GitLab Inc.

Good day everyone and welcome to today's GitLab third quarter fiscal year 2026 conference call. At this time all participants are in a view and listen only mode. Later you will have the opportunity to ask questions during the question and answer session. If you'd like to ask a question, please use the raise hand feature located in the menu at the bottom of your Zoom toolbar. In addition, please ensure your Zoom name reflects the full name and firm you are with. And if you're joining via phone, you may press star 9 to ask a question. Please note this call is being recorded, and it is now my pleasure to turn the conference over to Yao Chu.

Good afternoon. We appreciate you joining us for GitLab's third quarter fiscal 2026 financial results conference call. With me are Bill Staples, our CEO, and James Shen, our interim CFO. During this afternoon's call, we will provide an overview of the business, commentary on our third quarter results, and guidance for the fourth quarter and fiscal year 2026. Before we begin, I'll cover the safe harbor statement. I would like to direct you to the cautionary statement regarding forward-looking statements on page 2 of a presentation and in our earnings release issued earlier today, both of which are available under the Investor Relations section of our website. The presentation and earnings release include a discussion of certain risks, uncertainties, assumptions and other factors that could cause the results to differ from those expressed in any forward-looking statements within the meaning of the Private Securities Litigation Reform Act. As is customary, the content of today's call and presentation will be governed by this language. In addition, during today's call, we will be discussing certain non-GAAP financial measures. These non-GAAP financial measures exclude certain unusual or non-recurring items that management believes impact the comparability of the periods referenced. Please refer to our earnings release and presentation materials for additional information regarding these non-GAAP financial measures and the reconciliations to the most directly comparable GAAP measure. I will now turn the call over to Bill.

Bill? Thank you, Yao, and good afternoon, everyone. Thank you for joining us today. I'm pleased to report strong third quarter results. Revenue grew 25% year-over-year to $244 million, two points above our Q3 guidance. Non-GAAP operating margin reached 18%, a full five points above our Q3 guidance. It's my first anniversary as GitLab's CEO, and I wake up every day feeling incredibly lucky to build upon the foundation that Sid and team have created. When I first got here, I said three things. There has never been a better time to serve developers. We're in the early stages of how software gets transformed through AI. And GitLab sits at the heart of the software development lifecycle and has the best and most comprehensive platform to enable this transformation. My conviction in the company and our opportunity has only grown stronger. A year into this journey and hundreds of customer conversations later, I can confidently say that we are stronger today than even one year ago. We've built the foundation to deliver more value through AI in the coming year, architecting GitLab and DuoAgent platform to remain mission critical and delivering increasing value as LLMs and markets evolve. I truly believe there has never been a more exciting time to be a GitLab. We're seeing the rise of AI expand our total addressable market. AI has drastically reduced barriers to entry of software creation and is driving the marginal cost of code generation towards zero. However, software is more than just code. Software, with all its embedded business processes and sensitive data, is business critical. The global economy runs on software. Human lives rely on software. Businesses can't afford negligence in their quality assurance, security, compliance, or governance of their software development and delivery practice. I believe what we do becomes even more critical in a world where teams want to take advantage of agents to author code, given the non-deterministic nature of AI. For decades, I've watched my own teams and countless customer teams struggle to stay on top of bug backlogs, technical debt, and business requirements, all while innovating. The pattern is universal and long-standing. The tools for building software are technically pretty good, but things consistently break down wherever people and processes are required. GitLab has been solving this problem by providing teams an opinionated view with proven ROI. The key differentiator? We automate the end-to-end software delivery flow, including quality, security, compliance, and governance, in a single process flow as part of our unified platform. Ironically, as we've studied teams using agents and new AI tools, we see the familiar pattern. Agents act eerily like humans. Sometimes they follow prompts, but sometimes they don't. Sometimes they write secure code, but sometimes they don't. Why is this? Because LLMs will always be non-deterministic. It is the nature of the algorithms used to build them. and every business has unique requirements that LLMs simply can't guess. Even if LLMs become superior at code generation to humans, external validation of that code which will also be driven agentically with human oversight will be required to ensure they meet the complex human requirements of doing business. We believe LLMs will continue to improve in accuracy and cost but they will always require systems that can validate they are supporting complex business requirements. Let's take a look at how that shows up today. IDE tools like Cursor, Copilot, and Cloud Code have contributed to an explosion in code generation. The downstream effects are now clearly visible to us in our business. GitLab engagement has grown significantly across our GitLab.com SaaS customer base. In the first 10 months of 2025, key activity metrics, CI pipelines, deployments, and releases are up about 35% to 45% year over year, similar to what peers are seeing. For customers paying us more than 5K in ARR, usage proxies like deployments and CI pipelines on a per-seat basis are up 20-40% annually. Simply put, more code means more of a need for GitLab. Our 2025 Global Dev SecOps report shows that while AI accelerates coding, more code doesn't necessarily mean better outcomes. We call this the AI paradox. We believe long-term winners are not the vendors who can generate code the fastest, but those who can maximize the customer's ability to deliver high-quality, secure software to the consumers of their business and drive meaningful business outcomes through software. GitLab is in position to do that better than anyone else. Now, we've extended our end-to-end platform, which already powers full lifecycle actions for more than 50% of the Fortune 100, and hundreds of thousands of organizations across a hundred different countries around the world and now provide that same set of capabilities natively to agents along with shared context for both humans and agents. This not only facilitates greater trust and accuracy, but will help accelerate the end-to-end software delivery process required to win. Instead of just building new AI systems tools and agents to solve specific use cases, like our competition, We've extended our platform to provide intelligent orchestration across the software lifecycle, enabling our partners, customers, and ourselves to solve any engineering problem across the lifecycle. GitLab Duo agent platform is our answer to the AI paradox most companies are experiencing today as they adopt new AI tools and will be a driver of new revenue stream beyond seats. The context we have is rich. It includes semantic understanding of the code and dependencies across repositories, regular changes to it over time, quality assurance tests, planning and issue tracking and collaboration on those plans, security and compliance checks and build, integration and deployment pipelines, just to name a few. Our underlying platform becomes more valuable as the volume of code explodes, regardless of whether a human or agent made the change. I believe the primitives of code collaboration will prove to be powerful most, and with Duo Asian Platform, we're in a great position, even as LLMs improve and the market evolves. I'm pleased to share that Duo Asian Platform is on track for general availability in the coming weeks. Turning to the quarter, the highlights this quarter were continued strength in GitLab Ultimate, which is now 54% of total ARR, and was in 7 of our top 10 net ARR deals this quarter. Ultimate represents one of the best value propositions for companies who need a single DevSecOps platform. Ultimate drove expansions at customers like Indeed, SBI Securities, and Currys. We executed well on the initiatives we discussed last quarter that served to strengthen the foundation of the company. I'm pleased with the steady progress we're making on our first order build out and roll out of GitLab Duo Asian platform. We also saw stronger international results. Overall, sales cycles and win rates remain consistent. However, softness in the US public sector offset part of that performance. GitLab continues to be viewed as the preferred software factory and trusted partner to leading U.S. agencies, but slower decision-making related to the subsequent government shutdown created some new headwinds in the quarter. Our differentiated platform approach is seeing strong third-party validation as GitLab was named a leader in the 2025 Gartner Magic Quadrant for DevOps platforms for the third consecutive year, and a leader in the 2025 Gartner Magic Quadrant for AI coding assistance for the second consecutive year. Now let me turn to our key growth objectives. Our first objective is to add more new paying customers, especially in the mid-market and enterprise segments. We are starting to see some cases of AI mandates, catalyzing enterprises to look for a future-proof solution. GitLab's approach to a cohesive workflow on a unified platform across developer, security, and operations teams has never been more relevant. Mediametri, France's leading media measurement company, needed to accelerate their internal development processes and had an AI mandate to reduce maintenance costs. While they were already using a free version of GitLab for source code management, this first-order Ultimate and GitLab Duo win saw us replace seven different other tools out of the gate while maintaining ISO 27001 compliance. Duo will enable secure AI power development, allowing MediaMetri to deliver new measurement products and data analysis at a much faster pace. We won a landmark deal with a global consumer tech platform this quarter, thanks to our dedicated offering. They had grown frustrated after experiencing critical reliability issues with their incumbent source code management provider, This customer has over 5,000 developers, is well known for world-class engineering, and has exacting standards on reliability, responsiveness, and technical excellence. GitLab Dedicated was chosen to provide the environment for their most mission-critical code repositories, ensuring business continuity and operational resilience. While our mix of first-order versus expansion improved slightly this quarter, it's still not where I'd like it to be. We are expanding our go-to-market capacity and have hired a new business leader to build out our global first-order team with a focus on acquiring new logos. It's important to note that resourcing and ramping up this team will take time, but I believe the payoff will be worth the investment. Every new customer we win today matters, given their lifetime value. We are operating with urgency. We work every day to earn the trust of our customers, which is reflected in our best-in-class gross retention rates and demonstrated cohort growth across multiple cycles. We see a long runway for growth in our core of DevSecOps opportunity as our CAM continues to expand and our competitive position remains strong. We offer choice, neutrality, and openness in ways that others do not, and that message is resonating. Our competitors are actively choosing to limit choices for their customers in the form of hyperscaler infrastructure or self-managed versus SaaS options. In direct contrast, we recognize that every customer journey is different and make active efforts to meet our customers where they are. Our second objective is to help customers realize the value of our platform more quickly, thereby driving revenue expansion. Our biggest expansions this quarter share a compelling pattern. They're all spending on some form of AI tooling in their engineering org, but they continue to use GitLab as the backbone of their SDLC. We continue to see strong potential for up-tiering and attach within our existing customer base. which the following customer stories help illustrate. A leading financial SaaS provider for small businesses has been a happy GitLab customer since 2017. This quarter, they've created from premium to ultimate across almost 1,000 engineers. GitLab's approach to scanning the code at the point of commit before it ever leaves developers' hands, allows us to replace multiple fragmented security tools. K-Lab will help this customer reduce false positives, cut down manual overhead, and empower their developers with AppSec results immediately. A large European public sector organization expansion demonstrates the potential within our existing customer base. Like many large enterprises, they had multiple siloed deployments across different groups and 4,000 developers. This meant maintenance complexity and inconsistent developer experiences. After working closely with them for years across more than 120 stakeholders, they chose GitLab Dedicated and Duo this quarter as a foundation of a modern and secure SaaS-based software delivery platform. KitLab meets the highest customer standards in regulated industries and critical national infrastructure. Our third objective is to accelerate customer-focused innovation We continue to invest across three pillars, core DevOps, security, and AI. In core DevOps, we delivered a redesigned interface and a new intelligent pipeline repair flow that helps developers resolve issues faster, directly translating to increase the development velocity and reduce troubleshooting time. Security and compliance are mission-critical customer priorities as companies deploy AI toolkits and remain key drivers of ultimate adoption. We introduce new security capabilities, including static reachability analysis, secret validity checks, and diff-based scanning to bring security directly into the development process. The new Security Analyst Agent, also introduced this quarter, simplifies access to these sophisticated tools and can provide recommendations for engineers on where to focus. And with Duo Agent Platform, we launched the AI Catalog, a central place where teams can discover foundational GitLab Duo Agents best-in-class external agents like cloud, OpenAI Codex, Google Gemini CLI, as well as create, share, and collaborate their own custom-built agents for any software engineering task. Customer feedback has been strong. Many now tell us that GitLab is ahead of our peers in our vision and rapidly evolving capability. We closed our first few GitLab Duo Agent platform-based expansions this quarter, even before general availability. While our progress is rapid and early results are promising, we're at the very start of our journey on this massive opportunity. Pricing and packaging will likely be an iterative process as the platform matures and we discover the most effective ways to deliver value to our customers. And a reminder for any new investors, much of our customer base remains on self-managed solutions and may be slower to adopt some of these solutions. We'll be live streaming a product-specific event in February where more details will be made available. As the only pure-play, cloud and model-neutral independent public company delivering DevSecOps, we offer true independence. Build in the cloud you choose with the vendors and tools that you like best. while giving your engineers the very best possible experience. The world needs GitLab more than ever. I want to thank our team members for living our values and our mission, and to our customers for their trust, our partners for their support, and the broader GitLab community. Before I turn the call over, I also want to thank James Shen for his contributions during this period of transition at GitLab. He is one of the rock stars of this company and has done an amazing job rising to the occasion as interim CFO. I'm excited to welcome our new Chief Financial Officer, Jessica Ross, who will be starting in January. Jessica was most recently CFO of Front Door and has more than 25 years of experience in finance, accounting, and operational leadership at companies like Salesforce and Stitch Fix. You will all have an opportunity to get to know her in the coming months. With that, I'll turn it over to James.