UiPath Declines 14% Despite Upbeat Q4 Results

Enterprise automation software company UiPath, Inc. (NYSE: PATH) has reported better-than-expected results for the fourth quarter ended January 31, 2022. The solid results were on the back of robust growth witnessed in revenues.

However, shares of the company declined 14% to close at $24.99 in Wednesday’s extended trading session. The fall can be attributed to the muted guidance provided by the company, which also missed consensus estimates.

Revenue & Earnings

UiPath reported quarterly revenues of $289.7 million, up 39.4% year-over-year. Further, the figure surpassed the consensus estimate of $283.03 million. Licenses revenues (up 40.1% year-over-year) and subscription services revenues (up 37% year-over-year) accounted for 60% and 36% of the total revenues, respectively.

Earnings per share (EPS) for the quarter stood at $0.05, down 44.4% from the same quarter last year. The figure surpassed the consensus estimate of $0.03 per share.

Other Operating Metrics

Meanwhile, the company’s Annualized Renewal Run-rate (ARR) was $925.3 million, up 59% year-over-year, while net new ARR rose 72% from the prior year to $106.9 million. Its gross margin, however, declined from 91% in the previous year to 88%.

Outlook

For the first quarter, UiPath expects to post revenues in the range of $223 million to $225 million. The consensus estimate for the same stands at $243.1 million.

For the Fiscal Year 2023, the company forecasts revenue between $1.07 billion and $1.08 billion versus the consensus estimate of $1.16 billion.

Management Commentary

The CEO of UiPath, Daniel Dines, said, “The UiPath team delivered a strong finish to Fiscal Year 2022 with fourth quarter net new ARR reaching a record $107 million, an increase of 72 percent year-over-year. We believe this is a testament to our highly differentiated end-to-end platform. Our customers understand that automation is at the forefront of digital transformation and fundamental to driving efficiency, employee satisfaction, and strengthening customer relationships, all necessary to successfully navigate today’s complex operating environment and establish a sustainable competitive advantage.”

Stock Rating

The Wall Street community is cautiously optimistic about the stock and has a Moderate Buy consensus rating based on five Buys and two Holds. UiPath’s average price target of $51.86 implies that the stock has upside potential of 78.6% from current levels. Shares have declined 57.9% over the past year.

Negative Sentiment

TipRanks’ Stock Investors tool shows that investors currently have a Very Negative stance on PATH, as 4.4% of portfolios tracked by TipRanks decreased their exposure to PATH stock over the past 30 days.

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