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Gitlab Inc. (GTLB)·Q2 2026 Earnings Summary

Executive Summary

  • Q2 FY26 delivered strong top-line and profitability: revenue $236.0M (+29% YoY) with non-GAAP operating margin 16.8%; non-GAAP diluted EPS $0.24 versus $0.15 last year and $0.17 in Q1 .
  • Clear beat versus Street: revenue $235.96M vs consensus $227.25M*, EPS $0.24 vs $0.16*, while GAAP gross margin ran slightly below consensus; GAAP EBIT missed given GAAP op loss reported despite higher non-GAAP profitability* [*GetEstimates, S&P Global].
  • Guidance: Full-year revenue maintained at $936–$942M; profit raised materially (non-GAAP op income to $133–$136M; non-GAAP diluted EPS to $0.82–$0.83). Q3 guide: revenue $238–$239M; non-GAAP op income $31–$32M; non-GAAP EPS $0.19–$0.20 .
  • Strategic catalysts: accelerating AI-native Duo Agent Platform (beta) with planned consumption-based monetization, rising Ultimate mix (53% of ARR), Dedicated ARR ~$50M (+92% YoY), and go-to-market retooling to increase new logo lands; CFO transition announced (interim plan in place) .

What Went Well and What Went Wrong

What Went Well

  • Strong beat and operating leverage: non-GAAP operating income $39.6M (vs $18.2M last year), adjusted FCF $46.5M; cash/investments ~$1.2B, enabling investment in AI, platform, and GTM .
  • Platform momentum: Ultimate reached 53% of ARR; Dedicated ARR ~$50M (+92% YoY); DBNRR 121%; SaaS ~30% of revenue grew 39% YoY .
  • Management emphasis on seat-driven growth (>70% of FY26 revenue growth from paid seat growth), with accelerating double-digit paid seat growth; explicit plan to evolve pricing to hybrid seat+usage for Duo Agent Platform .

Quote: “Seat growth has accounted for more than 70% of our revenue growth… accelerating double digit paid seat growth rates over the past year.” — CEO Bill Staples .

What Went Wrong

  • GAAP margin optics: GAAP operating loss of $(18.4)M and GAAP EPS $(0.06) despite strong non-GAAP profitability, and GAAP gross margin (~88%) slightly below consensus* [*GetEstimates, S&P Global].
  • SMB softness: SMB represents ~8% of revenue and remained price-sensitive, coming in lighter than expected; expected to persist through FY26 .
  • Organizational transition risk: CFO resignation effective Sept 19 with interim appointments planned; GTM reorganization ramping in H2 to impact FY27, implying execution risk near-term .

Financial Results

Quarterly Comparison (documented actuals)

MetricQ2 FY25Q1 FY26Q2 FY26
Revenue ($USD Millions)$182.6 $214.5 $236.0
Non-GAAP Diluted EPS ($)$0.15 $0.17 $0.24
GAAP Diluted EPS ($)$0.08 $(0.22) $(0.06)
GAAP Gross Margin (%)88% 88% 88%
Non-GAAP Gross Margin (%)91% 90% 90%
Non-GAAP Operating Margin (%)10% 12% 16.8%
Non-GAAP Operating Income ($M)$18.2 $26.1 $39.6
GAAP Operating Income (Loss) ($M)$(41.0) $(34.6) $(18.4)

Q2 FY26 Actual vs Consensus

MetricActualConsensus
Revenue ($USD Millions)$235.96 $227.25*
Primary EPS (Diluted, $)$0.24 $0.164*
Gross Margin (%)87.92 (GAAP) [*GetEstimates]90.50*
EBIT ($USD Millions, GAAP)$(18.35) $24.05*

Values with asterisk (*) retrieved from S&P Global.

Segment Revenue Mix

SegmentQ4 FY25Q1 FY26Q2 FY26
Subscription — self-managed & SaaS ($M)$185.6 $194.5 $212.7
License — self-managed & other ($M)$25.9 $20.0 $23.3
Total Revenue ($M)$211.4 $214.5 $236.0

KPIs and Mix

KPI/MixQ4 FY25Q1 FY26Q2 FY26
Customers ≥$5k ARR9,893 10,104 10,338
Customers ≥$100k ARR1,229 1,288 1,344
DBNRR (%)123% 122% 121%
RPO ($M)$945.0 $955.1 $988.2
cRPO ($M)$579.2 $584.8 $621.6
Ultimate as % of ARR50% 52% 53%
SaaS as % of Revenue29% 30% ~30% (grew 39% YoY)

Cash Flow and Balance Sheet

MetricQ4 FY25Q1 FY26Q2 FY26
Cash from Operations ($M)$63.2 $106.3 $49.4
Adjusted Free Cash Flow ($M)$62.1 $104.1 $46.5
Cash & Investments ($B)$0.99 (C&I) $1.10 (C&I) ~$1.20 (C&I)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($M)Q3 FY26—$238.0–$239.0 Initiated
Non-GAAP Operating Income ($M)Q3 FY26—$31.0–$32.0 Initiated
Non-GAAP Diluted EPS ($)Q3 FY26—$0.19–$0.20 (171M shares) Initiated
Revenue ($M)FY26$936–$942 $936–$942 Maintained
Non-GAAP Operating Income ($M)FY26$117–$121 $133–$136 Raised
Non-GAAP Diluted EPS ($)FY26$0.74–$0.75 $0.82–$0.83 (171M shares) Raised
Projected Non-GAAP Tax RateFY2622% 22% Maintained
JiHu-related non-GAAP expense ($M)FY26~$18 ~$18 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 FY25 and Q1 FY26)Current Period (Q2 FY26)Trend
AI initiatives (Duo, Agentic)Duo Enterprise momentum; Workflow private beta; AWS Q integration; Ultimate+AI upsells Duo Agent Platform public beta; partnerships (Anthropic, OpenAI, Google, Amazon, Cursor); usage-based pricing plan; GA targeted by year-end Accelerating scope and monetization
GTM evolution/new logo landsCRO hired; focus on first orders, inside sales; alignment around objectives New business division ramp in H2; enterprise motion sophistication; capacity planning; PLG leader hired; comp largely unchanged near-term Building toward FY27 impact
SMB softnessPrice sensitivity at low-end; cautious macro commentary SMB ~8% of revenue; softness persisting through FY26 despite promos Persistent headwind
Dedicated (single-tenant SaaS)~90% YoY growth; large lands; FedRAMP Moderate; NatWest, Delta adoption Dedicated ARR ~$50M (+92% YoY); AWS SCA signed, expanding Dedicated access Strong adoption tailwind
Ultimate adoption/securityUltimate 50% ARR; security/compliance drivers Ultimate 53% ARR; security policies driving expansion (e.g., US wireless operator, +4,000 users) Continuing mix shift higher
Seat growth vs pricingSeat expansion ~75–80% of DBNRR drivers >70% of FY26 revenue growth from seats; accelerating double-digit seat growth; <10% FY26 rev growth from price increase Seat-led growth reinforced
CFO transition—CFO stepping down; interim CFO (James Shen) and CAO (Simon Mundy) planned; search underway Transitional, managed risk

Management Commentary

  • “We’re maintaining this year’s revenue outlook while raising non-GAAP operating profit, demonstrating our commitment to responsible growth and operating discipline.” — CEO Bill Staples .
  • “GitLab Ultimate now represents 53% of our total ARR… Dedicated now contributing approximately $50,000,000 in ARR, growing 92% year over year.” — CEO Bill Staples .
  • “Over 70% of our revenue growth in FY26 is due to paid seat growth… accelerating double digit rate of paid seat year over year growth.” — CEO Bill Staples .
  • “Q2 non-GAAP operating income was $39.6 million… Non-GAAP operating margin was 16.8%… adjusted free cash flow was $46 million.” — CFO Brian Robins .
  • “We plan to charge… via usage charges… our business model will evolve from a purely seat based model to a hybrid seat plus usage based model.” — CEO Bill Staples .

Q&A Highlights

  • GTM changes and timeline: New business division focused on first orders and post-sales adoption; enterprise sales sophistication; capacity planning. Hiring ramp 6–9 months; expect benefits starting FY27 .
  • SMB dynamics: SMB ~8% of revenue; price-sensitive “no-touch” web store channel; continued pricing/packaging experiments; softness to persist .
  • Linearity/SaaS mix: Strong month-one bookings (>20%); mix shift favored self-managed vs SaaS, influencing in-quarter revenue recognition .
  • Competitive positioning vs AI code tools: GitLab orchestrates lifecycle, embracing integrations with code-gen tools; defensibility via context, security, compliance, and platform interoperability .
  • Compensation and territories: No changes mid-year; begin ramping new teams with enablement and sales plays; aligned incentives lightly nudged for new customer growth .

Estimates Context

  • Q2 performance vs Street: Revenue beat by ~$8.7M ($235.96M vs $227.25M*); EPS beat by ~$$0.08 ($0.24 vs $0.16*). GAAP gross margin came in below consensus (~87.9% vs 90.5%), and GAAP EBIT missed due to reported GAAP operating loss, while non-GAAP profitability expanded [*GetEstimates, S&P Global].
  • FY26 Street baseline: FY26 revenue consensus ~$942.0M*, EPS ~$0.84*, vs company guidance $936–$942M and $0.82–$0.83. The company raised non-GAAP operating income and EPS guidance, suggesting upward estimate revisions to profitability despite maintained revenue* [*GetEstimates, S&P Global].

Values with asterisk (*) retrieved from S&P Global.

Key Takeaways for Investors

  • Near-term: Clear top-line and EPS beat plus raised full-year profit guidance is a positive setup; watch CFO transition headlines and SMB softness as potential sources of volatility .
  • Medium-term: GTM re-architecture and PLG additions target new logo acceleration; expect impact to build through FY27 (hunter motion, enterprise playbooks, capacity planning) .
  • Monetization evolution: Duo Agent Platform moves pricing to hybrid seat+usage; could expand TAM and revenue per account as agentic workflows scale; monitor GA timing and adoption curve .
  • Mix tailwinds: Ultimate penetration (53% ARR) and Dedicated (~$50M ARR, +92% YoY) reinforce high-value platform expansion and SaaS momentum; AWS SCA expands Dedicated access .
  • Cohort durability: DBNRR 121% and multi-year cohort expansion underscore expansion-led model; management disclosed >70% FY26 revenue growth from seats, not pricing .
  • FCF and margin trajectory: Consistent best-in-class non-GAAP gross margins (~90%) and rising operating leverage support sustained FCF generation to fund AI and GTM initiatives .
  • Risk checks: GAAP vs non-GAAP optics (GAAP op loss), SMB sensitivity, execution of GTM changes, and competitive intensity in AI code-gen; company’s interoperability strategy and platform context are differentiators .

Additional Data and References

  • Dedication to non-GAAP methodology (22% projected non-GAAP tax rate) and reconciliations detailed in 8-K exhibits .
  • AWS strategic collaboration agreement broadens Dedicated availability; supports regulated industries’ compliance needs .
  • Selected customer expansions (Virgin Media O2, US wireless operator, Emirates, top US bank, GovTech Singapore) showcasing platform and AI adoption .