GitLab Inc. · Q2 FY2027

The quarter in short

Revenue $286M, up 21.3% year over year and 8.4% on the quarter. Non-GAAP EPS $0.24, up 0.0% year over year and 4.3% on the quarter. GAAP EPS -$0.22. Free cash flow -$3M. Non-GAAP EPS beat consensus by 33%. Rule of 40 score +20.

What we learned

1. The full-year raise is this quarter, not the second half. Guidance went up $16.0 million at the midpoint against a $13.3 million beat; the implied second half rose $2.7 million, from $577.8 million to $580.6 million, or 0.5%.
2. The margin guided down in the quarter of the cuts came in at 14.9%. Non-GAAP operating income was $42.566 million against a guided $30–32 million — then the third quarter is guided back to 12.4–13.2%.
3. Up to $13 million of this year's revenue will be deferred by Flex, and none of it is in the raised guide. The same contract is excluded from current RPO entirely, worth a three-point headwind to the 20% growth reported.
4. Subscription cost of revenue grew 75.9% against 21.5% subscription revenue. Subscription gross margin fell 89.77% to 85.19%; the CEO attributes it to SaaS mix, not inference, since most customers pay their token costs outside the GitLab contract.
5. The seven-quarter slide in the two base metrics stopped. Customers above $5,000 of ARR grew 8% against 7% in April, and net retention held at 117% — though the whole-percent disclosure cannot show the "sequential acceleration" management claimed.

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