Financial Data and Key Metrics Changes - Revenue for Q2 2026 reached $236 million, representing a 29% year-over-year increase [36] - Non-GAAP operating margin improved to 17%, up from 10% in Q2 of the previous year [36][40] - Adjusted free cash flow for Q2 was $46 million, with a margin of 20%, compared to $10.8 million in the prior year [41] - Total remaining performance obligations (RPO) grew 32% year-over-year to $988.2 million [39] - Non-GAAP gross margin was 90% for the quarter [39] Business Line Data and Key Metrics Changes - SaaS revenue grew 39% year-over-year, now representing approximately 30% of total revenue [40] - GitLab Ultimate now accounts for 53% of total annual recurring revenue (ARR) [14] - GitLab Dedicated contributed approximately $50 million in ARR, growing 92% year-over-year [15] Market Data and Key Metrics Changes - The dollar-based net retention rate (DBNRR) for Q2 was 121%, driven by seat expansion (approximately 80%) and increased customer yield (approximately 5%) [36][37] - The customer base includes 10,338 customers with ARR of at least $5,000, contributing over 95% of total ARR [36] Company Strategy and Development Direction - The company aims to balance expansion efforts with a focus on new customer acquisition through sales-led and product-led growth strategies [9][11] - A new business division is being established to focus on first-order acquisition and post-sales support [60] - The company is enhancing its product offerings and customer experience, particularly in AI and security [17][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate market fluctuations while investing in AI capabilities and platform enhancements [41][44] - There is an expectation of incremental softness in the small and medium-sized business (SMB) segment, which is anticipated to persist through the year [43][74] - The company is maintaining its full-year revenue guidance while raising profit outlook due to strong operating leverage [43][44] Other Important Information - Brian Robbins, the CFO, announced his departure, with James Shen expected to serve as interim CFO [31][32] - The company is focusing on integrating AI tools into its platform, positioning itself as a leader in the AI-native DevSecOps space [27][30] Q&A Session Summary Question: Changes in management and their impact - Bill Staples addressed the executive turnover, emphasizing stability and scale as key focuses moving forward [49][50] Question: Growth forecast for the second half of the year - Brian Robbins noted that the guidance for the second half reflects a conservative approach due to market conditions and organizational changes [51][52] Question: SMB segment softness and its drivers - Brian Robbins indicated that the SMB segment accounts for about 8% of total revenue and has been more price-sensitive post-price increase [73][74] Question: Competitive landscape and platform defensibility - Bill Staples explained that GitLab's platform focuses on change management across the software lifecycle, differentiating it from AI code generation tools [80][82] Question: New customer acquisition strategy - Bill Staples highlighted the need for specialized sales teams focused on first-order acquisition to counteract the trend of decelerating new customer ads [87][88]

Financial Data and Key Metrics Changes - Revenue for Q2 FY 2026 reached $236 million, representing a 29% year-over-year increase [5][38] - Non-GAAP operating margin improved to 17%, up from 10% in the same quarter last year [5][42] - Adjusted free cash flow was $46 million, with a margin of 20%, compared to $10.8 million in the prior year [43] Business Line Data and Key Metrics Changes - SaaS revenue grew 39% year-over-year, now representing approximately 30% of total revenue [41][42] - GitLab Ultimate now accounts for 53% of total ARR, with significant adoption in security capabilities [14][15] - GitLab Dedicated contributed approximately $50 million in ARR, growing 92% year-over-year [15] Market Data and Key Metrics Changes - The dollar-based net retention rate (DBNRR) for Q2 was 121%, driven by seat expansion and increased customer yield [38][39] - The larger customer cohort (ARR of $100,000+) increased by 25% year-over-year, reaching 1,344 [38] Company Strategy and Development Direction - The company aims to balance expansion efforts with a focus on new customer acquisition through sales-led and product-led growth strategies [7][10] - A new Chief Product and Marketing Officer has been appointed to enhance product-led growth initiatives [11] - The company is focusing on accelerating customer-focused innovation in core DevOps, security, and AI areas [18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining revenue guidance while raising profit outlook, despite softness in the SMB segment [44][46] - The company is positioned uniquely as a cloud-agnostic DevSecOps platform with comprehensive AI capabilities [46][47] - Management highlighted the importance of adapting to the AI cycle as both an opportunity and a risk [52] Other Important Information - The company plans to evolve its business model from a purely seat-based model to a hybrid model that includes usage-based charges [27] - A leadership transition is underway, with the CFO stepping down and an interim CFO being appointed [33][35] Q&A Session Summary Question: Changes in management and their impact - Management changes are aimed at bringing stability and scaling the company, with a focus on capitalizing on the AI cycle [51][52] Question: Guidance for the second half of the year - Guidance was held steady due to strong first-month bookings and a mix of SaaS versus self-managed revenue [54][56] Question: SMB segment softness - The SMB segment accounts for about 8% of total revenue and is experiencing price sensitivity post-price increase [75] Question: Competitive conditions and platform defensibility - GitLab differentiates itself from AI code generation tools by focusing on change management across the software lifecycle [81][83] Question: New customer acquisition strategy - The company is implementing a specialized sales force focused on first-order customer acquisition to address previous deceleration in new customer ads [88][89] Question: Compensation and sales incentives - Current compensation models remain largely unchanged, but there are light touches to incentivize new customer growth [104]

Financial Performance - GitLab's Q2 FY26 revenue reached $236 million, demonstrating a 29% year-over-year growth rate[7, 56] - The company achieved a 17% Non-GAAP operating margin in Q2 FY26[7, 56] - GitLab's Non-GAAP adjusted free cash flow margin was 20% in Q2 FY26, translating to $46 million in adjusted free cash flow[7, 56] - The dollar-based net retention rate was 121%[7] Customer Growth and ARR - GitLab has 10,338 base customers[7] - The number of customers with over $100K in ARR reached 1,344[7] - GitLab Dedicated accounts for $50 million of total ARR[26] Strategic Objectives - GitLab aims to acquire new customers through sales-led growth, focusing on first-order lands and module adoption[10, 12] - The company is accelerating customer value realization through sales excellence and faster value demonstration[18, 19] - GitLab is shifting towards depth-first innovation, investing in core DevOps, security, and AI growth levers[32] Product and AI - GitLab Ultimate contributes 53% of the company's total ARR[22] - 56% of startups joining the GitLab Startup Program in Q2 FY26 are AI companies[14] - Customer surveys indicate that 91% believe AI-native dev tools will increase their GitLab usage[43]

Core Insights - GitLab (GTLB) and Pegasystems (PEGA) are significant players in the enterprise automation sector, each providing unique platforms for enhancing software development and business operations [1][2] Market Overview - The global autonomous enterprise market was valued at $49.25 billion in 2024 and is projected to grow at a CAGR of 16.2% from 2025 to 2030, presenting substantial growth opportunities for both GitLab and Pegasystems [2] GitLab (GTLB) Analysis - GitLab is experiencing strong demand for its DevSecOps platform, with solutions like GitLab Ultimate and GitLab Duo driving customer adoption [3] - In Q1 of fiscal 2026, GitLab reported a 13% year-over-year increase in customers with over $5K in Annual Recurring Revenue (ARR), totaling 10,104, and a 26% increase in customers with over $100K in ARR, reaching 1,288 [4] - GitLab's recent product launch, GitLab 18, includes significant innovations in DevOps workflows, security, compliance, and AI capabilities, which are expected to enhance its market presence [5] Pegasystems (PEGA) Analysis - Pegasystems is benefiting from the rising demand for its GenAI Blueprint solution, which integrates AI to create enterprise workflow applications, with over 1,000 new Blueprints being developed weekly [6] - In Q2 of 2025, Pegasystems reported a 16% year-over-year increase in Annual Contract Value (ACV) to $1.51 billion, driven by the popularity of its GenAI Blueprint [7] - The introduction of the Powered by Pega Blueprint solution allows system integrators to incorporate their expertise into Pega's AI-driven workflow designer, enhancing client success [8] Stock Performance and Valuation - Year-to-date, GitLab shares have decreased by 16.4%, while Pegasystems shares have increased by 23.5%, attributed to macroeconomic challenges for GitLab and strong demand for PEGA's products [9][10] - Valuation metrics indicate that both GTLB and PEGA shares are currently overvalued, with GitLab trading at a forward Price/Sales ratio of 7.55X compared to PEGA's 5.68X [13] - The Zacks Consensus Estimate for GTLB's 2025 earnings is $0.75 per share, reflecting a 1.35% year-over-year increase, while PEGA's estimate is $1.84 per share, indicating a 21.85% year-over-year increase [15] Earnings Performance - GitLab has consistently beaten earnings estimates over the past four quarters, with an average surprise of 37.64%, while Pegasystems has also exceeded estimates with a higher average surprise of 66.66% [16] Conclusion - Both GitLab and Pegasystems are well-positioned to capitalize on the growth in enterprise automation, but Pegasystems currently shows stronger momentum, higher earnings growth, and broader adoption of its GenAI solutions [17]

Core Insights - GitLab (GTLB) shares have declined by 16.8% year-to-date, underperforming the broader Zacks Computer & Technology sector, which has risen by 7%, and the Zacks Internet - Software industry, which has increased by 16.2% [1][2][10] - The underperformance is attributed to macroeconomic uncertainties and heightened competition in AI-enabled DevSecOps, particularly from larger competitors like Microsoft [2][10] - Despite challenges, GitLab is experiencing strong demand for its DevSecOps platform, with significant growth in its customer base [4][5] Stock Performance - GitLab's stock has lagged behind Microsoft, which has gained 19.4% year-to-date [2][10] - The company reported a 13% year-over-year increase in customers with over $5K in Annual Recurring Revenue (ARR) and a 26% increase in customers with over $100K in ARR in Q1 FY26 [5][10] Product and Portfolio Expansion - GitLab launched GitLab 18 in May 2025, introducing AI-native features and integrated tools for Premium and Ultimate customers at no additional cost [6][7] - The company achieved FedRAMP Moderate Authority to Operate status for GitLab Dedicated for Government, enhancing its offerings for federal agencies [8] Partnerships and Collaborations - GitLab is leveraging partnerships with major cloud platforms like Google Cloud and Amazon to expand its reach among large enterprise customers [11][12] - The integration of Amazon Q's AI agents into GitLab's platform aims to accelerate development and streamline security processes [11] Financial Guidance - For Q2 FY26, GitLab expects revenues between $226 million and $227 million, reflecting a growth of approximately 24% year-over-year [13] - For the full fiscal year 2026, the revenue forecast is between $936 million and $942 million, indicating a similar growth rate [14] Earnings Estimates - The Zacks Consensus Estimate for GTLB's Q2 FY26 earnings is 16 cents per share, with a year-over-year increase of 6.67% [15] - The consensus for fiscal 2026 earnings is pegged at 75 cents per share, reflecting a year-over-year increase of 1.35% [16] Valuation Metrics - GTLB is currently trading at a forward price/sales ratio of 7.57X, which is higher than the sector average of 6.57X, indicating a stretched valuation [17]

Core Insights - GitLab (GTLB) is experiencing strong demand for its DevSecOps platform, with significant contributions from solutions like GitLab Ultimate, Dedicated, and GitLab Duo, leading to increased customer adoption and relationship expansion [1][10] - The company's financial performance reflects this demand, with total revenues of $214.4 million in the first quarter of fiscal 2026, marking a 27% year-over-year increase [1] Customer Growth - GitLab's expanding clientele is evident, with customers generating over $5K in Annual Recurring Revenue (ARR) increasing to 10,104, a 13% year-over-year rise [2] - Customers with more than $100K in ARR grew to 1,288, up 26% year-over-year, indicating GitLab's success in attracting and retaining large enterprise customers [2] Product Innovations - The company announced the general availability of GitLab 18, which includes major innovations in core DevOps workflows, security, compliance, and AI capabilities [3] - GitLab Duo with Amazon Q was also launched for Ultimate self-managed customers on AWS, alongside achieving FedRAMP Moderate Authority to Operate for GitLab Dedicated for Government [3] Strategic Partnerships - GitLab benefits from a robust partner network, including major cloud platforms like Google Cloud and Amazon Web Services (AWS), which aids in expanding its presence among large enterprises [4] Competitive Landscape - GitLab operates in a highly competitive environment, facing significant competition from Microsoft, Atlassian, and other DevSecOps platforms [5][6][7] - Microsoft has strengthened its position through the integration of GitHub and Azure DevOps, making it a formidable rival for GitLab [6] Stock Performance and Valuation - GitLab's shares have declined by 17.7% year to date, contrasting with a 7% return from the broader Zacks Computer & Technology sector [8] - The stock is trading at a premium, with a forward 12-month Price/Sales ratio of 7.51X compared to the industry average of 5.74X, and it currently holds a Value Score of F [11] Earnings Estimates - The Zacks Consensus Estimate for second-quarter fiscal 2026 earnings is 16 cents per share, reflecting a 6.67% year-over-year increase [13] - The consensus for fiscal 2026 earnings is set at 75 cents per share, indicating a 1.35% year-over-year growth [13]

Core Insights - GitLab is positioned as a leading DevSecOps platform, emphasizing its comprehensive capabilities in software innovation and security [3][10] - The company has approximately 50 million users and aims to enhance developer productivity while reducing security risks [3][10] - GitLab's unique all-remote culture allows it to hire talent globally, with over 2,000 employees across 65 countries [8][10] Company Overview - GitLab is described as the most comprehensive DevSecOps platform, facilitating software development, security, and operations [3][4] - The platform integrates various functions into a single system, improving efficiency and reducing the need for multiple tools [4][10] - GitLab's mission focuses on enhancing the software development lifecycle through continuous innovation and AI integration [10][19] Financial Performance - GitLab reported a 27% year-over-year revenue growth, with a non-GAAP gross margin of 90% [37][38] - The company generated over $100 million in free cash flow in the first quarter, maintaining a clean balance sheet with over $1 billion in cash [32][38] - The SaaS revenue grew by 35% year-over-year, now comprising about 30% of total revenue [37][40] Market Position and Strategy - GitLab aims to be the "Switzerland" of software development, providing a neutral platform that is not tied to any specific cloud provider [25][27] - The total addressable market (TAM) for GitLab is estimated at $40 billion, with growth opportunities in AI and adjacent markets [27][28] - The company employs both bottom-up and top-down sales strategies, with about 50% of Fortune 100 companies using GitLab products [29][28] Product Development and AI Integration - GitLab has invested hundreds of millions in R&D to enhance its platform, focusing on AI integration throughout the software development lifecycle [10][19] - The introduction of GitLab Duo, an AI product, aims to improve code suggestions and overall development efficiency [19][22] - Partnerships, such as with Amazon Q, are designed to tackle critical development challenges and enhance GitLab's offerings [22][23] Challenges and Customer Needs - Security remains a top priority for customers, with GitLab's Ultimate product accounting for two-thirds of sales due to its advanced security features [23] - Companies are increasingly looking to integrate various tools to enhance software velocity, which GitLab's platform facilitates [23] - The evolving landscape of AI and remote work is reshaping customer expectations and the skills required in the workforce [11][12]

Core Insights - GitLab (GTLB) is expected to report first-quarter fiscal 2026 results on June 10, 2025, with anticipated revenues between $212 million and $213 million, reflecting a year-over-year growth of 25-26% [1][9] - Non-GAAP earnings are projected to be between 14 cents and 15 cents per share, with the Zacks Consensus Estimate for revenues at $212.52 million, indicating a 25.61% increase from the previous year [1][2] Revenue Growth Drivers - The expected performance in the first quarter is attributed to ongoing investments in innovation within GitLab's core DevOps platform, security, and AI-driven solutions [3] - The expansion of GitLab Dedicated, which grew nearly 90% year-over-year in the prior quarter, is likely to have contributed to revenue growth, appealing to customers seeking secure, single-tenant SaaS solutions [4][9] Client Expansion and Partnerships - GitLab's growing customer base, including notable clients such as Delta AirLines, NatWest Group, Alphabet, and Amazon, is anticipated to drive growth in the first quarter [5][9] - Delta AirLines' adoption of GitLab Dedicated is expected to enhance product adoption and recurring revenues [6] - NatWest Group's expanded use of GitLab Ultimate and GitLab Dedicated reflects rising demand for secure solutions in regulated sectors, likely aiding revenue momentum [7] Collaborative Initiatives - GitLab's collaboration with Amazon Q to launch an AI-powered DevSecOps solution is designed to improve the developer experience and is expected to positively impact customer engagement [8][10] - Continued collaboration with Alphabet's Google Cloud platform aims to enhance GitLab's scalability and intelligence in its offerings, further increasing customer engagement [10]

Core Viewpoint - GitLab's stock has underperformed in 2023, with a year-to-date decline of 14.8%, contrasting with the broader technology sector's slight decline and significant gains from industry peers [1][2] Financial Performance - For fiscal 2026, GitLab anticipates revenues between $936 million and $942 million, reflecting a year-over-year growth rate of 24% [5] - The Zacks Consensus Estimate for fiscal 2026 revenues stands at $936.51 million, indicating a growth of 23.35% year-over-year [5] - Non-GAAP earnings for fiscal 2026 are projected to be between 68 and 72 cents per share, with a consensus estimate of 70 cents, suggesting a year-over-year decline of 5.41% [6] Market Position and Product Development - GitLab's comprehensive DevSecOps platform, supported by a robust product portfolio, is driving enterprise adoption and enhancing developer efficiency [7] - The GitLab Ultimate subscription now constitutes 50% of total annual recurring revenue, driven by its security and compliance features appealing to large enterprises [8] - GitLab Duo offers AI-powered development capabilities, including smart code suggestions and test automation, with the recent launch of GitLab 18 enhancing AI integration [9] Strategic Partnerships - GitLab's partnerships with major companies like Amazon and Alphabet are pivotal for its growth [10] - The collaboration with Amazon Web Services (AWS) includes the integration of GitLab Duo with Amazon Q, enhancing developers' ability to produce secure code efficiently [11] - Expanded integrations with Google Cloud have strengthened GitLab's platform capabilities, positioning the company for continued success in fiscal 2026 [12] Investment Outlook - GitLab's strong enterprise demand, rapid AI-driven innovation, and deepening cloud partnerships highlight its competitive edge and potential for sustained growth [13]

Core Viewpoint - GitLab's share price has declined significantly due to increasing competition in the AI-driven code generation market, particularly from Microsoft's GitHub, alongside macroeconomic challenges and a shift towards agentic AI capabilities [1][2][3]. Company Performance - GitLab shares have lost 27.1% year to date, underperforming the broader Zacks Computer & Technology sector's 21% decline and the Zacks Internet Software industry's 18.3% drop [1]. Competitive Landscape - The competition in the AI-driven code generation space is intensifying, with GitHub's AI-powered coding assistant, GitHub Copilot, gaining traction and reinforcing Microsoft's dominance in the developer tools market [2]. - Persistent macroeconomic headwinds and the rapid shift towards agentic AI capabilities present growing challenges for GitLab [3]. Product Strengths - GitLab's robust DevSecOps platform, including GitLab Ultimate, GitLab Dedicated, and GitLab Duo, has driven customer adoption and retention, enhancing security, scalability, and AI-driven automation [4]. - GitLab Ultimate, the flagship product, accounted for 50% of the company's Annual Recurring Revenues as of the fourth quarter of fiscal 2025, highlighting its importance in revenue growth [6]. - The introduction of GitLab Duo, an AI-powered assistant, aims to improve software development workflows and developer productivity [7]. Innovation and Development - GitLab's Duo Workflow product, which focuses on AI-driven software development, entered private beta in the fourth quarter of 2024, leveraging Generative AI to enhance the software development lifecycle [8]. Strategic Partnerships - GitLab's partnerships with leading cloud providers, including Amazon Web Services and Zscaler, enhance the platform's scalability and deployment capabilities, strengthening its competitive position in the DevSecOps market [9]. - The integration of GitLab Duo with Amazon Q aims to improve AI-driven DevSecOps on AWS, enhancing security and efficiency [10]. Future Outlook - Despite challenges such as rising competition and cautious enterprise spending, GitLab's strong AI-driven DevSecOps platform, strategic partnerships, and growing enterprise adoption support long-term growth [11].