GitLab (GTLB) could see better growth if stronger bookings turn into revenue, sales investments life H2 results, and the Duo Agent Platform becomes a bigger revenue source, Morgan Stanley said in a note Wednesday.

The note said GitLab executed well in Q1, with revenue up 23% year over year to $264 million, helped by demand from enterprise, public sector and SaaS customers as demand signs improved, with gross bookings at the best level in four quarters, new customers up 30% and first orders at the highest level in 10 quarters.

GitLab's seat-based model still faces pressure from tech layoffs, customer seat cuts, and mergers and acquisitions activity, which led management to raise its fiscal 2027 outlook by less than the Q1 beat, and still assumes no major public sector rebound and no meaningful revenue from Duo Agent Platform, Morgan Stanley said.

Duo Agent Platform is an early positive sign because it could help GitLab move toward a mix of seat-based and usage-based revenue, though material contribution is more likely in fiscal 2028, according to the note.

Morgan Stanley kept its equal-weight rating for GitLab and raised its price target to $30 from $29, saying it is looking for clearer signs of lasting growth before becoming more positive.

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