GitLab Shares Fall Despite Q2 Earnings Beat, Revenues Up Y/Y

GitLab GTLB reported second-quarter fiscal 2026 non-GAAP earnings of 24 cents per share, beating the Zacks Consensus Estimate by 50%. The company reported earnings of 15 cents per share in the year-ago quarter.

Total revenues of $236 million beat the consensus mark by 4.14% and rallied 29.2% year over year. The upside can be attributed to the strong demand for its DevSecOps platform.

GitLab shares plunged 9.57% in pre-market trading.

GitLab’s Top-Line Details

Subscriptions, self-managed, and SaaS (90.1% of total revenues) revenues increased 30.3% year over year to $212.7 million, beating the Zacks Consensus Estimate by 3.93%. License, self-managed, and other revenues (9.9% of total revenues) rose 20% year over year to $23.3 million.

GitLab Inc. Price, Consensus and EPS Surprise

GitLab Inc. price-consensus-eps-surprise-chart | GitLab Inc. Quote

SaaS revenues contributed 30% to total revenues and surged 39% year over year, driven by the strong adoption of GitLab Dedicated, AI integration, and expanding customer engagement.

Customers with more than $5K of Annual Recurring Revenue (ARR) increased to 10,338, up 11% year over year. Customers with more than $100K of ARR increased to 1,344, up 25% year over year, demonstrating GTLB’s ability to attract and retain large enterprise customers.

The dollar-based Net Retention Rate was 121% in the reported quarter.

Total Remaining Performance Obligation (RPO) surged 32% year over year to $988.2 million. The current RPO increased 31% year over year to $621.6 million.

GitLab’s Operating Details

On a non-GAAP basis, research & development expenses increased 16.8% year over year to $52.3 million. Sales and marketing expenses were up 15.5% year over year to $89.6 million. General and administrative expenses increased 20.7% year over year to $30.2 million in the reported quarter.  

Operating income was $39.6 million on a non-GAAP basis against the year-ago quarter’s loss of $18.2 million.

GitLab’s Balance Sheet & Cash Flow

As of July 31, 2025, cash and cash equivalents and short-term investments were $1.16 billion compared with $1.10 billion as of April 30, 2025.

In the reported quarter, the company generated a cash flow from operations of $49.4 million compared with an operating cash outflow of $106.3 million in the previous quarter.

As of July 31, 2025, the adjusted free cash flow was $46.5 million compared with $104.1 million as of April 30, 2025.

GitLab Initiates Q3 & FY26 Guidance

For the third quarter of fiscal 2026, GitLab expects revenues between $238 million and $239 million, indicating approximate growth of 23% year over year.

Non-GAAP operating income is expected to be in the range of $31-$32 million for the fiscal third quarter.

Non-GAAP fiscal third-quarter earnings are expected to be between 19 cents and 20 cents per share. 

For fiscal 2026, GitLab expects revenues between $936 million and $942 million, indicating growth of approximately 24% year over year.

Non-GAAP operating income is expected to be in the range of $133-$136 million for fiscal 2026. 

Non-GAAP earnings are expected to be between 82 cents and 83 cents per share.

GitLab Zacks Rank & Stocks to Consider

Currently, GitLab has a Zacks Rank #4 (Sell).

Alkami Technology ALKT, Arista Networks ANET, and Amphenol APH are some better-ranked stocks that investors can consider in the broader Zacks Computer & Technology sector. While ANET and ALKT carry a Zacks Rank #2 (Buy), APH sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Alkami Technology shares have lost 32.3% year to date. The Zacks Consensus Estimate for Alkami Technology’s full-year 2025 earnings is pegged at 58 cents per share, which remained unchanged over the past 30 days, implying growth of 100% from the year-ago quarter’s reported figure.

Arista Networks shares have gained 24.3% year to date. The Zacks Consensus Estimate for ANET’s full-year fiscal 2025 earnings is pegged at $2.81 per share, up 9.7% in the past 30 days, indicating year-over-year growth of 23.79%.

Amphenol shares have gained 59.6% year to date. The Zacks Consensus Estimate for Amphenol’s full-year 2025 earnings has increased 1.34% to $3.02 per share in the past 30 days, indicating year-over-year growth of 59.79%.

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