GitLab Q1 Revenue Jumps on AI Demand

GitLab Inc. (NASDAQ:GTLB) reported Q1 FY2026 results on June 10, 2025, posting revenue grew 27% year-over-year to $214.5 million and a non-GAAP operating margin reached 12%. The earnings call highlighted accelerated AI adoption, strategic customer wins, record adjusted free cash flow, and reaffirmed its guidance of approximately 24% top-line growth for FY2026, delineating critical platform initiatives and market expansion opportunities for long-term investors.

Accelerated AI-Driven Product Adoption and Key Customer Validation

GitLab Duo, the company's suite of AI-driven development capabilities, saw the number of first-time Duo customers rose 35% quarter-over-quarter, while notable wins included Highmark Health, the FBI, NatWest, and Volkswagen Digital Solutions. 52% of total Annual Recurring Revenue (ARR) now comes from customers using the Ultimate tier, indicating growing enterprise demand for advanced security and AI features.

"Momentum with Git Lab Duo continues to grow, particularly with Duo Enterprise. In Q1, the number of customers who purchased GitLab Duo for the first time increased 35% quarter-over-quarter. We also closed some great expansion deals with existing customers. For example, Highmark Health and"
— William Staples, CEO

Rising penetration of AI-powered solutions and premium-tier adoption signals deeper platform entrenchment, enhancing GitLab’s competitive moat as enterprise DevSecOps requirements intensify.

Sustained Operating Leverage and Record Free Cash Flow

The company generated $104.1 million in adjusted free cash flow with a 49% free cash flow margin, marking an all-time quarterly high, while non-GAAP operating income reached $26.1 million, compared to a $3.8 million loss in the same period last year. SaaS revenue, now 30% of total, increased 35% year-over-year due to strong adoption of GitLab Dedicated, further non-GAAP gross margin of 90%.

"We generated $104.1 million in adjusted free cash flow in Q1, a record adjusted free cash flow margin of 49%.Non-GAAP operating margin was 12.2% compared to negative 2.3% in Q1 of last year, an increase of approximately 1,400 basis points year-over-year."
— Brian Robbins, CFO

Efficient scaling of GitLab’s business model, characterized by high margins and effective cost control, provides substantial financial flexibility for continued AI investment and reduces medium-term execution risk.

Strategic Expansion of AI Platform Capabilities and Ecosystem

High-profile integrations, notably the launch of GitLab Duo with Amazon Q and expanding agentic AI features, were supported by AI-assisted test generation accelerated by more than 35% during R+V Insurance’s recent Duo Enterprise evaluation. April set an all-time record for customer-driven contributions, highlighting a robust community innovation engine that aligns product enhancements tightly with enterprise needs.

"In April, we launched GitLab Duo with Amazon Q, a strategic integration that embeds Amazon Q's autonomous software development agents directly within the GitLab DevSecOps platform…Our private beta satisfaction metrics are really compelling. 82% of surveyed users already classify themselves as either satisfied or very satisfied with Workflow's capabilities, validating our strategic investment in agentic software development."
— William Staples, CEO

Ongoing investment in native AI workflows and broad ecosystem interoperability ensures GitLab’s continued relevance as development environments evolve, and positions the company as a foundational, future-proofed DevSecOps platform amid intensifying automation trends.

Looking Ahead

Management guided Q2 FY2026 total revenue to $226 million to $227 million and full-year FY2026 revenue to $936 million to $942 million (both implying 24% year-over-year growth), with non-GAAP operating income for FY2026 projected at $117 million to $121 million and non-GAAP net income per share of $0.74 to $0.75 on 172 million shares for FY2026.

GitLab remains on track to publicly launch Duo Workflow (agentic AI) this winter and will detail further product innovation at the GitLab 18 launch event on June 24. No incremental changes to guidance philosophy or macroeconomic assumptions were provided during the call.

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This article was created using Large Language Models (LLMs) based on The Motley Fool's insights and investing approach. It has been reviewed by our AI quality control systems. Since LLMs cannot (currently) own stocks, it has no positions in any of the stocks mentioned. The Motley Fool has positions in and recommends GitLab. The Motley Fool has a disclosure policy.