What Happened?
Shares of automation software company UiPath (NYSE:PATH) jumped 6.8% in the morning session after the company reported a "beat and raise" quarter. First quarter 2025 (fiscal 2026) results exceeded Wall Street's revenue and adjusted operating income expectations.
Annualized recurring revenue rose 12% y/y, reflecting strong customer retention and growing demand for its new agentic automation platform.
Looking ahead, it lifted its full-year revenue guidance, which is encouraging. Overall, we think this was a solid quarter with some key areas of upside.
After the initial pop the shares cooled down to $12.99, up 0.2% from previous close.
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What The Market Is Telling Us
UiPath’s shares are quite volatile and have had 17 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was about 1 year ago when the stock dropped 35.1% on the news that the company reported weak first quarter earnings results and lowered its full-year revenue guidance, falling significantly short of Wall Street's expectations.
The company noted it saw "increased deal scrutiny and lengthening sales cycles for large multi-year deals." In addition, it observed growth deceleration in the second half of March and into April due to a challenging macroeconomic environment and a change in customer behavior, which likely drove the weak guidance.
Lastly, the company said that the investments made to reaccelerate growth fell short of expectations, making it less nimble when responding to customer needs, and creating short-term pressure on operating margins.
Furthermore, CEO Rob Enslin unexpectedly resigned. Following the disappointing results, multiple Wall Street analysts downgraded the stock's rating. For example, Bank of America downgraded the stock from Buy to Neutral and lowered the price target from $30 to $16, highlighting the weakening conviction in the near term given the execution and growth challenges. Overall, this was a weak quarter for the company, providing little reason for investors to stay positive.
UiPath is up 0.4% since the beginning of the year, but at $12.99 per share, it is still trading 16.2% below its 52-week high of $15.50 from December 2024. Investors who bought $1,000 worth of UiPath’s shares at the IPO in April 2021 would now be looking at an investment worth $188.19.
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