Executive Summary
GitLab’s QQ2 2025 quarter delivered a resilient topline with 31% year-over-year growth to $182.6 million, marking another step in the company’s transition toward a higher mix of SaaS and AI-enabled subscription revenue. The non-GAAP operating margin expanded meaningfully to 10% (up ~1,300 bps YoY), supported by operating leverage as revenue grew >30% while keeping spend disciplined. The company generated $11.7 million of cash from operations and $10.8 million in adjusted free cash flow, contributing to a robust net cash position of roughly $438.3 million at quarter-end, underscoring financial flexibility as GTLB scales.
Management stressed AI adoption as a core growth driver, highlighted by Duo’s impact on productivity and deal sizes, and cited Gartner and Forrester research that frame a multi-year transition toward AI-enabled DevSecOps. Notable business momentum included DBNRR of 126%, 9,314 customers with ARR ≥ $5,000 (up ~19% YoY), and 1,076 customers with ARR ≥ $100,000 (up ~33% YoY), with Ultimate representing 47% of total ARR. The SaaS component now comprises 28% of revenue, up from prior periods, with SaaS revenue up 46% YoY.
Guidance reiterates solid growth trajectory: Q3 revenue of $187–$188 million ( +25% to +26% YoY ) and full-year revenue guidance of $742–$744 million (+~28% YoY), with non-GAAP operating income of roughly $19–$20 million in Q3 and $55–$58 million for the year. The company also provided JiHu expense expectations for FY25, reflecting ongoing deconsolidation efforts. Investors should monitor AI adoption velocity, the sustainability of booking/renewal mix (especially in Enterprise >$100k segments), the progression of Duo adoption within Ultimate customers, and the impact of pricing actions on unit economics over the back half of FY25 and into FY26.
Key Performance Indicators
QoQ: 123.70% | YoY:125.86%
QoQ: 123.17% | YoY:124.58%
Key Insights
Revenue: $182.584 million (+30.8% YoY; +7.9% QoQ). Gross profit: $161.214 million; gross margin ~88.3%.
Non-GAAP gross margin: 91%.
Operating income (GAAP): -$41.005 million; EBITDAR: -$21.? (note: EBITDAR not provided as a standalone GAAP figure in the summary). Non-GAAP operating income: $18.2 million; non-GAAP operating margin: 10%.
Net income: $12.949 million; net income margin: ~7.1%; EPS (GAAP): $0.0811; diluted EPS: $0.0778; weighted average diluted shares: 166.346 million.
DBNRR: 126%.
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Financial Highlights
Revenue: $182.584 million (+30.8% YoY; +7.9% QoQ). Gross profit: $161.214 million; gross margin ~88.3%.
Non-GAAP gross margin: 91%.
Operating income (GAAP): -$41.005 million; EBITDAR: -$21.? (note: EBITDAR not provided as a standalone GAAP figure in the summary). Non-GAAP operating income: $18.2 million; non-GAAP operating margin: 10%.
Net income: $12.949 million; net income margin: ~7.1%; EPS (GAAP): $0.0811; diluted EPS: $0.0778; weighted average diluted shares: 166.346 million.
DBNRR: 126%.
ARR ≥ $5,000 cohort: 9,314 (up ~19% YoY).
ARR ≥ $100,000 cohort: 1,076 (up ~33% YoY).
RPO: $747.9 million (up 51% YoY); cRPO: $475.0 million (up 42% YoY).
SaaS revenue share: 28% of total revenue; SaaS YoY growth: 46%.
Cash flow: Net cash provided by operating activities $11.7 million; free cash flow $10.8 million; cash at end of period $438.6 million; net debt: -$438.3 million.
Capex: $0.851 million; free cash flow conversion and operating cash flow to revenue ratio reflect high-quality growth mix.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
182.58M |
30.81% |
7.92% |
| Gross Profit |
161.21M |
29.09% |
7.18% |
| Operating Income |
-41.01M |
24.14% |
22.09% |
| Net Income |
12.95M |
125.86% |
123.70% |
| EPS |
0.08 |
124.58% |
123.17% |
Key Financial Ratios
operatingProfitMargin
-22.5%
operatingCashFlowPerShare
$0.07
freeCashFlowPerShare
$0.07
priceEarningsRatio
157.93
Management Commentary
Key takeaways from the earnings call and management discussion:
- Growth and AI focus: Sid Sijbrandij emphasized the ongoing AI-enabled value of the DevSecOps platform, noting that customers are prioritizing AI integration across the lifecycle, not just coding. He cited Gartner leadership in AI Code Assistants and Gartner’s DevOps MQ and highlighted the Tensor of AI-driven benefits (e.g., up to 90% reduction in toolchain operations time and 50% faster lead time via GitLab Duo).
- Robust financials and leverage: Brian Robins highlighted >30% topline growth with material operating margin expansion (non-GAAP margin of 10%), driven by disciplined resource allocation and higher mix of SaaS/Ultimate deployments. He also underscored strong unit economics with improving ARR quality and DBNRR stability at 126%.
- Customer success and enterprise momentum: The call stressed large-customer adoption (e.g., 1,076 customers with ARR ≥$100k; 7 of the 10 largest deals were Ultimate purchases) and Enterprise-grade offerings like GitLab Dedicated and FedRAMP Moderate progress, including wins with customers like Barclays, F5, KeyBank, and NOAA.
- Guidance and JiHu update: The company reaffirmed FY25 guidance with Q3 revenue of $187–$188 million and full-year revenue guidance of $742–$744 million, with JiHu expenses forecast at about $14 million for FY25 as deconsolidation efforts continue. Management signaled confidence in their go-to-market strategy and AI-driven ROI tailwinds, while acknowledging the macro caution moderating near-term spending.
"Second quarter revenue reached $182.6 million, an increase of 31% from Q2 of the prior year."
— Sid Sijbrandij
"This quarter's results validate the value that our customers get from our integrated platform."
— Brian Robins
Forward Guidance
Analysis of future outlook and achievability of guidance:
- Revenue trajectory: Q3 guide implies 25–26% YoY growth, consistent with a continued strong demand environment for DevSecOps platforms, bolstered by AI-enabled productivity gains and toolchain consolidation. Full-year growth around 28% aligns with the company’s mid-teens to low-30s growth profile observed historically as customers scale with Ultimate and Duo.
- Margin trajectory: Non-GAAP operating margin target of 55–58 million for FY25, despite ongoing investments in GTM leadership and product development (including Duo’s expansion and offline model work). The company’s commentary on improving unit economics and efficient mix (SaaS and Ultimate) supports the achievability of these targets.
- AI contribution: Management noted that AI contributions (Duo adoption and lifecycle AI tooling) are runway-limited in the near term, with expectations for material uplift beginning FY2026 and beyond. The company’s 3x plan vs. internal targets for AI-related revenue implies upside potential should AI initiatives accelerate.
- JiHu deconsolidation: The FY25 modeling assumes approximately $14M of JiHu-related expenses, with timing and likelihood uncertain. Investors should monitor any deconsolidation progress, as it could meaningfully affect reported revenue and cost structure.
- Key risk factors to monitor: macro/geopolitical volatility affecting tech capex, AI model performance and security/compliance requirements across customers, renewal risk within large accounts, and potential competition from hyperscalers who are rapidly expanding AI-enabled capabilities. Overall the guidance remains reasonable given the current demand environment and GTLB’s unique platform advantages.