GitLab Inc. Q3 FY2026 earnings call

Bill Staples reported strong third quarter results. AI has expanded the total addressable market. GitLab has extended its end - to - end platform and Duo Agent platform is on track for general availability in the coming weeks. GitLab was named a leader in Gartner Magic Quadrants for DevOps and AI coding assistance. Key growth objectives include adding more new paying customers, helping customers realize platform value more quickly, and accelerating customer - focused innovation. Product innovations include redesigned interface, new intelligent pipeline repair flow, new security capabilities, and the AI Catalog on DuoAgent platform.

Revenue grew 25% year over year to $244 million. Non - GAAP operating margin reached 18%. GitLab Ultimate is now 54% of total ARR. Dedicated revenue grew 36% year over year, accounting for 31% of total revenue. Dollar - based net retention rate (DBNRR) was 119%. Total RPO grew 27% year over year to $1 billion, while CRPO grew 28% year over year to $659 million. Non - GAAP gross margin was 89% for the quarter. Non - GAAP operating income was $43.7 million in Q3, compared to $25.9 million in Q3 of last year. Q3 FY 2026 adjusted free cash flow was $27.2 million, with an adjusted free cash flow margin of 11.1%.

For FY '26, expect total revenue of $946 million to $947 million, representing a growth rate of approximately 25% year over year. Expect non - GAAP operating income of $147 million to $148 million and non - GAAP net income per share of 95¢ to 96¢ assuming 171 million weighted average diluted shares outstanding. SMB softness and US public sector shutdown effects are factored into the guidance. Fourth quarter guidance reflects prudence due to SMB weakness and government shutdown lingering effects.

Softness in the US public sector offset part of the performance. Slower decision - making related to the government shutdown created headwinds. The Jihoo joint venture expenses are a factor, with forecasted $16 million of expenses related to Jehu for FY 2026 compared with $13 million from last year.

Q: On the fourth quarter guide and subscription revenue growth, A: Guidance reflects best view of business today with prudence for SMB weakness and go - to - market disruption.

Q: On first order business progress, A: Hired global leader for new business, hiring ramp will take couple of quarters with results in back half of FY 2027. Product - led growth early results promising.

Q: On Fed impact, A: PubSec is about 12% of ARR, saw disruption from shutdown and ongoing effects, partnered with customers to overcome challenges.

Q: On Duo monetization, A: Duo products monetized with seat - based add - ons, early stages, moving to usage - based pricing with GA.

Q: On SMB weakness, A: SMB is small share, about 8% of ARR, price sensitivity and license usage scrutiny, weakness continues into Q4.

Q: On Duo agent platform GA readiness, A: Criteria include reliability, performance, stability, quality of agent responses, security standards.

Q: On NRR mix, A: Q3 seats contributed slightly over 80% of mix, yield about 10%, remaining from up - tiering, disclosure will become less relevant.

Q: On pricing for higher - end plans, A: Plan to capture through usage, moving to usage - based pricing with pre - commit upfront for usage.

Q: On deployment activity from AI, A: Elevated activity from mix of customer development for AI and better productivity from AI tools.

Q: On Duo Agent platform impact, A: Brings value across software life cycle, helps with planning, bug triage, code authoring and review, security analysis.

Q: On SMB softness cause, A: Segment - specific weakness, price sensitivity, license usage scrutiny.

Q: On customer AI tool usage, A: Pervasive use, customers use multiple AI tools, GitLab's approach is complementary.

Q: On GitLab differentiation vs others, A: Context from unified platform and tools to action on behalf of users, which large AI vendors can't match. Closing, A: Committed to responsible growth, Duo Agent platform to evolve business model, speaking at UBS conference.