GitLab (GTLB) is having a moment. The software company's stock surged more than 24% in premarket trading Wednesday after it delivered a fiscal second-quarter earnings report that had investors doing a double take. The headline numbers were impressive enough, but the details underneath painted an even brighter picture of a company hitting on all cylinders.
Let's start with the basics. GitLab reported adjusted earnings of 24 cents per share, blowing past the 18 cents analysts had penciled in. Revenue came in at $286.25 million, up 21% year over year and ahead of the $273.12 million consensus estimate. Not too shabby.
But the real story is in the operational metrics. Adjusted operating income jumped to $42.6 million from $39.6 million, with a 15% operating margin. Adjusted free cash flow hit $9.8 million, a 3% margin. The company ended the quarter with a healthy $1.3 billion in cash and investments, even after taking about $23.3 million in restructuring charges.
GitLab also used some of that cash to buy back about 3.5 million shares during the quarter, leaving roughly $245 million under its buyback authorization. That's a nice vote of confidence in the company's own future.
Bookings and Retention: The Numbers That Matter
For a subscription software company like GitLab, the metrics that really matter are bookings and retention. And on that front, the company delivered some eye-popping numbers.
Gross bookings hit a record. First orders more than doubled to about 1,700, the highest level in three years. That suggests the sales engine is firing on all cylinders, bringing in new customers at a rapid clip.
New-logo net annual recurring revenue (ARR) rose 39%. First-order net ARR climbed nearly 40%, while total net ARR grew 42%. Deals worth at least $500,000 surged more than 150%. And Ultimate ARR, the company's top-tier offering, rose about 35% and now represents 59% of total ARR.
Retention metrics were equally encouraging. Gross retention remained above 90%, and dollar-based net retention improved sequentially to 117% for the first time since 2024. That means existing customers are spending more with GitLab, a key driver of long-term growth.
Looking ahead, total remaining performance obligations (RPO) rose 16% to $1.2 billion, while current RPO increased 20% to $744.7 million. Calculated billings grew 24%, up from just 12% growth in the previous quarter. That acceleration is a strong signal that momentum is building.
AI and SaaS Adoption Are Accelerating
GitLab's SaaS revenue grew 36% and now accounts for 34% of total revenue, driven by GitLab Dedicated and its AI-powered Duo offerings. The company's new Flex consumption model has been a hit, securing more than $20 million in commitments from over 130 customers within just six weeks of launch. GitLab expects Flex to defer no more than $13 million in fiscal 2027 revenue, a manageable trade-off for the long-term upside.
The paid consumption run rate jumped to more than $40 million, up from $15 million in the first quarter. Management is aiming to exceed $100 million by year-end, which would be a massive acceleration.
On the AI front, Duo Agent Platform's paid committed recurring revenue rose 50% sequentially. Orbit, GitLab's AI-powered code indexing tool, grew 70% to more than 2,200 organizations and generated over 170,000 queries. Notably, Orbit achieved 70% accuracy, compared with 58% for traditional retrieval-augmented generation. That's a meaningful improvement that could drive further adoption.
Other usage metrics were also strong: secure repositories grew 60%, code pushes grew 50%, and CI/CD pipelines grew 40%. The public-sector business rebounded, with account executive capacity up about 30% and productivity per representative up roughly 10%.
Guidance: Raising the Bar
GitLab raised its fiscal 2027 adjusted earnings forecast to 85 to 87 cents per share, above the analyst estimate of 81 cents. The company now expects revenue of $1.129 billion to $1.133 billion, ahead of the $1.12 billion consensus. It maintained its gross margin forecast of 85% to 87%.
For the third quarter, GitLab expects adjusted earnings of 19 to 20 cents per share, versus the 18-cent analyst estimate. Revenue is projected at $281 million to $283 million, in line with the $281 million consensus.
Investors clearly liked what they saw. GitLab shares were up 24.81% at $56.27 in premarket trading Wednesday, hitting a new 52-week high. The stock's surge reflects growing confidence that GitLab is not just a niche developer tool, but a platform that is becoming increasingly central to how companies build and deploy software in the age of AI.
