Summary
GitLab closed the second quarter of fiscal 2027 with revenue of $286.3 million, up 21.3% from the prior-year quarter. Year-to-date revenue reached $550.4 million, up 22.2%. First order growth exceeded 100% year over year. Gross profit rose 16.0% to $240.6 million, but gross margin fell to 84.1% from 87.9% a year earlier. Management tied the compression to an $11.0 million increase in third-party hosting costs for SaaS and cloud usage, and said the growing SaaS and Duo Agent Platform mix will keep cloud-related costs elevated.
The bottom line moved the other way. Operating loss was $56.9 million, and the loss widened from $18.4 million in the prior-year quarter. Operating margin was -19.9%, down 12.1 percentage points from -7.8%. Net loss attributable to GitLab was $36.8 million, compared with $9.2 million a year ago, and diluted loss per share was $0.22 against $0.06. The quarter carried restructuring charges tied to the plan announced in May 2026 and a sharp step up in stock-based compensation. On a non-GAAP basis, operating income was $42.6 million and non-GAAP diluted net income per share was $0.24. The distance between the two sets of numbers is the quarter's central tension.
The first half reads better than the quarter. Year-to-date net loss attributable to GitLab was $41.8 million, a narrowing from $45.1 million, and year-to-date diluted loss per share was $0.25 versus $0.27. Operating cash flow for the quarter was negative $3.1 million, down from $49.4 million a year earlier. Management attributed the swing to the timing of accounts receivable collections and cash payments tied to restructuring. Year-to-date operating cash flow was $146.1 million, down 6.1% from $155.7 million. Capital expenditures were $0.2 million for the quarter, down from $2.9 million. Non-GAAP adjusted free cash flow, a separate measure, was $9.8 million against $46.5 million a year ago.
Backlog and customer metrics held up. Remaining performance obligations were $1.2 billion, up 21.4% year over year, and current RPO grew 20% to $744.7 million. Customers spending more than $5,000 of ARR reached 11,114, up 8%, while customers above $100,000 of ARR reached 1,571, up 17%. Dollar-based net retention rate was 117%, down from 121%. GitLab repurchased roughly 3.5 million shares during the quarter and had $245.3 million left under its repurchase authorization as of July 31, 2026. Cash, cash equivalents and short-term investments totaled $1,257.0 million.
GitLab used the quarter to push a new commercial model. GitLab Flex gives customers one annual commitment that can be reshaped month to month across platform seats, GitLab Credits and add-on capabilities without contract amendments. The company also launched GitLab Secrets Manager as a usage-based add-on and put GitLab Orbit into public beta. Management cited a Forrester Consulting study that found a 400% return on investment and $7.5 million in net present value over three years for the Duo Agent Platform.
Guidance for the third quarter of fiscal 2027 calls for non-GAAP operating income of $35 million to $37 million and non-GAAP diluted net income per share of $0.19 to $0.20. For the full fiscal year 2027, the company guided to non-GAAP operating income of $148 million to $152 million and non-GAAP diluted net income per share of $0.85 to $0.87, assuming roughly 172 million weighted average shares. GitLab did not offer comparable GAAP guidance, saying certain items are out of its control or cannot be reasonably predicted. The outlook depends on holding the current growth rate while absorbing higher cloud costs. Named risks include intense competition and possible loss of market share, security and privacy breaches, the incorporation of AI features into products, customer renewals and expansion, and general economic conditions such as inflation, tariffs and regulatory uncertainty.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2027 | Q1 FY2027 | QoQ | Q2 FY2026 | YoY |
|---|---|---|---|---|---|
| Revenue | $286.3M | $264.2M | +8.4% | $236.0M | +21.3% |
| Gross profit | $240.6M | $226.7M | +6.2% | $207.5M | +16.0% |
| Gross margin | 84.1% | 85.8% | -1.8 pp | 87.9% | -3.9 pp |
| Research & development | $95.0M | $71.5M | +32.9% | $71.5M | +32.9% |
| Sales & marketing | $134.4M | $119.4M | +12.6% | $109.6M | +22.6% |
| General & administrative | $68.2M | $51.6M | +32.2% | $44.7M | +52.5% |
| Total operating expenses | $297.6M | $242.4M | +22.7% | $225.8M | +31.8% |
| Operating income (loss) | -$56.9M | -$15.7M | -261.5% | -$18.4M | -210.3% |
| Operating margin | -19.9% | -6.0% | -13.9 pp | -7.8% | -12.1 pp |
| Net income (loss) | -$36.1M | -$5.6M | -547.6% | -$10.0M | -261.5% |
| Net margin | -12.6% | -2.1% | -10.5 pp | -4.2% | -8.4 pp |
| Diluted EPS | -$0.22 | -$0.03 | -$0.19 | -$0.06 | -$0.16 |
| Customers | 1,571 | 1,519 | +3.4% | 1,344 | +16.9% |
| Net retention rate | 117.0% | 117.0% | ±0.0 pp | 121.0% | -4.0 pp |
Risks
Competition is intensifying as advances in AI enable rapid, low-cost development of software applications, and GitLab faces AI-native coding tools plus well-established providers such as Microsoft and Atlassian. MD&A positions AI, including the GitLab Duo Agent Platform, as central to strategy while noting reliance on third-party AI models and high computing costs.
Gross margin decreased 3.9 percentage points to 84.1% in FY2027 Q2 from 87.9% in FY2026 Q2, and decreased 3.2 percentage points to 84.9% year to date, primarily due to higher third-party hosting costs for SaaS and cloud usage. MD&A expects increased cloud-related costs as SaaS and Duo Agent Platform offerings grow, which may further pressure gross margins.
In June 2026 GitLab introduced Flex, a purchasing model where unprovisioned customer commitments are recorded as customer advances and not deferred revenue until the customer elects specific products or services. RPO of $1.2 billion as of July 31, 2026 includes non-cancellable Flex customer advances, creating timing and forecasting uncertainty for revenue recognition.
Dollar-Based Net Retention Rate was 117% as of July 31, 2026 compared with 121% as of July 31, 2025. Risk factors note customers may downtier, decrease seats or usage, or decline to purchase additional services, and MD&A notes growth depends on expanding existing customers.
Operating loss widened to $56.9 million in FY2027 Q2 from $18.4 million in FY2026 Q2, and net loss attributable to GitLab widened to $36.8 million from $9.2 million. MD&A attributes increases to restructuring costs, stock-based compensation, and hosting expenses, and risk factors state GitLab has a history of losses and may not achieve or sustain profitability.
Operating cash flow was negative $3.1 million in FY2027 Q2 compared with positive $49.4 million in FY2026 Q2, a decrease of 106.3%, due to timing of accounts receivable collections and cash payments for restructuring. Year-to-date operating cash flow decreased 6.1% to $146.1 million.
Risk factors materially expand cybersecurity risk, noting AI has shifted security boundaries with new language-based attack vectors, AI-enabled social engineering, automated vulnerability exploitation, and AI supply-chain attacks. Because code is executed on GitLab infrastructure, the company faces heightened security risks beyond standard SaaS providers.
AI features, including GitLab Duo, are subject to rapidly evolving AI regulations and privacy laws such as GDPR and CCPA, with risks of regulatory enforcement, litigation, and fines. Tax risks are also expanded with OBBBA and OECD Pillar 2, and MD&A reports an increase in the effective tax rate for FY2027 Q2 compared with FY2026 Q2.
Risk factors cite inflation, tariffs, volatile interest rates, federal budget and debt ceiling uncertainty, and potential government shutdowns as factors that may lengthen sales cycles and reduce corporate spending. MD&A notes these conditions may pressure overall spending for GitLab products and services.
Risk factors note ability to attract and retain team members is critical to product development, customer service, and handling business needs. MD&A reports increases in stock-based compensation expense and restructuring costs, which may affect retention and operating expenses.
SaaS KPIs
All quarters →Dollar-Based Net Retention Rate
Non-GAAP Gross Margin
Non-GAAP Operating Margin
Total RPO
Non-GAAP Adjusted Free Cash Flow
cRPO
Summary, forecast, risks and KPIs are extracted from Gitlab Inc.'s SEC filings for Q2 FY2027 (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 1, 2026.