3.5 million shares and had about $245 million remaining under its repurchase authorization. It ended the quarter with $1.3 billion in cash and investments.

For the third quarter of fiscal 2027, GitLab forecast revenue of $281 million to $283 million, representing 15% to 16% year-over-year growth. It projected non-GAAP operating income of $35 million to $37 million and non-GAAP earnings per share of $0.19 to $0.20.

For the full fiscal year, the company raised its outlook to revenue of $1.129 billion to $1.133 billion, or growth of approximately 18% to 19%. GitLab expects non-GAAP operating income of $148 million to $152 million and non-GAAP earnings per share of $0.85 to $0.87. The company continues to expect full-year gross margin of 85% to 87% and approximately $50 million in JiHu-related expenses.

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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