Key Highlights
- GitLab shares soared 21% to $54.53 in premarket trading following second-quarter results that exceeded Wall Street projections.
- Second-quarter revenue reached $286.3 million, representing 21% growth compared to last year and surpassing the $273.1 million forecast.
- Non-GAAP earnings per share hit 25 cents, significantly outpacing the 18-cent analyst consensus.
- William Blair lifted GTLB to Market Perform from Underperform, though declined to issue a Buy recommendation.
- The company increased its fiscal 2027 annual revenue forecast to $1.131 billion.
Shares of GitLab climbed 21% to $54.53 in premarket activity Wednesday following the software company’s impressive second-quarter earnings performance. The rally extends a strong three-month run that saw the stock appreciate 46% heading into Tuesday’s market close.
Second-quarter revenue totaled $286.3 million, marking a 21.3% increase from the same period last year and exceeding Wall Street’s $273.1 million projection. Non-GAAP earnings per share of 25 cents handily surpassed the 18-cent estimate. Adjusted operating income reached $42.6 million, well above the anticipated $31.3 million.
The results demonstrated momentum across multiple metrics. High-value transactions exceeding $500,000 more than doubled compared to the prior year, climbing over 150%. Annual recurring revenue from Ultimate-tier subscriptions expanded approximately 35% and now represents 59% of overall ARR. Software-as-a-Service revenue surged 36%, comprising 34% of total quarterly revenue.
GitLab posted record gross bookings during the quarter. Net annual recurring revenue growth picked up speed, while net dollar retention showed sequential improvement for the first time since 2024.
Commercial Team Performance Strengthens
Initial order volume more than doubled to approximately 1,700 transactions, while net ARR from first-time orders increased 39%. The company expanded its account executive headcount by roughly 30%, with individual representative productivity advancing about 10%. Business activity within small and medium-sized enterprises stabilized, and the company reported higher win rates against competitors.
Paid usage of GitLab’s Duo Agent Platform climbed approximately 50% from the previous quarter. Secure code repositories expanded 60%, code contributions rose 50%, and continuous integration/continuous deployment pipelines grew roughly 40%.
Strong initial reception greeted the company’s flexible subscription offering called Flex. GitLab also noted enhanced competitive performance across different regions and customer segments.
Annual Projections Elevated
The company boosted its fiscal 2027 full-year targets. Revenue expectations now stand at $1.131 billion, reflecting 18.4% growth versus the previous fiscal year. Adjusted operating margin is projected at 13.3%, with non-GAAP earnings per share estimated at 86 cents.
Third-quarter guidance calls for revenue of $282 million alongside adjusted earnings per share of 20 cents.
William Blair elevated its rating on the stock to Market Perform from Underperform. Analyst Jason Ader highlighted widespread improvements in revenue expansion, commercial execution, and customer base growth as catalysts for the upgrade.
However, Ader emphasized this doesn’t constitute a full buy recommendation. “One quarter does not resolve long-term questions about AI-driven disruption in the dev tools market,” he stated.
The firm identified competitive pressures as a significant concern. GitLab faces competition from Microsoft’s GitHub, Anthropic’s Claude Code, and Cursor, recently purchased by SpaceX for $60 billion.
William Blair noted it requires additional evidence that recent bookings momentum can be maintained and that the Flex offering will generate new growth rather than simply reallocate existing customer spending. The analysts also highlighted potential headwinds from pricing pressure on seat-based licensing models.
While acknowledging the strong quarterly performance, William Blair withheld a Buy rating, emphasizing the need for GitLab to demonstrate the long-term viability of its recent strategic initiatives.
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