GitLab Q2 Earnings Preview: Strong Growth Prospects and a Complicated Market Landscape

GitLab is set to release its Q2 2026 earnings on Sept. 3, 2025, with expected revenues between $226-227 million, a 24% YoY growth. Non-GAAP earnings are expected to be between 16-17 cents per share. The company's strong dollar-based net retention rate and expanding clientele are expected to have contributed to its growth prospects. GTLB shares have lost 14.8% YTD, underperforming the Zacks Computer & Technology sector's rise of 12.9% and the Zacks Internet - Software industry's growth of 19.5%.

GitLab Inc. (GTLB) is scheduled to release its second-quarter fiscal 2026 earnings on September 3, 2025. The company is expected to report revenues between $226 million and $227 million, representing an approximate 24% year-over-year (YoY) growth. Non-GAAP earnings per share (EPS) are anticipated to be between 16 cents and 17 cents [1].

The Zacks Consensus Estimate for second-quarter fiscal 2026 revenues is $226.57 million, indicating a 24.09% increase from the year-ago quarter. The consensus mark for earnings has remained unchanged at 16 cents per share over the past 30 days [1]. GitLab has consistently beaten the Zacks Consensus Estimate in each of the last four quarters, delivering an average earnings surprise of 37.64% [1].

Key factors expected to influence GitLab's performance in the second quarter of fiscal 2026 include ongoing investments in innovation across its core DevOps platform, security, and AI-driven solutions. The continued adoption of GitLab Duo, including Duo Enterprise, is anticipated to drive growth as customers integrate AI capabilities into their workflows. The expansion of GitLab Dedicated is also likely to contribute to top-line growth [1].

GitLab's strong dollar-based net retention rate of 122% in the first quarter of fiscal 2026, driven by seat expansion, tier upgrades, and increased customer yield, indicates continued growth potential from existing customers [1]. The company's expanding clientele and market leadership in the DevSecOps platform category are expected to have contributed to its growth prospects [1].

Despite these positive factors, GTLB shares have lost 14.8% year to date (YTD), underperforming the Zacks Computer & Technology sector's rise of 12.9% and the Zacks Internet - Software industry's growth of 19.5%. GTLB shares have also underperformed Microsoft (MSFT) shares, which have gained 20.2% YTD [1].

GitLab stock is trading at a premium, with a forward 12-month Price/Sales of 7.55X compared to the Internet - Software industry's 5.71X [1]. The company's growing customer base, which includes cloud platforms like Alphabet's GOOGL Google Cloud and Amazon AMZN, is likely to have driven growth during the fiscal second quarter [1].

Investors should note that GitLab faces challenges from one-time expenses, such as the global Summit event and ongoing costs related to its China joint venture, Jihu, which add pressure to its margins. The company's gross margin contracted 100 basis points in the first quarter of fiscal 2026. Stretched valuation also remains a concern [1].

References:
[1] https://www.tradingview.com/news/zacks:7b3c54a96094b:0-gtlb-stock-set-to-report-q2-earnings-a-smart-buy-or-risky-investment/
[2] https://finviz.com/news/154896/gtlb-stock-set-to-report-q2-earnings-a-smart-buy-or-risky-investment