Focus · Dubai Online
Shares of UiPath (PATH) sank despite the company reporting solid fiscal second-quarter results and raising its full-year guidance. UiPath began as a robotic process automation (RPA) company that lets customers use software bots to perform repetitive, rule-based tasks; however, it has been transforming itself in the age of artificial intelligence (AI). Its goal now is to be an orchestration platform that can combine AI with deterministic automation.
UiPath said its platform that can orchestrate both AI agents and bots was beginning to resonate with customers as it can give them better returns on their investments. It also believes that its strong roots in governance and reliability are a competitive advantage. Its AI momentum is evident in the quarter, with 18 of its 20 largest deals including an AI component. The company has been strengthening its go-to-market strategy, noting increased deal sizes and expanded customer engagement as evidence this is paying off. However, customer education remains important as it looks to explain how combining AI with deterministic automation can benefit enterprises.
For its fiscal Q2, revenue rose 13% year over year to $410 million, surpassing guidance of $395 to $400 million. Annualized recurring revenue (ARR) rose by 12% year over year to $1.94 billion. The company added $37 million in new ARR in the quarter, up 19% year over year. Dollar-based net retention came in at 109%, showing solid growth within its existing customer base, and gross retention was 97%. UiPath ended the quarter with 10,350 customers, down from 10,550 at the end of Q1, with attrition among smaller customers. Customers with $30,000 or more in ARR increased by 6%, and those with $100,000 or more in ARR grew by 10%. Customers with $1 million or more in ARR jumped 21% to 387.
Adjusted earnings per share (EPS) was steady at $0.15. The company generated $31 million in operating cash flow and free cash flow, ending the quarter with $1.41 billion in cash and marketable securities and no debt. UiPath forecast Q3 revenue in the range of $440 million to $445 million, representing growth of 8% at the midpoint. It guided for ARR between $1.992 billion and $1.997 billion. For the full year, it raised its revenue guidance to a range of $1.789 billion to $1.794 billion from an earlier outlook of $1.776 billion to $1.781 billion. It now expects ARR of $2.065 billion to $2.070 billion versus between $2.058 billion and $2.063 billion previously.
UiPath continues to see growth momentum, with 18 of its 20 largest deals including AI components. The company is also exploring outcome-based pricing models to increase customer value and adoption. It continues to add prebuilt vertical and outcome-oriented solutions to drive growth and serve as a gateway for its entire solution. Despite a 17% drop in stock price, UiPath’s valuation remains attractive, trading at a forward price-to-sales ratio of 4.4 times and an enterprise-value-to-forward-sales ratio of around 3.5 after subtracting its $1.4 billion in cash and marketable securities. The stock is considered a speculative AI investment due to its strong AI integration and recurring revenue model.
Source: The Motley Fool
