10-Q · June 2, 2026
GitLab reported strong Q1 2026 results with a revenue increase of 23% to $264.2 million, surpassing expectations after Q4's revenue beat. However, the operating margin showed signs of pressure, and for the first time,…
Earnings analysis · 10-Q
GTLB earnings analysis
Filed September 2, 2026 · Our reading of the company's report
The latest report
GitLab delivered a strong Q2 FY2027 top-line and non-GAAP earnings performance, with revenue of $286.254 million, 21% year-over-year growth and non-GAAP diluted EPS of $0.24, both above consensus. However, GAAP gross…
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GitLab delivered a strong Q2 FY2027 top-line and non-GAAP earnings performance, with revenue of $286.254 million, 21% year-over-year growth and non-GAAP diluted EPS of $0.24, both above consensus. However, GAAP gross margin was 84%, GAAP operating margin was negative 20% and adjusted free cash flow was only $9.750 million, creating concerns about profitability and cash conversion. The filing also highlights execution risks from a restructuring expected to exit approximately 22 countries, rising AI-related security and infrastructure costs, and potential insider share sales.
From revenue to operating profit
Where each $100 of revenue went in this report.
Cost of sales, operating expenses, and what remained. Figures are rounded to whole dollars.
Reported figures
- Earnings per share
- $0.24
What stood out
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Revenue beat with 21% growth
Q2 FY2027 revenue was $286.254 million, up 21% year over year and 4.7% above the $273.349 million consensus estimate.
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EPS substantially exceeded consensus
Non-GAAP diluted EPS was $0.24 versus the $0.13 consensus estimate, an $0.11 beat or 84.6% upside to consensus.
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Expansion metrics remained strong
Dollar-based net retention was 117%, indicating continued expansion within the existing customer base; customers with more than $100,000 of ARR grew 17%.
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Enterprise customer base expanded
Base Customers increased to 11,114 as of July 31, 2026, from 10,338 as of July 31, 2025, an increase of 776 customers or 7.5%.
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Liquidity remained substantial
Cash, cash equivalents and short-term investments totaled $1.257 billion at July 31, 2026, compared with $1.2599 billion at January 31, 2026, leaving a substantial liquidity base.
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Quantitative outlook provided
Management provided Q3 FY2027 revenue outlook of $281 million-$283 million and non-GAAP diluted EPS outlook of $0.19-$0.20, plus FY2027 revenue outlook of $1.129 billion-$1.133 billion and EPS outlook of $0.85-$0.87.
What to watch
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Margin compression
GAAP gross margin declined to 84% and GAAP operating margin was negative 20%, signaling material profitability pressure despite the revenue and EPS beat.
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Cash-flow conversion weakened
Adjusted free cash flow was only $9.750 million in the quarter, substantially below the $147 million shown for the immediately preceding period in the supplied quarterly history, limiting cash conversion despite $1.257 billion of cash, equivalents and short-term investments.
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International restructuring execution risk
The June 2026 restructuring plan is expected to exit operations in approximately 22 countries. The filing states that charges may exceed estimates and that anticipated cost savings may not be realized.
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AI, cyber and currency exposure
The filing adds specific AI-related security exposure, including AI-enabled social engineering, automated vulnerability exploitation, inadvertent data exposure and AI supply-chain attacks; it also states that a hypothetical 10% change in foreign exchange rates as of July 31, 2026 would have a material impact on the financial statements.
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Ownership concentration after sunset
On August 21, 2026, all Class B shares converted into Class A shares because Class B represented less than 5% of aggregate outstanding common stock; ownership remains concentrated among directors, executives and holders of at least 5%.
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Potential insider selling pressure
A new Rule 10b5-1 plan provides for potential sales of approximately 6,292,736 shares by Executive Chair Sytse Sijbrandij between September 24, 2026 and August 18, 2027, creating potential selling pressure.
Management's outlook
The filing discusses Q3 FY2027 quantitative outlook of revenue $281 million-$283 million and non-GAAP diluted EPS $0.19-$0.20. It also reports FY2027 outlook of revenue $1.129 billion-$1.133 billion and non-GAAP diluted EPS $0.85-$0.87, but provides no comparable prior outlook to determine whether guidance was raised, maintained, or lowered.
Earlier filings 1
This is our reading of a public filing, not the filing itself. Analysis can contain errors; check the source document for full context.