GitLab shares rose more than 23% in premarket trading on Wednesday after the company reported fiscal second-quarter 2027 revenue growth of 21% and provided an update on demand for its software development and security platform.
Revenue for the quarter ended July 31 increased to $286.3 million from $236.0 million in the corresponding period a year earlier.
Adjusted diluted earnings per share were $0.24, unchanged from the prior-year period, while adjusted operating income increased to $42.6 million from $39.6 million.
GitLab said first-order growth exceeded 100% year over year, while net annual recurring revenue growth was above 40%.
William Blair Upgrades GitLab to Outperform
William Blair upgraded GitLab to Outperform from Market Perform following the quarterly results.
“While one quarter does not resolve long- term questions about AI-driven disruption in the dev tools market, we believe the combination of improving core fundamentals and tangible progress across the company’s strategic priorities warrants a more balanced risk/reward view,” the brokerage said.
The comments represent William Blair’s assessment of GitLab and the development-tools market.
Customers With More Than $100,000 in ARR Increase 17%
GitLab reported continued expansion among customers generating higher levels of annual recurring revenue.
The number of customers generating more than $100,000 in ARR increased 17% to 1,571, while customers generating more than $5,000 rose 8% to 11,114.
GitLab reported a dollar-based net retention rate of 117%. Total remaining performance obligations increased 16% to $1.2 billion.
GitLab Expands AI Products With Orbit
The company continued investing in artificial intelligence capabilities during the quarter, including GitLab Orbit, which entered public beta.
According to GitLab, internal testing showed that its unified context graph enabled AI agents to respond up to 11 times faster and with up to 45% fewer hallucinations. These figures are based on the company’s internal testing.
GitLab also introduced GitLab Secrets Manager as a usage-based add-on for Premium and Ultimate customers.
Adjusted Free Cash Flow Falls to $9.8 Million
GitLab generated adjusted free cash flow of $9.8 million during the quarter, compared with $46.5 million in the corresponding period a year earlier.
Operating cash flow was an outflow of $3.1 million, compared with an inflow of $49.4 million a year earlier.
The company also repurchased approximately 3.5 million shares during the quarter.
GitLab Provides Fiscal 2027 Guidance
For the third quarter, GitLab expects revenue of between $281 million and $283 million, alongside adjusted operating income of $35 million to $37 million.
For the full fiscal year 2027, the company forecasts revenue of $1.129 billion to $1.133 billion and adjusted operating income of between $148 million and $152 million.
GitLab expects full-year adjusted diluted earnings per share of $0.85 to $0.87.
The projections represent company guidance and remain subject to future business and market conditions.