Summary
GitLab's fiscal 2026 second quarter produced $235.96 million in revenue, up 29.2% from $182.58 million in the same quarter last year. First-half revenue reached $450.47 million, up 28.1% from $351.77 million. Gross profit rose 28.7% to $207.46 million, but gross margin slipped to 87.9% from 88.3%. Management attributes margin pressure partly to hosting costs tied to SaaS and cloud usage and warns that a growing SaaS mix may keep weighing on gross margins.
The operating picture improved sharply on a GAAP basis. The operating loss was $18.35 million, narrower than the $41.00 million loss a year earlier, and operating margin rose to -7.8% from -22.5%. Net income went the other way. GitLab reported a net loss attributable to the company of $9.21 million, down 171.3% from net income of $12.91 million a year earlier, a swing driven largely by a tax benefit recorded in the prior-year quarter. Diluted EPS was -$0.06 against $0.08. Year to date, the net loss attributable to GitLab was $45.08 million, wider than the $42.32 million loss from the first six months of last year.
Non-GAAP results show the same operating leverage. Non-GAAP operating income was $39.6 million for the quarter, a 17% operating margin, compared with $18.2 million and 10% a year earlier. Non-GAAP net income was $40.9 million, or $0.24 per diluted share, versus $24.5 million and $0.15. Stock-based compensation remains the largest reconciling item between the two sets of numbers.
Cash generation stood out. Operating cash flow was $49.37 million for the quarter, up 322.1% from $11.70 million, and $155.67 million for the six months, up 212.4% from $49.84 million. Capital expenditures rose to $2.90 million from $0.85 million. Adjusted free cash flow, a non-GAAP measure, was $46.5 million against $10.8 million. Deferred revenue, current portion, reached $459.46 million, up 26.8%. Total remaining performance obligations were $988.20 million, up 32.1%, and cRPO was $621.6 million, up 31%.
Customer metrics kept expanding. Customers with more than $5,000 of ARR totaled 10,338, up 11%, and customers above $100,000 of ARR reached 1,344, up 25%. The dollar-based net retention rate was 121%, down from 126% a year earlier, which suggests expansion inside existing accounts is cooling even as new customers sign on. GitLab also moved its Duo Agent Platform into public beta and signed a three-year strategic collaboration agreement with AWS. Brian Robins will step down as CFO on September 19, 2025, with James Shen serving as interim CFO.
Guidance for the third quarter of fiscal 2026 includes non-GAAP operating income of $31.0 million to $32.0 million and non-GAAP diluted net income per share of $0.19 to $0.20. For the full fiscal year 2026, the outlook calls for non-GAAP operating income of $133 million to $136 million and non-GAAP diluted net income per share of $0.82 to $0.83, based on approximately 171 million weighted average shares outstanding. GitLab did not offer a reconciliation of the forward-looking non-GAAP measures to comparable GAAP figures, saying certain items are outside its control or cannot be reasonably predicted.
Risks look familiar. Competition in DevSecOps is intense, and the company's filings flag possible share loss, the difficulty of embedding AI features into products, and the risk that its revenue growth rate may decline. Foreign exchange movements have swung other income and expense around, and the U.S. tax position remains complicated after the bilateral advance pricing agreement. Adjusted free cash flow depends on collections and on how quickly the revenue mix shifts toward hosted SaaS, which carries higher infrastructure costs.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2026 | Q1 FY2026 | QoQ | Q2 FY2025 | YoY |
|---|---|---|---|---|---|
| Revenue | $236.0M | $214.5M | +10.0% | $182.6M | +29.2% |
| Gross profit | $207.5M | $189.5M | +9.5% | $161.2M | +28.7% |
| Gross margin | 87.9% | 88.3% | -0.4 pp | 88.3% | -0.4 pp |
| Research & development | $71.5M | $65.4M | +9.3% | $61.3M | +16.7% |
| Sales & marketing | $109.6M | $107.6M | +1.9% | $97.8M | +12.1% |
| General & administrative | $44.7M | $51.1M | -12.4% | $43.2M | +3.6% |
| Total operating expenses | $225.8M | $224.1M | +0.8% | $202.2M | +11.7% |
| Operating income (loss) | -$18.4M | -$34.6M | +47.0% | -$41.0M | +55.2% |
| Operating margin | -7.8% | -16.1% | +8.3 pp | -22.5% | +14.7 pp |
| Net income (loss) | -$10.0M | -$36.3M | +72.4% | $12.3M | -181.4% |
| Net margin | -4.2% | -16.9% | +12.7 pp | 6.7% | -11.0 pp |
| Diluted EPS | -$0.06 | -$0.22 | +$0.16 | $0.08 | -$0.14 |
| Customers | 1,344 | 129 | +941.9% | 129 | +941.9% |
| Net retention rate | 121.0% | 122.0% | -1.0 pp | 126.0% | -5.0 pp |
Risks
GitLab has a history of losses, including net loss attributable to GitLab of $45.1 million for the six months ended July 31, 2025 and an accumulated deficit of approximately $1.2 billion as of July 31, 2025. It expects operating and other expenses to increase as it invests in R&D, AI capabilities, sales and marketing, and public-company costs, which will negatively affect operating results if revenue does not increase.
GitLab has implemented AI capabilities across its services, including GitLab Duo and the GitLab Duo Agent Platform. These features face evolving AI regulations, intellectual property litigation risk, privacy obligations under GDPR and CCPA, reliance on third-party AI model vendors, and high compute costs that could adversely affect gross margin.
The DevSecOps market is highly competitive with limited barriers to entry, and GitLab competes with well-established providers such as Microsoft and Atlassian plus point solutions. Competitors may offer lower-priced or free products, integrate with third-party tools in ways that disadvantage GitLab, or move faster on AI, which could reduce revenue growth or market share.
Dollar-Based Net Retention Rate was 121% as of July 31, 2025 compared with 126% as of July 31, 2024. Customers have no obligation to renew, may downtier, may decline additional purchases, or may choose free offerings; the company also cites length and complexity of sales cycles and limited historical conversion data.
The DevSecOps platform hosts customer proprietary, personal, and financial data, and GitLab uses third-party service providers and open-source code. Breaches or AI-enabled attack vectors such as automated vulnerability exploitation, model data exposure, and software supply-chain attacks could lead to litigation, regulatory fines, customer loss, and reputational harm.
The filing repeatedly cites global business and macroeconomic conditions, including inflation, tariffs, volatile interest rates, uncertainty over the federal budget and debt ceiling, potential government shutdowns, and instability in the global banking sector. These factors may lengthen sales cycles and cause customers to delay or reduce spending.
The July 2025 OBBBA increases the tax rate on international operations, reduces benefits for foreign-derived deduction eligible income, and increases the Base Erosion and Anti-Abuse Tax rate. Over 60 countries have enacted or drafted Pillar 2 minimum tax legislation, and digital services taxes are expanding, any of which could raise GitLab's effective tax rate and cash taxes.
Base Customers grew to 10,338 as of July 31, 2025 from 9,314 as of July 31, 2024, and $100,000 ARR customers grew to 1,344 from 1,076. Rapid growth strains management and operational resources, and failure to scale systems, processes, and controls could cause deployment delays, cost increases, or difficulty forecasting revenue and expenses.
GitLab's public Handbook, open-source operations, and transparency practices may give competitors access to innovations and create Regulation FD or disclosure-control risk. The filing notes that unintended disclosures of material information could lead to securities law violations and reputational harm.
GitLab depends on numerous open core software programs and independent contributors outside its direct control. If project committees or contributors fail to develop and enhance those technologies, GitLab may need to expend additional resources or face delayed releases and upgrades, making offerings less competitive.
GitLab relies on channel partners for sales and support, particularly for enterprise, governmental, and international customers. Partners are not exclusive, may prioritize competing products, may deliver poor service, and may fail to comply with contractual obligations, which could delay purchases or harm the GitLab brand.
Other income (expense), net changed to $10.9 million expense for the six months ended July 31, 2025 from $0.4 million income for the six months ended July 31, 2024, driven by foreign exchange losses on revaluation of non-functional currency monetary assets and liabilities. This volatility may continue to affect results.
SaaS KPIs
All quarters →Dollar-Based Net Retention Rate
Customers with more than $100,000 of ARR
Customers with more than $5,000 of ARR
Non-GAAP Gross Margin
Non-GAAP Operating Margin
Total RPO
cRPO
Summary, forecast, risks and KPIs are extracted from Gitlab Inc.'s SEC filings for Q2 FY2026 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.