GitLab Surges as Much as 24% After Q2 Results Beat Expectations Across the Board, Wall Street Swiftly Raises Price Targets

For the second quarter of fiscal 2027 ended July 31, GitLab's revenue was $286.3 million, up 21% year-over-year; Non-GAAP operating income was $42.6 million, with an operating margin of 15%; and Non-GAAP diluted earnings per share was $0.24.

The market had previously expected GitLab's revenue to be approximately $273.3 million and adjusted EPS to be around $0.18, with the company's actual performance exceeding both expectations.

The company stated that gross bookings reached a record high in the quarter, with net ARR increasing 42% year-over-year; the dollar-based net retention rate rose to 117%, marking the first quarter-over-quarter improvement since 2024.

Customer growth was also quite strong. First orders in the quarter totaled approximately 1,700, up over 100% year-over-year; net ARR from new customers grew 39% year-over-year. The number of large deals worth at least $500,000 increased by more than 150% year-over-year.

GitLab's recently introduced Flex model has also made early progress. About six weeks after its launch, more than 130 customers have committed to Flex, with committed amounts exceeding $20 million.

Meanwhile, as of the end of the second quarter, GitLab's Paid Consumption Run Rate exceeded $40 million, up from $15 million at the end of the first quarter.

The company also stated that SaaS revenue grew 36% year-over-year, accounting for 34% of total revenue, while Ultimate product ARR increased 35% year-over-year, representing 59% of total ARR.

GitLab is accelerating its deployment of AI-related products. In June this year, the company launched the public beta of Orbit. As of the second-quarter earnings call, over 2,200 organizations have enabled Orbit indexing.

The company disclosed that the number of secure repositories grew 60% year-over-year, code pushes increased 50%, and CI/CD pipelines rose 40%. GitLab CEO Bill Staples stated that as AI drives the expansion of software development, the importance of code context, security, governance, and control is also increasing.

GitLab expects third-quarter fiscal 2027 revenue of $281 million to $283 million and non-GAAP operating income of $35 million to $37 million.

The company also raised its full-year guidance, projecting fiscal 2027 revenue of $1.129 billion to $1.133 billion, non-GAAP operating income of $148 million to $152 million, and non-GAAP diluted earnings per share of $0.85 to $0.87.

Following the earnings report, several Wall Street institutions raised their price targets for GitLab. Among them, Canaccord Genuity raised its price target to $70, RBC Capital raised its target from $46 to $60, Baird raised its target from $47 to $59, Morgan Stanley (MS) raised its target from $30 to $57, and BofA Securities raised its target to $54.

According to StockAnalysis data, as of pre-market on September 2, the average price target for GitLab among 27 analysts was $52.14.

[Source: StockAnalysis]

Overall, GitLab demonstrated strong performance in revenue, adjusted profit, net ARR, and customer expansion this quarter. Record gross bookings, early adoption of Flex, and growth in AI-related products provided fresh support for the company's future growth.

This content was translated using AI and reviewed for clarity. It is for informational purposes only.