GitLab GTLB is set to release its second-quarter fiscal 2026 results on Sept. 3, 2025.
The company expects second-quarter fiscal 2026 revenues between $226 million and $227 million, indicating an approximate growth of 24% year over year. Non-GAAP fiscal second-quarter earnings are expected to be between 16 cents and 17 cents per share.
The Zacks Consensus Estimate for second-quarter fiscal 2026 revenues is $226.57 million, representing a 24.09% increase from the year-ago quarter’s reported figure.
The consensus mark for earnings has remained unchanged at 16 cents per share over the past 30 days. GitLab reported earnings of 15 cents per share in the year-ago quarter.
GitLab Inc. Price and EPS Surprise
GitLab Inc. price-eps-surprise | GitLab Inc. Quote
GTLB beat the Zacks Consensus Estimate in each of the last four quarters, delivering an average earnings surprise of 37.64%.
Let us see how things have shaped up for the upcoming announcement.
Key Factors to Note
GitLab’s second-quarter fiscal 2026 performance is expected to have benefited from ongoing investments in innovation across its core DevOps platform, security, and AI-driven solutions.
The continued adoption of GitLab Duo, including Duo Enterprise, is expected to have driven growth in the to-be-reported quarter as customers increasingly integrate AI capabilities into their workflows. The continued expansion of GitLab Dedicated is likely to have contributed to the fiscal second quarter’s top-line growth.
GitLab’s strong dollar-based net retention rate of 122% in the first quarter of fiscal 2026, driven by seat expansion, tier upgrades, and increased customer yield, indicates continued growth potential from existing customers in the second quarter of fiscal 2026.
Gitlab’s expanding clientele and market leadership in the DevSecOps platform category are expected to have contributed to its growth prospects in the to-be-reported quarter. In the first quarter of fiscal 2026, customers with more than $5K of Annual Recurring Revenue (ARR) increased to 10,104, up 13% year over year. Customers with more than $100K of ARR increased to 1,288, up 26% year over year, demonstrating GTLB’s ability to attract and retain large enterprise customers.
GTLB Shares Underperform Sector, Industry
GTLB shares have lost 14.8% year to date (YTD), underperforming the Zacks Computer & Technology sector’s rise of 12.9% and the Zacks Internet - Software industry’s growth of 19.5%.
GTLB’s shares have also underperformed its peer, Microsoft MSFT. Microsoft has strengthened its position in the DevSecOps space by seamlessly integrating GitHub and Azure DevOps. GTLB shares have also underperformed Microsoft shares, which have gained 20.2% in the year-to-date period.
GTLB Stock's Performance
Image Source: Zacks Investment ResearchGitLab Trading at a Premium
However, the Value Score of F suggests a stretched valuation for GitLab at this moment.
GitLab stock is trading at a premium, with a forward 12-month Price/Sales of 7.55X compared with the Internet - Software industry’s 5.71X.
Price/Sales (F12M)
Image Source: Zacks Investment ResearchGitlab’s Fiscal Q2 to Benefit From Expanding Clientele
GitLab’s growing customer base, which includes cloud platforms like Alphabet’s GOOGL Google Cloud and Amazon AMZN, is likely to have driven growth during the fiscal second quarter. These platforms are helping it expand its footprint among large enterprise customers.
In August, GitLab announced a three-year collaboration agreement with Amazon’s cloud computing platform, Amazon Web Services (AWS), to expand access to GitLab Dedicated, its single-tenant DevSecOps platform. The partnership between GitLab and AWS enables organizations in regulated industries to meet compliance requirements while reducing tool sprawl, costs, and security risks. Such tie-ups are expected to have a positive impact on GitLab’s customer engagement and adoption for the second quarter of fiscal 2026.
The integration of GitLab’s DevSecOps platform with Alphabet’s Google Cloud services is enhancing developer productivity by streamlining authentication, boosting application deployment, and improving the developer experience. This collaboration between GitLab and Alphabet ensures a more seamless and efficient development workflow. Such initiatives are likely to have increased customer engagement and accelerated the adoption of GitLab for the second quarter of fiscal 2026.
What Should Investors Do With GTLB Stock?
GitLab’s strong growth, AI-powered DevSecOps platform, and solid partnerships position it as a leader in the DevOps space.
However, the company is facing challenging macroeconomic uncertainties and increased competition in AI-enabled DevSecOps, particularly from larger players like Microsoft, which is a concern.
GTLB faces challenges from one-time expenses, such as the global Summit event and ongoing costs related to its China joint venture, Jihu, which add pressure to its margins. The company’s gross margin contracted 100 basis points in the first quarter of fiscal 2026. Stretched valuation also remains a concern.
GitLab currently has a Zacks Rank #5 (Strong Sell), indicating that investors should avoid investing in this stock at present.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Amazon.com, Inc. (AMZN): Free Stock Analysis Report Microsoft Corporation (MSFT): Free Stock Analysis Report Alphabet Inc. (GOOGL): Free Stock Analysis Report GitLab Inc. (GTLB): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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