GitLab's Q2 Results Show H2 Slowdown, Despite Analysts' Positive Long-Term Outlook

GitLab's Q2 FY26 results show a possible slowdown in the second half of the year, with shares sinking 8% in early market action. The company is experiencing some turnover at the executive level. Despite this, analysts remain positive on the long-term setup.

GitLab Inc. (GTLB) reported its second-quarter fiscal year 2026 financial results, highlighting a 29% year-over-year (YoY) revenue increase to $236 million. The company's non-GAAP operating margin reached 17%, indicating improved operational efficiency. However, the company's shares sank 8% during early market action, reflecting concerns about a possible slowdown in the second half of the year [1].

The company's strong performance was driven by a 25% increase in large customer cohort customers with ARR of at least $100,000, contributing to over 95% of total ARR. The GitLab Duo Agent Platform, which integrates AI capabilities into the software development lifecycle, was highlighted as a key driver of growth. However, the company is facing challenges in the small and medium business (SMB) segment, which is expected to persist through the rest of the year [1].

GitLab's revenue guidance for Q3 FY26 is $238 million to $239 million, representing approximately 23% growth year-over-year. The full-year revenue guidance is $936 million to $942 million, indicating a 24% growth year-over-year. Despite these positive projections, the company is undergoing significant organizational changes, which may introduce short-term uncertainty. The departure of CFO Brian Robins, who is stepping down to take a similar role at Snowflake, adds to the leadership transition [1].

Analysts remain cautiously optimistic about GitLab's long-term prospects. RBC Capital Markets reiterated its Outperform rating and $58 price target, noting that business trends remain durable despite the deceleration in the second half. KeyBanc retained its Overweight rating but lowered its price target to $53, acknowledging the potential risks from macroeconomic factors and AI disruptions. Bank of America reiterated its Buy rating and $72 price target, attributing the lack of increased revenue guidance to conservatism and executive turnover [2].

GitLab's strategic focus on AI-native SaaS solutions and product-led growth positions it well to capitalize on the $40 billion DevSecOps market. The company's ability to balance innovation with profitability will be critical as it continues to grow. Investors should closely monitor GitLab's operational efficiency and profitability metrics as the company navigates the challenges of organizational changes and competitive pressure [2].

References:
[1] https://finance.yahoo.com/news/gitlab-inc-gtlb-q2-2026-070335039.html
[2] https://seekingalpha.com/news/4492356-gitlab-sinks-on-second-half-slowdown-but-analysts-remain-positive-on-long-term-setup