GitLab — 2026Q3 earnings
reported 2026-09-01
EPS $0.24 vs $0.18 est — beat
next session +10.0% (close 2026-09-01 → 2026-09-02)
Source
Press release ↗Summary
GitLab's second quarter of fiscal 2027, ended July 31, 2026, paired 21% revenue growth to $286.3 million with what the CEO called record gross bookings and net ARR growth exceeding 40%. Profit was non-GAAP only: GAAP operating margin was (20)% against a 15% non-GAAP margin, and operating cash flow was $(3.1) million. The new element was GitLab Flex, one commitment that customers spend across seats, credits and new capabilities. On the call, management said more than 130 customers committed more than $20 million to Flex in its first six weeks, and set a goal of more than $100 million of paid consumption run rate by the end of the fiscal year. The CFO put Flex's maximum FY27 revenue-recognition timing effect at approximately $13 million and left it out of guidance. She also said the second-half outlook assumes a more normalized pace of bookings, not a repeat of Q2.
Earnings call
Review
From the report
Revenue grew 21% to $286.3 million, with first-order growth of more than 100% and a 117% dollar-based net retention rate, but the quarter was profitable only on a non-GAAP basis and operating cash flow was negative. GitLab also introduced its Flex commercial model.
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Total revenue was $286.3 million, up 21% year over year. show quote
“Total revenue of $286.3 million, up 21% year-over-year”
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The quarter was profitable only on a non-GAAP basis: GAAP operating margin was (20)% against a non-GAAP operating margin of 15%. show quote
“GAAP operating margin of (20)%; non-GAAP operating margin of 15%”
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Operating cash flow was negative at $(3.1) million, and non-GAAP adjusted free cash flow was $9.8 million. show quote
“Operating cash flow of $(3.1) million and non-GAAP adjusted free cash flow of $9.8 million”
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The CEO called it an exceptional quarter, citing record gross bookings and net ARR growth of more than 40% year over year. show quote
“Q2 was an exceptional quarter, with record gross bookings and net ARR growth exceeding 40% year over year”
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First-order growth was more than 100% year over year. show quote
“First Order growth of more than 100% year on year.”
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The dollar-based net retention rate was 117%. show quote
“Dollar-Based Net Retention Rate was 117%.”
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Total RPO grew 16% to $1.2 billion, while cRPO grew 20% to $744.7 million. show quote
“Total RPO grew 16% year-over-year to $1.2 billion, while cRPO grew 20% to $744.7 million.”
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GitLab introduced GitLab Flex, a commercial model in which one annual commitment covers platform seats, GitLab Credits and newly eligible capabilities. show quote
“Introduced a new commercial model with GitLab Flex to give customers one annual commitment covering platform seats, GitLab Credits, and new eligible capabilities as they become available”
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GitLab repurchased approximately 3.5 million shares in the quarter. show quote
“In the quarter, GitLab repurchased approximately 3.5 million shares.”
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From the call
Management presented Flex as central to where the business is going. It cited early commitments, set a paid consumption run-rate target, and put a figure on the revenue-timing effect that guidance excludes. It also said the second-half outlook assumes a more normalized bookings pace after an exceptional Q2.
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The CEO said more than 130 customers committed more than $20 million to Flex in its first six weeks on the market. show quote
“After only six weeks in market, more than 130 customers committed more than $20 million to Flex.”
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Paid consumption run rate ended the quarter above $40 million, up from $15 million in Q1, which the CEO attributed to Flex. show quote
“Paid consumption run rate ended the quarter above $40 million, up from $15 million existing in Q1, thanks to the introduction of Flex.”
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Management's stated goal is more than $100 million of paid consumption run rate by the end of the fiscal year. show quote
“Our objective is to exceed $100 million of paid CRR by the end of this fiscal year.”
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Based on the back-half available-to-renew pool and its H2 pipeline, the CFO put the maximum potential FY27 revenue impact of the Flex transition at approximately $13 million. show quote
“Given the size of the available-to-renew pool in the back half of the year as well as our visibility into the H2 pipeline, we expect the maximum potential impact on our revenue to be approximately $13 million in FY27.”
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Guidance does not include the potential Flex impact. The CFO said GitLab intends to quantify the revenue-recognition effects for the rest of the year. show quote
“we have not incorporated the potential impact of Flex in our guide, but we do intend to quantify the revenue recognition impacts through the rest of the year.”
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The CFO said Flex commitments are excluded from cRPO, which created a 3-point headwind to cRPO relative to RPO this quarter. show quote
“This quarter, cRPO saw a 3-point headwind relative to RPO purely from the absence of Flex commitments in that metric.”
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Q3 FY27 revenue was guided to $281 million to $283 million, approximately 15% to 16% growth year over year. show quote
“For Q3 FY27, we expect total revenue of $281 million to $283 million, representing approximately 15% to 16% year-over-year growth.”
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The CFO said the second-half outlook assumes bookings return to a more normalized pace rather than repeating Q2. show quote
“Our second half outlook assumes a more normalized pace of bookings from here, not a repeat of Q2's exceptional levels.”
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The CEO said GitLab still has one primary competitor, that he thinks its position against it is stronger than it has ever been, and that GitLab is seeing higher win rates. show quote
“We still have one primary competitor. Our position versus that competitor is, I think, stronger than it's ever been. They've struggled with reliability and meeting the needs of customers in this new Agentic era with security and trust and other dimensions. And so we're seeing higher win rates.”
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as of 2026-10-06