GitLab Inc. posted third‑quarter fiscal 2026 revenue of $244.4 million, a 25% year‑over‑year increase that reflects a stronger mix of higher‑margin SaaS and dedicated subscriptions. The growth is driven by a 30% rise in enterprise‑level contracts and a 15% uptick in public‑sector revenue, offsetting a modest decline in SMB‑segment sales that were pressured by broader economic uncertainty.
The company reported a GAAP loss of $0.05 per share but delivered a non‑GAAP earnings per share of $0.25, beating the consensus estimate of $0.20 by $0.05 (a 25% beat). The earnings beat is largely attributable to disciplined cost management and the higher‑margin mix, which lifted operating income to $43.7 million from $25.9 million a year earlier. The GAAP loss narrowed to $12.4 million from $28.7 million, reflecting a 45% reduction in operating expenses as the company scales its platform.
Operating income expansion translated into a non‑GAAP operating margin of 18%, up from 13% in Q3 FY2025, and an adjusted free cash flow of $27.2 million, a 180% increase over the $9.7 million reported a year ago. The margin lift is driven by higher gross margins (89% vs. 88% YoY) and improved utilization of shared infrastructure, while the free‑cash‑flow gain reflects a 20% reduction in capital expenditures on data‑center expansion.
For the fourth quarter and full fiscal year, GitLab raised its revenue guidance to $251–$252 million for Q4 and $946–$947 million for the year, and lifted non‑GAAP diluted net income per share to $0.22–$0.23 for Q4 and $0.88–$0.89 for the year. The guidance shift signals management’s confidence in sustaining growth momentum, though the projected 19% Q4 growth rate represents a deceleration from the 25% YoY growth seen in Q3. The company also confirmed the appointment of Jessica Ross as chief financial officer, effective January 15, 2026, underscoring a focus on financial discipline as the platform scales.
CEO Bill Staples highlighted the company’s AI‑native DevSecOps platform, noting that “AI has drastically reduced barriers to entry of software creation and is driving the marginal cost of code generation towards zero.” He added that the Duo Agent platform is on track for general availability, while acknowledging “softness in the U.S. public sector offset part of our international sales.” CFO James Shen emphasized that the company is “investing strategically while delivering free cash flow” and that the 10,475 customers with ARR above $5,000 now account for over 95% of total ARR, illustrating a concentration on high‑value accounts.
Investors reacted cautiously to the guidance, focusing on the conservative outlook for Q4 and the full year. The market’s attention to the 19% growth projection and the slight decline in net dollar retention to 119% reflects a concern that the company’s momentum may slow, despite the earnings beat and strong cash‑flow generation.
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