GitLab Achieves 29% Revenue Growth, Raises Profit Outlook

GitLab reported Q2 FY2026 revenue of $236 million, a 29% YoY increase, and expanded non-GAAP operating margin to 16.8%. The company sustained its full-year revenue guidance but raised its profit outlook due to robust non-GAAP operating leverage and the introduction of a hybrid seat plus usage-based monetization model tied to its AI-powered Duo Agent platform. GitLab's ARR growth was concentrated in the enterprise and mid-market, with a 25% YoY increase in the $100,000-plus cohort. The company's non-GAAP gross margin remained at 90%, and adjusted free cash flow reached $46 million, or a 20% margin.

Title: GitLab Reports Strong Q2 FY2026 Results with 29% Revenue Growth and Expanded Non-GAAP Margin

GitLab (NASDAQ: GTLB) reported its Q2 FY2026 financial results on September 2, 2025, showcasing a robust performance with a 29% year-over-year (YoY) increase in revenue to $236 million. The company also expanded its non-GAAP operating margin to 16.8% [1]. Despite the strong financials, the stock experienced a 10.3% decline post-earnings, attributed to softer guidance and the CFO’s transition [1].

The company sustained its full-year revenue guidance but raised its profit outlook, citing robust non-GAAP operating leverage and the introduction of a hybrid seat plus usage-based monetization model tied to its AI-powered Duo Agent platform [1]. GitLab's annual recurring revenue (ARR) growth was concentrated in the enterprise and mid-market segments, with a 25% YoY increase in the $100,000-plus cohort. This growth was driven by a combination of seat expansion and increased customer yield, with a dollar-based net retention rate (DBNRR) of 121% [1].

The company's non-GAAP gross margin remained strong at 90%, and adjusted free cash flow reached $46 million, or a 20% margin. The introduction of the Duo Agent platform, which enables engineers to collaborate with AI agents, has significantly improved product stickiness. Approximately 53% of total ARR now comes from the high-value Ultimate tier, and the adoption of GitLab Dedicated contributed approximately $50 million in ARR, growing 92% year over year [1].

GitLab's strategic AWS partnership, which launched in August 2025, has been instrumental in driving growth. The collaboration centers on GitLab Dedicated, a single-tenant cloud solution tailored for regulated industries like healthcare, finance, and government. This partnership addresses data residency, isolation, and governance requirements, enabling organizations to adopt cloud computing without compromising compliance [2].

While GitLab faces stiff competition from GitHub and Microsoft, its open-core model and AI-first approach create a unique value proposition. Unlike GitHub’s reliance on Azure integration, GitLab’s platform is cloud-agnostic, appealing to enterprises seeking flexibility. Its focus on regulated sectors further differentiates it from competitors like Atlassian [3].

However, the stock's recent decline highlights near-term risks. The company's valuation remains stretched, trading at a forward P/E of 587x and an EV/Sales multiple of 8.2x [3]. For the investment to succeed, GitLab must continue executing on its AI roadmap and demonstrate consistent profitability.

References:
[1] https://www.nasdaq.com/articles/gitlab-reports-29-percent-revenue-growth
[2] https://about.gitlab.com/press/releases/2025-08-06-gitlab-aws-strategic-collaboration-agreement/
[3] https://finimize.com/content/gtlb-asset-snapshot