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GTLB
Earnings call · Jul 2026 (Q2 FY27)

Gitlab Q2 FY27 earnings call GTLB

Sep 1, 2026 Source

Executive summary

GitLab Q2 FY27 — Record Bookings and Accelerating Net ARR

GitLab delivered an exceptional quarter, marked by record bookings and accelerating net ARR, driven by strong execution across new and existing customers. The company is strategically transitioning to its new Flex consumption model, which is gaining rapid customer adoption and is expected to be the default transaction method, though it introduces near-term accounting complexities. This shift positions GitLab for continued growth by monetizing both seat-based and consumption-based usage in an evolving AI-driven software development landscape.

Highlights

7

  • Revenue was $286.3 million, up 21% year-over-year, exceeding guidance by 5 points.

  • Achieved the largest gross bookings quarter in company history.

  • Net ARR grew more than 40% year-over-year, marking the second highest growth quarter in the last four years.

  • First orders grew more than 100% year-over-year, with first order net ARR increasing nearly 40%.

  • Non-GAAP operating income was $42.6 million, representing a 15% operating margin, ahead of expectations.

  • Dollar-based net retention accelerated sequentially for the first time since 2024, reaching 117%.

  • Paid consumption run rate (CRR) exceeded $40 million, up from $15 million in Q1, driven by the introduction of Flex.

Concerns

4

  • Incurred $23.3 million in restructuring charges during the quarter.

  • Adjusted free cash flow was $9.8 million, a 3% margin, impacted by the timing of collections.

  • The transition to Flex is expected to introduce near-term noise in revenue timing, with a potential maximum impact of $13 million in FY27 revenue shifting to future periods.

  • Current RPO (cRPO) experienced a 3-point headwind relative to total RPO due to Flex commitments being excluded from cRPO.

Guidance & targets

CategoryTargetConfidence
Total Revenue
$281 million to $283 million
high materiality
High
Non-GAAP Operating Income
$35 million to $37 million
medium materiality
High
Non-GAAP Net Income Per Share
$0.19 to $0.20
medium materiality
High
Total Revenue
$1.129 billion to $1.133 billion
high materiality
High
Non-GAAP Operating Income
$148 million to $152 million
medium materiality
High
Non-GAAP Net Income Per Share
$0.85 to $0.87
medium materiality
High
Full Year Gross Margins
85% to 87%
medium materiality
High
JiHu-related Expenses
$15 million
low materiality
High
Paid Consumption Run Rate (CRR)
exceed $100 million
high materiality
High

GTLB operating KPIs by quarter

GTLB operating KPIs stated on its earnings calls, by fiscal quarter
KPI Jan 2026 Q4 FY26 Apr 2026 Q1 FY27This call Jul 2026 Q2 FY27Change vs prior quarter
Customers above an annual spend threshold ARR >= $5,000
10.682K We now have 10,682 customers with ARR of at least $5,000, contributing over 95% of total ARR. Source transcript
10.831K We now have 10,831 customers paying us at least $5,000 in ARR, representing over 95% of our total ARR base. Source transcript
—+1.4%
Customers above an annual spend threshold ARR >= $100,000
1,456 Our $100,000-plus cohort grew 18% year-over-year to 1,456 customers, representing just over 75% of ARR. Source transcript
1,519 Revenue of $264 million, growth of 23%, operating profit of $38 million and a 14% non-GAAP operating margin and 1,519 customers paying us more than $100,000 a year, up 18% year-over-year. Source transcript
—+4.3%
Net revenue retention rate
118% Dollar-based net retention was 118%. Source transcript
117% Dollar-based net retention was 117%. Source transcript
117% Dollar-based net retention was 117%, up sequentially for the first time since 2024. Source transcript
0 pt
Remaining performance obligation (RPO)
$1.1B Total RPO grew 20% year-over-year to $1.1 billion. Source transcript
$1.1B Total RPO grew 18% year-over-year to $1.1 billion. Source transcript
$1.2B Total RPO grew 16% year-over-year to $1.2 billion and current RPO grew 20% to $744.7 million. Source transcript
+9.1%
Remaining performance obligation (RPO) Current
$719.4M Current RPO grew 24% to $719.4 million. Source transcript
$724M Current RPO grew 24% to $724 million. Source transcript
$744.7M Total RPO grew 16% year-over-year to $1.2 billion and current RPO grew 20% to $744.7 million. Source transcript
+2.9%

Operating figures the company states on every call, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Orderbook & backlog

Total RPO $1.2 billion Q2 FY27

up 16% YoY

Current RPO $744.7 million Q2 FY27

up 20% YoY

Excludes Flex commitments due to customer control over timing, product mix, and pace of future consumption.

Calculated Billings 24% Q2 FY27

YoY

Doubling the 12% growth rate posted last quarter.

Product announcements

ProductTypeDetails
Duo Agent Platformupdate
Secrets Managerlaunch
Dedicated Runnerslaunch
GitLab Orbitmilestone
Next-generation Git productroadmap
Artifact management productroadmap

Risks & headwinds

Restructuring Charges Q2 FY27

$23.3 million

Adjusted Free Cash Flow Timing Q2 FY27

$9.8 million (3% margin)

Mitigation:Timing of collections weighing on the number this quarter.

Flex Revenue Recognition Impact FY27

Maximum potential impact of approximately $13 million in FY27 revenue shifting to future periods

Mitigation:Management committed to explicitly quantify the impact each quarter to provide transparency and separate accounting effects from underlying business performance. This is a timing change, not a change in underlying customer commitment or cash economics.

Flex Impact on Current RPO (cRPO) Q2 FY27

3-point headwind relative to RPO

Mitigation:Flex commitments are excluded from current RPO because the customer controls the timing, product mix, and pace of future consumption. Management committed to explicitly quantify this impact each quarter.

JiHu Deconsolidation Uncertainty

Q2 non-GAAP expenses were essentially flat year-over-year at $3.0 million

Mitigation:Goal remains to deconsolidate JiHu, though timing is uncertain.

What to watch in Q3 FY27

Flex Adoption and Financial Impact

Next quarter (Q3 FY27) and rest of FY27
Current Over 130 customers committed more than $20 million in 6 weeks
Target Continued rapid adoption and quantification of revenue recognition impact

Why it matters

Flex is central to the business model evolution and will impact reported revenue and RPO metrics, requiring clear understanding of accounting effects.

However, in the first 6 weeks on the market, over 130 customers committed more than $20 million to Flex. That is a fast emphatic signal of demand for a fundamentally better way to buy from us.

Q&A highlights

How is GitLab rebuilding source code management for agent scale operations, and is this strategy for all customers or primarily AI natives?

Bill Staples detailed new consumption products like Duo Agent Platform (50% QoQ growth), Secrets Manager, and Dedicated Runners. He highlighted GitLab Orbit, a Knowledge Graph, seeing rapid adoption (2,200+ orgs, 70% increase in 4 weeks, 80% queries from external agents). He also discussed rearchitecting Git infrastructure for 100x scale to support agents and the upcoming artifact management product in private beta, all aimed at enhancing the software supply chain for the Agentic era.

“As experts in Git, we're one of the leading contributors to that project. We're now in the middle of rearchitecting that Git infrastructure to achieve roughly 100x scale what humans have ever required.”

asked by William Kingsley Crane · answered by William Staples

2 min read 6 chapters

Detailed narrative

Accelerating First Orders and Customer Growth

GitLab achieved its largest first order quarter in three years, with first order count growing over 100% year-over-year and first order net ARR increasing nearly 40%. This growth is attributed to repeatable sales motions from a dedicated first order organization and product-led investments widening the top of the funnel, bringing significantly more new customers into the platform. Over half of the current $1 billion+ run rate revenue comes from customers whose first order was less than $5,000, highlighting a strategy to land and expand.

Sales Capacity and Productivity Improvements

The company saw a 30% year-over-year increase in account executive capacity and a 10% improvement in productivity per representative. Attrition also improved for the second consecutive quarter, indicating that investments in the sales organization are beginning to yield compounding results. This contributed to the largest gross bookings quarter in company history and a net ARR growth of over 40%.

Flex Monetization Strategy

GitLab introduced 'Flex,' a new consumption model allowing customers to make a single dollar commitment and flexibly allocate it across seats and consumption products. In its first six weeks, over 130 customers committed more than $20 million to Flex, demonstrating strong demand for a simpler, more adaptable spending model. This strategy aims to enhance retention by allowing customers to redirect unused capacity, reduce sales friction by enabling product adoption without new contracts, and create a new growth tailwind as usage expands on demand.

Stabilization in SMB and Mid-Market

Performance in the price-sensitive SMB and mid-market segments stabilized, exceeding internal targets for both expansion and first orders. This positive trend suggests that increased focus and investment in these segments are yielding encouraging results, with management expressing growing confidence in the sustained recovery. Public sector also rebounded meaningfully in the quarter, with expectations for continued gradual recovery.

AI Strategy and Context Graph

GitLab is executing a bold AI strategy, with Duo Agent Platform CRR growing approximately 50% quarter-over-quarter. The company's context graph, GitLab Orbit, saw rapid adoption with over 2,200 organizations enabling indexing (a 70% increase in 4 weeks) and 80% of queries coming from external agents. This demonstrates that GitLab's integrated platform, which connects source code, issues, pipelines, and security findings, becomes more valuable as AI development tools are adopted, improving agent performance and driving platform usage.

Financial Performance and Outlook

Q2 revenue was $286.3 million, up 21% year-over-year, exceeding guidance by 5 points. Non-GAAP operating income reached $42.6 million, a 15% margin, ahead of expectations. The company raised its full-year revenue guidance to $1.129 billion to $1.133 billion, reflecting strong momentum. Management emphasized transparency regarding the Flex transition's impact on revenue recognition, which could shift up to $13 million in FY27 revenue to future periods, while underlying customer commitments and cash economics remain unchanged.

AI-generated summary of the company's earnings call. Not investment advice.