GitLab presented its financial results for the first quarter of fiscal year 2026 during the previous trading session. GitLab is an American technology company that develops the DevSecOps platform, enabling teams to plan, create, test, deploy, and secure software within a single tool. Established in 2011 and headquartered in San Francisco, the company operates on a cloud-based (SaaS) and open-source model, serving clients globally from startups to large corporations. The GitLab platform integrates source code management, CI/CD automation, security testing, project management, and analytics, allowing organisations to deliver software faster and more securely. GitLab is also a pioneer in remote work, being one of the world's largest all-remote enterprises.
Financial Results for Q1 Fiscal Year 2026
- Revenue: $214.5 million, a 27% increase year-over-year.
- Non-GAAP Operating Margin: 12% (compared to a 2% loss in the prior year).
- Non-GAAP Gross Margin: 90%.
- Adjusted Free Cash Flow: $104.1 million, with a 49% margin.
- Customers with ARR over $100K: 1,288 (+26% year-over-year).
- Dollar-Based Net Revenue Retention (DBNRR): 122%.
- Cash and Investments at Quarter-End: $1.1 billion.
Outlook
- Q2 Fiscal Year 2026 Guidance: Revenue between $226 million and $227 million (+24% year-over-year); non-GAAP earnings per share of $0.16-$0.17.
- Full Fiscal Year 2026 Guidance: Revenue between $936 million and $942 million (+24% year-over-year).
Did the Company Positively Surprise Investors?
While GitLab's first-quarter results surpassed its own projections, the extent of the positive surprise was rather modest by historical standards, with revenue exceeding the upper end of its guidance by only 0.7%. Following the announcement, the company's stock is currently down approximately 9%, after an initial decline of around 14% at market open.
The majority of institutions issuing recommendations for GitLab have maintained their 'buy' ratings but have notably lowered their price targets. Average target prices are now hovering around $65-$70. Analysts have pointed to a slowdown in new customer acquisition and competitive pressures within the AI segment. However, they also underscored the company's robust growth momentum, strong customer retention, and record free cash flow.
GitLab continues its consistent investment in artificial intelligence (AI) driven features (GitLab Duo), integrating AI into its collaboration and code automation tools. The company anticipates further growth propelled by increasing client adoption of AI solutions and strategic partnerships, including one with AWS.
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