Live: GitLab (GTLB) Shares Sink 12% Thanks to Disappointing Guidance

On GitLab’s conference call they:

• Directly addressed concerns from investors around how the company could be impacted by fewer engineering hires and the resulting pressure on per monetization from seat growth.
• Clarified that full-year guidance is conservative due to changes in the company’s go-to-market strategies.
• And provided more discussion on their CFO transition.

Overall, the call has soorthed some of Wall Street’s fears and shares are now down 7% after being down 12% when the call began.

Positives:

• Revenue and earnings for last quarter both soundly beat expectations
• The company launched the public beta of its GitLab Duo Agent Platform and a new strategic collaboration with AWS
• Operating Cash Flow hit $49.4 million (above Wall Street expectations)

Negatives:

• Fiscal year revenue guidance of $939 million at th midpoint is disappointing and points to revenue deceleration in the seocnd half
• The company announced a CFO transition

Overall,  Wall Street is focusing more on the negatives after hours. The stock is down 11%.

The company’s conference call has begun and you can register to join here.

SaaS stocks have been under pressure all summer as fears mount that AI could reduce their pricing power.

Earnings tonight won’t help. GitLab is now down almost 10% thanks to disappointing Fiscal year guidance.

CRM powerhouse Salesforce is also struggling tonight. Shares are down 4%. The reason for the drop is the same as GitLab: investors aren’t impressed with their full-year revenue guide.

GTLB | GitLab Q2’26 Earnings Highlights:

• Adj. EPS: $0.24 [✅]; UP +60% YoY
• Revenue: $236.0M [✅]; UP +29% YoY
• Adj. Gross Margin: 90% [✅]; DOWN -100 bps YoY
• Net Income: $(9.2)M [❌]; DOWN -171% YoY
• Operating Cash Flow: $49.4M; UP +322% YoY
• Non-GAAP Adjusted Free Cash Flow: $46.5M; UP +330% YoY
• Customers with >$5,000 ARR: 10,338, UP +11% YoY
• Customers with >$100,000 ARR: 1,344, UP +25% YoY
• Dollar-Based Net Retention Rate: 121%
• Total RPO: $988.2M, UP +32% YoY
• cRPO: $621.6M, UP +31% YoY

Outlook:

• Revenue: $238.0 – $239.0M [➖]
  • Guidance reflects continued strong demand for GitLab’s AI-native DevSecOps platform.
  • Expectations for sustained growth driven by new customer acquisitions and existing customer expansions.
• Non-GAAP Operating Income: $31.0 – $32.0M [➖]
• Non-GAAP Diluted Net Income per Share: $0.19 – $0.20 [➖]

Q2 Segment Performance:

• Subscription Revenue: $212.7M [✅]; UP +30% YoY
• License Revenue: $23.3M [✅]; UP +20% YoY

Other Key Q2 Metrics:

• Adj. Operating Income: $39.6M [✅]; UP +117% YoY
• Adj. Operating Expenses: $89.6M [✅]; UP +15% YoY
• R&D Expenses: $71.5M [✅]; UP +17% YoY
• Effective Tax Rate: 22% (vs. -39% YoY)
• Cash and Cash Equivalents: $261.4M
• Short-term Investments: $903.8M
• Accounts Receivable: $197.8M
• Deferred Revenue: $485.2M

CEO Commentary:

• Bill Staples: “This quarter’s results demonstrate the strength of GitLab’s AI-native DevSecOps platform as we continue to drive customer-focused innovation. GitLab Duo Agent Platform represents our vision for human-AI collaboration across the software development lifecycle. With extensibility and interoperability at our core, GitLab gives customers the flexibility to build software with their choice of AI generation tools integrated directly within GitLab, underpinned by the full lifecycle data needed to deliver faster, higher quality AI outcomes.”

CFO Commentary:

• Brian Robins: “Our team achieved strong second quarter fiscal year 2026 results, with 29% revenue growth and significant year-over-year operating margin expansion. GitLab’s sustained growth reflects the transformational value enterprises achieve through the only cloud-agnostic, model-neutral DevSecOps platform with comprehensive contextual AI capabilities that span planning through deployment, capable of running anywhere, including air-gapped environments.”

Other Executives:

• Manav Khurana, Chief Product and Marketing Officer: “The public beta launch of GitLab Duo Agent Platform is a significant step in enhancing our offerings and providing our customers with advanced AI capabilities.”
• James Shen, Vice President of Finance: “We are committed to maintaining our growth trajectory while ensuring financial discipline as we navigate through this transition period.”

That’s what’s causing the negative reaction. Wall Street expected $943, so the company’s full year guide comes in under expectations.

It was both a revenue beat ($236 million vs. Wall Street expectations of $227 million) and an earnings beat (adjusted EPS of $.24) for GitLab, yet shares are down. Losses have been cut back to about 5%. We’ll continue looking into what’s disappointing.

GitLab just released earnings and its more disappointment for investors in the company. Shares are immediately down 12%. We’ll continue posting news and analysis.

Right after earnings release we’ll begin posting news and analysis to this blog.

24/7 Wall St.’s AI Investor Podcast has recommended shares of GitLab multiple times. In our next episode, we’ll be providing more analysis into GitLab’s earnings tonight.

If you’re invested in GitLab and want to hear a more detailed look at its earnings, make sure to subscribe to the podcast in your favorite player. We’ve embedded one of our latest episodes in Spotify below: