GitLab Inc. (NASDAQ: GTLB) shares hit a new 52-week high after the software developer reported second-quarter fiscal 2027 adjusted earnings per share of $0.24, beating consensus estimates of $0.18.

The company also posted quarterly sales of $286.3 million, exceeding the consensus estimate of $273.12 million. This represents a 21 percent increase in revenue compared to $235.96 million in the same period last year.

Financial Performance

The company’s earnings per share remained unchanged from the same period last year, despite the significant beat against current quarter expectations. Non-GAAP operating income reached $42.6 million, representing a 15 percent operating margin, up from $39.6 million a year ago. Gross margin was 86.5 percent.

Adjusted free cash flow totaled $9.8 million, representing a 3 percent margin. GitLab ended the quarter with $1.3 billion in cash and investments. The company also recorded about $23.3 million in restructuring charges.

Operational Highlights

GitLab reported record gross bookings and net annual recurring revenue (ARR) growth exceeding 40 percent year over year. First Order growth surpassed 100 percent year-on-year, with first orders more than doubling to about 1,700, marking the highest level in three years.

The company introduced its Flex model, allowing customers to allocate spending across products, securing over $20 million in commitments from more than 130 customers in its first six weeks. GitLab expects the model to defer no more than $13 million in fiscal 2027 revenue.

Key customer metrics included:

• Customers with more than $5,000 of ARR reached 11,114, an increase of 8 percent year-over-year.
• Customers with more than $100,000 of ARR reached 1,571, an increase of 17 percent year-over-year.
• Dollar-Based Net Retention Rate was 117 percent, improving sequentially for the first time since 2024.
• Total RPO grew 16 percent year-over-year to $1.2 billion, while cRPO grew 20 percent to $744.7 million.
• Deals worth at least $500,000 surged more than 150 percent.
• Ultimate ARR rose about 35 percent and represented 59 percent of total ARR.

"Q2 was an exceptional quarter, with record gross bookings and net ARR growth exceeding 40% year over year," said Bill Staples, GitLab CEO. "As AI drives more software creation and more work through the development lifecycle, the context, security, governance and control GitLab provides become increasingly valuable," Staples added.

SaaS And AI Adoption

SaaS revenue increased 36 percent and accounted for 34 percent of total revenue, driven by GitLab Dedicated and Duo. The paid consumption run rate jumped to more than $40 million from $15 million in the first quarter. GitLab aims to exceed $100 million by year-end.

Duo Agent Platform’s paid committed recurring revenue rose 50 percent sequentially. Orbit indexing grew 70 percent to more than 2,200 organizations and generated over 170,000 queries. Orbit achieved 70 percent accuracy, compared with 58 percent for traditional retrieval-augmented generation. Secure repositories, code pushes and CI/CD pipelines grew 60 percent, 50 percent and 40 percent, respectively.

Meanwhile, GitLab’s public-sector business rebounded. Account executive capacity grew about 30 percent, while productivity per representative increased roughly 10 percent.

Capital Allocation

The company repurchased about 3.5 million shares during the quarter. It had roughly $245 million remaining under its buyback authorization.

Analyst Reactions

Following the results, several analysts raised their price targets for GitLab:

• BTIG analyst Nick Altmann maintained a Buy rating and raised the price target from $52 to $60.
• Piper Sandler analyst Rob Owens maintained a Neutral rating and raised the price target from $28 to $52.
• Needham analyst Mike Cikos maintained a Buy rating and raised the price target from $38 to $65.

Looking Ahead

GitLab raised its fiscal 2027 adjusted EPS guidance to between 85 cents and 87 cents, versus the 81 cent analyst estimate. The company also raised its revenue outlook to between $1.129 billion and $1.133 billion, versus the $1.12 billion estimate. Management expects full-year gross margins to be between 85 percent and 87 percent.

For the third quarter, GitLab expects adjusted earnings of 19 cents to 20 cents per share, compared with the 18 cent analyst projection. Revenue is forecast at $281 million to $283 million, versus the $281 million consensus estimate.

GitLab stock was up 24.81 percent to $56.27 in pre-market trading.

What the Numbers Show

While adjusted EPS beat estimates significantly, it remained flat year-over-year. This divergence suggests that while operational efficiency or cost management may have improved relative to expectations, absolute profitability on a per-share basis has not expanded compared to the prior year period. The raise in full-year guidance indicates management confidence in sustaining momentum despite the flat YoY EPS performance. Additionally, the introduction of the Flex model signals a strategic shift toward consumption-based monetization, which management notes may impact revenue recognition timing but not underlying cash commitments.

GitLab Inc (NASDAQ: GTLB) raised its full-year financial guidance for fiscal 2027, lifting both revenue and adjusted earnings per share (EPS) outlooks above analyst expectations.

The company increased its FY27 adjusted EPS guidance range from $0.79-$0.82 to $0.85-$0.87. This new midpoint exceeds the consensus analyst estimate of $0.81.

Revenue Outlook

GitLab also upgraded its top-line forecast. The revised FY27 sales guidance stands at $1.129 billion-$1.133 billion, up from the previous range of $1.112 billion-$1.118 billion. This represents a beat against the $1.116 billion analyst estimate.

What the Numbers Show

The simultaneous upward revision in both margin-sensitive EPS and top-line revenue suggests improved operational efficiency or pricing power, as the EPS increase outpaces the proportional lift in the revenue midpoint.