Here's our initial take on GitLab's (GTLB 1.48%) fiscal 2026 first-quarter financial report.
Key Metrics
| Metric | Q1 2025 | Q1 2026 | Change | vs. Expectations |
|---|---|---|---|---|
| Revenue | $169.2 million | $214.5 million | +27% | Beat |
| Earnings per share (adjusted) | $0.03 | $0.17 | +467% | Beat |
| Dollar-based net retention rate | 129% | 122% | -7 pps | n/a |
| Free cash flow (adjusted) | $37.4 million | $104.1 million | +178% | n/a |
Weak Guidance Overshadows Strong First Quarter
GitLab beat analyst expectations in the first quarter of fiscal 2026, reporting revenue of $214.5 million, up 27% year over year, and adjusted earnings per share of $0.17. Adjusted free cash flow nearly tripled from the prior-year period, and the company narrowed its GAAP operating loss considerably.
The company's dollar-based net retention rate, which measures how quickly existing customers are expanding spending, was a healthy 122% in the first quarter (but fell 7 percentage points year over year). The number of large customers spending at least $100,000 annually jumped 26% to 1,288, a sign that the company is winning more enterprise customers. The company announced GitLab 18 in May, the latest version of its DevSecOps platform that features built-in AI capabilities.
While GitLab's first-quarter results were solid, the company's outlook for the second quarter and the full year missed the mark. GitLab expects second-quarter revenue between $226 million and $227 million, slightly below the average analyst estimate. For the full fiscal year, the consensus analyst estimate is at the very high end of GitLab's guidance range of $936 million to $942 million.
Immediate Market Reaction
GitLab's outlook was only slightly worse than expected, but it was enough to send the stock lower in after-hours trading. Shares of GitLab tumbled in after-hours trading on Tuesday, down around 13% soon after the first-quarter report was released. With the company's outlook falling a bit short, solid first-quarter results weren't enough to make investors happy. Going into the report, GitLab stock was down about 14% year to date.
What to Watch
GitLab didn't miss expectations by all that much with its guidance, but given a tough macroeconomic environment, even a slight disappointment was enough to drive the stock lower. GitLab had success winning over large customers in the first quarter, and its AI-enabled GitLab 18 release could make its platform more compelling. Investors should tune in to GitLab's earnings call on Tuesday evening to see if management discusses whether and how customer behavior is changing in light of an uncertain economic environment.
