We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
GTLB Q2 Earnings Call Puts Flex, AI and Sales Momentum in Focus
Read MoreHide Full Article
Key Takeaways
GitLab made Flex central to growth after 130 customers committed over $20M in its first six weeks.
GTLB raised fiscal 2027 revenue guidance to $1.129B-$1.133B after Q2 revenues and EPS topped estimates.
GitLab's net ARR rose 42%, retention hit 117%, and $500K-plus deals grew more than 150% year over year.
GitLab Inc. (GTLB - Free Report) used its second-quarter fiscal 2027 earnings call to frame Flex as the centerpiece of its next growth phase, linking seat subscriptions with a broader consumption model for AI-era software development.
The quarter also gave management more confidence in the business. Revenues were $286.3 million, beating the Zacks Consensus Estimate of $273.3 million. Non-GAAP earnings were $0.24 per share, above the consensus mark of $0.18.
CEO Bill Staples said that more than 130 customers committed over $20 million to Flex in its first six weeks, helping platform-wide paid consumption run rate, or CRR, rise above $40 million.
Staples also mentioned that the model lets customers redirect committed dollars among Premium and Ultimate seats, GitLab credits and eligible usage products without repeated contracting cycles.
CFO Jessica Ross added that management expects Flex to become increasingly important, while stressing that its near-term impact is primarily about revenue timing rather than customer commitments or cash economics.
GitLab Raises Outlook but Normalizes H2
Ross raised fiscal 2027 revenue guidance to $1.129-$1.133 billion and projected non-GAAP earnings of $0.85-$0.87 per share.
For the fiscal third quarter, Ross guided revenues of $281-$283 million, non-GAAP operating income of $35 million-$37 million and diluted earnings of $0.19-$0.20 per share.
Ross cautioned that the second-half outlook assumes normalized bookings after unusually strong fiscal second-quarter execution. She said that guidance excludes Flex's potential accounting impact, with a maximum fiscal 2027 revenue-timing effect of approximately $13 million.
GTLB Sees Sales Execution Improve
Staples said that account executive capacity increased about 30% year over year while productivity per representative improved roughly 10%, contributing to GitLab's largest gross bookings quarter.
Ross said that net ARR grew 42% year over year, dollar-based net retention reached 117%, and the company recorded approximately 1,700 first orders, more than double the prior-year level.
Ross also highlighted better public-sector activity and a sharp increase in larger transactions, with deals of at least $500,000 growing more than 150% year over year.
GitLab Builds Around AI-Driven Consumption
Staples described AI as a driver of more customers, more products and more consumption. Duo Agent Platform paid CRR grew about 50% sequentially.
Staples said that more than 2,200 organizations enabled GitLab Orbit indexing, while about 80% of customer query volume came from customers connecting Orbit to external agents.
In Q&A, a Canaccord Genuity analyst asked about GitLab's next-generation Git strategy. Staples said that the company is rearchitecting Git infrastructure for roughly 100 times the scale required by human workflows and is also advancing artifact management.
GTLB Q&A Tests Flex Economics and Margins
A BofA Securities analyst asked which metric best captures Flex progress. Staples pointed to paid CRR, which includes Flex commitments, credit commitments and paid on-demand usage, with a fiscal year-end target above $100 million.
A UBS analyst asked whether Flex customers were increasing commitments. Ross said that it was too early to quantify that, while Staples stated that Flex can create headroom for new products and reduce contraction tied to unused seat capacity.
A Baird analyst pressed on gross-margin pressure from AI. Ross said that SaaS represented 34% of revenues, while Staples said that recent margin changes were driven more by SaaS mix than early AI adoption.
GitLab Keeps Focus on Execution
Staples closed with an emphasis on repeating the second-quarter's execution while expanding monetization beyond seats. His growth framework centers on new customers, additional products and consumption.
Ross maintained that the transition to Flex will create reporting noise, particularly in revenue recognition and current RPO, and committed to quantifying those effects each quarter.
GTLB's Growth Score of A is its strongest style signal, while the Value Score of F is the weakest. It has a Momentum Score of C and a VGM Score of C. Higher grades indicate better expected performance within the framework, but the Zacks Rank can change as earnings estimates are revised following the just-reported results.
View the Zacks #1 Rank List
Image: Bigstock
GTLB Q2 Earnings Call Puts Flex, AI and Sales Momentum in Focus
Key Takeaways
GitLab Inc. (GTLB - Free Report) used its second-quarter fiscal 2027 earnings call to frame Flex as the centerpiece of its next growth phase, linking seat subscriptions with a broader consumption model for AI-era software development.
The quarter also gave management more confidence in the business. Revenues were $286.3 million, beating the Zacks Consensus Estimate of $273.3 million. Non-GAAP earnings were $0.24 per share, above the consensus mark of $0.18.
GitLab Inc. Price, Consensus and EPS Surprise
GitLab Inc. price-consensus-eps-surprise-chart | GitLab Inc. Quote
GTLB Makes Flex Central to Growth
CEO Bill Staples said that more than 130 customers committed over $20 million to Flex in its first six weeks, helping platform-wide paid consumption run rate, or CRR, rise above $40 million.
Staples also mentioned that the model lets customers redirect committed dollars among Premium and Ultimate seats, GitLab credits and eligible usage products without repeated contracting cycles.
CFO Jessica Ross added that management expects Flex to become increasingly important, while stressing that its near-term impact is primarily about revenue timing rather than customer commitments or cash economics.
GitLab Raises Outlook but Normalizes H2
Ross raised fiscal 2027 revenue guidance to $1.129-$1.133 billion and projected non-GAAP earnings of $0.85-$0.87 per share.
For the fiscal third quarter, Ross guided revenues of $281-$283 million, non-GAAP operating income of $35 million-$37 million and diluted earnings of $0.19-$0.20 per share.
Ross cautioned that the second-half outlook assumes normalized bookings after unusually strong fiscal second-quarter execution. She said that guidance excludes Flex's potential accounting impact, with a maximum fiscal 2027 revenue-timing effect of approximately $13 million.
GTLB Sees Sales Execution Improve
Staples said that account executive capacity increased about 30% year over year while productivity per representative improved roughly 10%, contributing to GitLab's largest gross bookings quarter.
Ross said that net ARR grew 42% year over year, dollar-based net retention reached 117%, and the company recorded approximately 1,700 first orders, more than double the prior-year level.
Ross also highlighted better public-sector activity and a sharp increase in larger transactions, with deals of at least $500,000 growing more than 150% year over year.
GitLab Builds Around AI-Driven Consumption
Staples described AI as a driver of more customers, more products and more consumption. Duo Agent Platform paid CRR grew about 50% sequentially.
Staples said that more than 2,200 organizations enabled GitLab Orbit indexing, while about 80% of customer query volume came from customers connecting Orbit to external agents.
In Q&A, a Canaccord Genuity analyst asked about GitLab's next-generation Git strategy. Staples said that the company is rearchitecting Git infrastructure for roughly 100 times the scale required by human workflows and is also advancing artifact management.
GTLB Q&A Tests Flex Economics and Margins
A BofA Securities analyst asked which metric best captures Flex progress. Staples pointed to paid CRR, which includes Flex commitments, credit commitments and paid on-demand usage, with a fiscal year-end target above $100 million.
A UBS analyst asked whether Flex customers were increasing commitments. Ross said that it was too early to quantify that, while Staples stated that Flex can create headroom for new products and reduce contraction tied to unused seat capacity.
A Baird analyst pressed on gross-margin pressure from AI. Ross said that SaaS represented 34% of revenues, while Staples said that recent margin changes were driven more by SaaS mix than early AI adoption.
GitLab Keeps Focus on Execution
Staples closed with an emphasis on repeating the second-quarter's execution while expanding monetization beyond seats. His growth framework centers on new customers, additional products and consumption.
Ross maintained that the transition to Flex will create reporting noise, particularly in revenue recognition and current RPO, and committed to quantifying those effects each quarter.
GTLB's Zacks Signals Stay Mixed
GTLB carries a Zacks Rank #3 (Hold). Within the Zacks framework, the Style Scores complement the Rank and grade value, growth and momentum characteristics from A through F. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
GTLB's Growth Score of A is its strongest style signal, while the Value Score of F is the weakest. It has a Momentum Score of C and a VGM Score of C. Higher grades indicate better expected performance within the framework, but the Zacks Rank can change as earnings estimates are revised following the just-reported results.