GitLab’s first quarter was marked by strong revenue growth and non-GAAP profitability that exceeded Wall Street expectations, yet the market reacted negatively. Management attributed the mixed sentiment to ongoing headwinds in the price-sensitive customer segment and higher-than-expected seat contraction, primarily due to customer layoffs and merger-related churn. CEO Bill Staples noted that these factors, along with macroeconomic uncertainty, tempered an otherwise solid enterprise performance and robust adoption of new AI-driven offerings.
Is now the time to buy GTLB? Find out in our full research report (it’s free for active Edge members).
GitLab (GTLB) Q1 CY2026 Highlights:
- Revenue: $264.2 million vs analyst estimates of $254.2 million (23.1% year-on-year growth, 3.9% beat)
- Adjusted EPS: $0.23 vs analyst estimates of $0.20 (12.3% beat)
- Adjusted Operating Income: $37.53 million vs analyst estimates of $33.13 million (14.2% margin, 13.3% beat)
- The company slightly lifted its revenue guidance for the full year to $1.12 billion at the midpoint from $1.11 billion
- Management raised its full-year Adjusted EPS guidance to $0.80 at the midpoint, a 3.2% increase
- Operating Margin: -6%, up from -16.1% in the same quarter last year
- Net Revenue Retention Rate: 117%, down from 118% in the previous quarter
- Annual Recurring Revenue: $1.00 billion (21.7% year-on-year growth, beat)
- Billings: $249 million at quarter end, up 12.1% year on year
- Market Capitalization: $5.25 billion
While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From GitLab’s Q1 Earnings Call
- Matthew Hedberg (RBC): Asked about competitive positioning and win rates versus GitHub. CEO Bill Staples noted an uptick in enterprise adoption and highlighted reliability and cloud-neutral architecture as differentiators, but cautioned that infrastructure decisions remain slow-moving at scale.
- Oscar Saavedra (Morgan Stanley): Inquired about increased conservatism in forward guidance amid macro uncertainty and restructuring. CFO Jessica Ross explained that guidance reflects risk from customer churn, layoffs, and potential execution disruption.
- Radi Sultan (UBS): Queried monetization of nontechnical user cohorts. Staples responded that seat-based pricing is extended to new user types, and management believes this will benefit both seat and agent platform models.
- Ethan Weeks (Piper Sandler): Sought clarity on partnerships with AI labs and potential competitive threats. Staples emphasized GitLab’s open-source leadership and enterprise reach as reasons AI labs chose partnership over competition.
- Matt Calitri (Needham): Asked how restructuring savings would be reinvested and how ROI will be measured. Ross noted reinvestment in people, R&D, and process improvements, while stressing a disciplined approach to capital allocation and risk.
Catalysts in Upcoming Quarters
Looking forward, the StockStory team will be focused on (1) the pace of adoption and monetization for GitLab Duo Agent platform and the impact of AI-driven workflows, (2) the effectiveness of the Act 2 restructuring in supporting operational agility and innovation, and (3) the company’s ability to sustain enterprise customer growth despite macro and customer-specific pressures. The rollout of GitLab Flex and updates on cloud migration trends will also warrant close attention.
GitLab currently trades at $31.10, down from $31.82 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free).
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