Gloo's "Profitability" Is an Adjusted Number—the Pretax Loss Is Still $21.6 Million

A headline that reads "Q2 pretax profit, −21.63" does not sound like a company that just beat guidance and told shareholders it is nearing breakeven. Both things are true of Gloo Holdings (Nasdaq: GLOO), and the gap between them is the story.

Gloo is a Boulder, Colorado software maker for the faith and "flourishing" ecosystem — tools that churches, ministries, and their networks use to run and coordinate their work. It went public in November, a rare technology debut in a market obsessed with AI and crypto. In its fiscal second quarter ended July 31, revenue hit $46.6 million, up 188% from a year earlier and 12% sequentially, above the $44 million it had guided to. Management raised its full-year revenue guidance to $200 million and said it now counts more than 30 customers paying over $1 million a year, including its first above $10 million.

Those are the lines the press release leads with. The line underneath them is the pretax loss of roughly $21.6 million — a net loss the company said narrowed to $21.2 million. Revenue is nearly tripling, and the bottom line is still deeply red. That is where a careful reader's foot should stop.

The "profitability" Gloo is promising is not profit

The company's headline milestone is not a GAAP profit at all. It is "Adjusted EBITDA" — a non-GAAP measure that starts from net loss and adds back interest, taxes, depreciation, and a package of other items, including stock-based compensation and this quarter's $4.4 million restructuring charge tied to severance. On that adjusted basis, second-quarter Adjusted EBITDA came to negative $8.3 million, an improvement of $3.2 million from the prior quarter. Management guided third-quarter revenue to $55 million, Adjusted EBITDA to a narrower negative $3.5 million, and said it expects Adjusted EBITDA to reach profitability in the fourth quarter.

None of this is fraud; it is a standard growth-company scoreboard. But the label matters. Adjusted EBITDA excludes big, real costs — stock-based compensation and restructuring are cash or near-cash events — so a company can be "Adjusted EBITDA profitable" while losing money on a GAAP basis and while still consuming cash. The margin math shows why the headline can be both exciting and misleading: the cost of revenue was still 64% of total revenue in the quarter. That improved 10.8 percentage points from a year earlier, but it means a large share of each revenue dollar still goes to delivering the product before a single dollar of profit takes shape.

Now follow the same dollar into the cash-flow statement

Adjust the lens from the income statement to cash, and the picture shifts. Over the trailing twelve months, Gloo reported operating cash flow of about negative $76 million, and free cash flow of roughly negative $92 million after about $15 million of capital spending. Even when an adjusted EBITDA number reaches zero, that does not mean the business is generating cash; the non-GAAP figure has simply left other cash costs out.

This matters because growth like Gloo's has to be financed from somewhere, and the funding is coming from shareholders. The November IPO raised $72.8 million by selling 9.1 million shares at $8 each. Then in July Gloo sold another 7 million shares at $3.25 apiece, raising about $22.75 million before fees — enough for the company to keep funding acquisitions (a series of roll-ups, including Midwestern Interactive and Cedarstone) and operating losses. At July 31 it held cash of $39.3 million, and it guided to a weighted-average share count of about 90 million for the third quarter.

Here is the shareholder invoice

The people paying for this growth are the shareholders who keep funding it at lower prices. The stock changed hands near $3.15 after the report, down roughly 60% over the past year and some two-thirds below the $8 IPO price, even as revenue roughly tripled from the prior year. The fall is not because growth slowed — it did not. It is because the celebrated "profitability" is an adjusted, non-GAAP bar, the bottom line remains deeply loss-making (fiscal 2025 alone produced a $158.7 million net loss), and the growth keeps consuming more cash than the business earns, forcing repeated equity dilution.

The headline number, −21.63, is not wrong. It is the door. Behind it is a fast-growing company whose real question is not whether revenue can triple again, but whether it can reach cash profitability before it has to go back to shareholders for more money. The next paying of the account comes with the third-quarter report around $55 million in revenue — watch the gap between the adjusted number it celebrates and the cash it actually holds.