GitLab reported Q2 FY2027 revenue of $286.3 million, up 21% year over year, with gross bookings reaching a company record. Quarterly net ARR growth exceeded 40%, driven by strong bookings and customer expansion, although this does not indicate total ending ARR grew by 40%.
Dollar-based net retention was 117%, down from 121% a year earlier, but management noted an underlying sequential improvement. Customers generating over $100,000 in ARR rose 17% to 1,571. Remaining performance obligations increased 20% to $744.7 million, while total RPO rose 16% to $1.2 billion, reflecting a substantial contracted revenue base.
Demand for larger deals strengthened. First orders more than doubled, first-order net ARR grew nearly 40%, and deals worth at least $500,000 increased by over 150%. The Ultimate tier accounted for 59% of ARR after growing roughly 35%.
AI is emerging as a growth driver. GitLab's Duo Agent Platform paid consumption run rate grew about 50% sequentially to exceed $40 million, compared to $15 million entering the quarter. The company noted this is an annualized measure and part of the increase came through GitLab Flex commitments.
GitLab Flex attracted more than 130 customers and over $20 million in commitments during its first six weeks, mostly at renewal. This model allows customers to use one commitment across seats, credits, and eligible consumption products, facilitating adoption of AI-driven offerings.
Cash generation remains a concern. Quarterly operating cash flow turned negative at $3.1 million, compared to positive $49.4 million a year earlier. However, six-month operating cash flow stayed positive at $146.1 million. The decline was largely influenced by accounts receivable, with collection timing impacting the quarterly performance.
GitLab's results demonstrate strong bookings, customer growth, and rising AI adoption, but the key challenge is converting this momentum into sustainable revenue growth and positive cash flow, ensuring durable financial performance beyond short-term gains.
