GitLab Sets $936M–$942M Revenue Goal for FY26 Amid Accelerating AI Adoption

Posted by The News Pulse June 10, 2025 Post a Comment

Earnings Call Insights: GitLab Inc. (GTLB) Q1 2026

Management View

William Staples, CEO, highlighted a 27% year-over-year revenue increase to $215 million, with non-GAAP operating margin reaching 12%. He emphasized, "Our continued growth underscores the demonstratable value customers realize with our AI native Dev SecOps platform." Staples described GitLab as "the only AI native cloud agnostic model neutral Dev SecOps platform capable of running anywhere, including air gap environments."
Staples stated that the market is shifting rapidly in favor of platform solutions, with AI co-creation tools expected to drive increased code generation, benefitting GitLab’s core offerings. He noted a significant customer win with Super Micro, which "doubled the size of their software team and upgraded from our free tier in Q1." He also pointed to the annual launch of new product capabilities in GitLab 18, including centralized artifact management, optimized CICD pipelines, enhanced security frameworks, and native AI integration. The integration of Duo Chat and code suggestions into premium and ultimate tiers is designed "to be an obvious solution for them with no barriers to adoption."
Partnerships were highlighted, including the GitLab Duo integration with Amazon Q and a strategic expansion with AWS, which Staples expects to "amplify our market presence and drive higher quality customer engagement." He also announced that GitLab achieved FedRAMP Moderate authorization for its Dedicated SaaS solution, expected to create "a nice tailwind in our public sector business."
Staples previewed the upcoming GitLab Duo Workflow, stating that "82% of surveyed users already classify themselves as either satisfied or very satisfied with workflows capabilities." He reported quarterly momentum for Duo, with "the number of customers who purchased GitLab Duo for the first time, increased 35% quarter-over-quarter."
CFO Brian G. Robins stated, "First quarter revenue reached $214.5 million, an increase of 27% from Q1 of the prior year." He added, "Q1 non-GAAP operating income was $26.1 million compared to a loss of $3.8 million in Q1 of last year." Robins described a "record adjusted free cash flow margin of 49%" and ended the quarter with "$1.1 billion in cash and investments."

Outlook

For Q2 FY26, GitLab expects revenue of $226 million to $227 million, representing approximately 24% year-over-year growth. Non-GAAP operating income is expected to be $23 million to $24 million, with non-GAAP net income per share projected at $0.16 to $0.17.
Full year FY26 guidance is for revenue of $936 million to $942 million, also a 24% year-over-year growth rate. Non-GAAP operating income is projected at $117 million to $121 million, and non-GAAP net income per share at $0.74 to $0.75.
Robins emphasized, "Our guidance philosophy has not changed and assumes that the macroeconomic environment we have been operating in since April continues."

Financial Results

Revenue reached $214.5 million, up 27% year-over-year. The customer base with ARR of at least $5,000 grew to 10,104, contributing over 95% of total ARR. Customers with $100,000+ in ARR increased 26% to 1,288.
Dollar-based net retention rate (DBNRR) was 122%. Total ARPU grew 40% year-over-year to $955.1 million, and CRPO grew 34% to $584.8 million. Non-GAAP gross margin was 90%.
SaaS revenue represented 30% of total revenue, growing 35% year-over-year. Q1 non-GAAP operating margin was 12.2%, up from negative 2.3% in Q1 of last year.
Adjusted free cash flow was $104.1 million, with a margin of 49%.

Q&A

Robbie David Owens, Piper Sandler: Asked about the strategic positioning amid rapid AI changes. Staples responded that "every single customer conversation I have, at 1 point or another lands on AI" and emphasized customers experiment with multiple tools, but "all of those tools that are really focusing on code creation are creating more code...that end up needing GitLab."
Koji Ikeda, BofA: Inquired about growth dynamics and deal linearity. Robins noted, "the mix favored more SaaS -- and then two, the linearity was back-end weighted in the quarter."
Sanjit Kumar Singh, Morgan Stanley: Questioned deceleration in net new adds. Robins explained, "at the low end of the market, SMB and low end of mid-market is where we're seeing some price sensitivity, but it's not impacting the financials."
James Derrick Wood, TD Cowen: Asked about AI’s impact on developer job growth. Staples said, "I see the number of engineers continuing to be sustained and even grow...the number of people who are able to create code is only going to increase with some of the power of AI."
Pinjalim Bora, JPMorgan: Asked about value capture as AI unlocks new efficiencies. Staples outlined the company’s approach focused on collaborative AI, security, openness, and native agent integration to "unlock a really unique collaborative experience with many to many interactions between humans and agents."
Gray Wilson Powell, BTIG: Asked about the sustainability of high free cash flow. Robins stated, "there's nothing anomalistic within the quarter that led to the higher free cash flow collections."

Sentiment Analysis

Analyst tone reflected cautious optimism, with several probing on customer growth, competitive differentiation in AI, and sustainability of financial outperformance. Questions highlighted skepticism about new customer additions and the "skinny beat" relative to past quarters.
Management maintained a confident, upbeat tone in prepared remarks and Q&A. Staples frequently referenced competitive strengths, platform differentiation, and customer adoption. Robins expressed satisfaction with operational execution and stated, "There were no surprises."
Compared to the previous quarter, analyst questions showed increased scrutiny of growth drivers and customer adds, while management sustained a positive and strategic messaging, albeit acknowledging "price sensitivity" in SMB segments and persistent macroeconomic caution.

Quarter-over-Quarter Comparison

Revenue growth rate moderated slightly from Q4’s 29% to Q1’s 27%. The non-GAAP operating margin declined from 18% in Q4 to 12% in Q1, but both quarters highlighted expanding operating leverage.
The number of customers with $100,000+ ARR grew from 1,229 in Q4 to 1,288 in Q1. DBNRR declined from 123% to 122%.
Management’s confidence and strategic focus on AI and platform differentiation remained strong, though the "skinny beat" and analyst focus on growth momentum signaled heightened attention to top-line trends.
Guidance for FY26 revenue remained unchanged, signaling a steady outlook despite the moderation in growth metrics. The focus on Ultimate tier and AI solutions remained consistent quarter to quarter.

Risks and Concerns

Management identified "price sensitivity" in the SMB and low end of mid-market segments, impacting new customer additions but not financials.
Macroeconomic caution persists, with guidance based on the current environment continuing. Robins noted, "environment remains cautious, but people are still buying."
Analyst concerns included competitive pressures in AI tools, the sustainability of high net retention rates, and the cadence of new customer growth.

Final Takeaway

GitLab’s leadership emphasized robust revenue growth, expanding operating leverage, and rapid AI platform adoption as strategic differentiators. The company is maintaining its full-year revenue and profitability targets, supported by strong customer adoption of premium and ultimate tiers, record free cash flow, and major enterprise wins. Management remains confident in its AI-native platform approach, continued innovation, and the ability to capture value as the market for AI-driven software development scales.

Read the full Earnings Call Transcript

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