UiPath (PATH, Financial) experienced a decline in its stock price today, despite surpassing expectations in both revenue and earnings for the fourth quarter of January and projecting significant revenue growth for FY25. The company's forecast for the first quarter of April is below consensus, attributing this to a seasonal trend that peaks in the fourth quarter. Additionally, despite the integration of Generative AI into its offerings, UiPath has not seen a substantial growth impact from these technologies.
The company's revenue growth is expected to slow down in FY25, with projections between $1.555 billion and $1.560 billion, marking a 19% year-over-year increase at the midpoint. This is a decrease from the 24% growth seen in FY24. The forecast for FY25 Annual Recurring Revenue (ARR) is set between $1.725 billion and $1.730 billion, indicating an 18% year-over-year growth, which is also a slowdown from the 22% increase at the end of FY24.
UiPath remains optimistic about the future of AI in business transformations, despite the current phase of experimentation by customers with Generative AI. The company is investing in new AI capabilities, expecting its latest Autopilot software version to boost customer productivity significantly.
However, the company faces macroeconomic challenges that affect new deals and limit IT budgets, especially at the lower end of the market. Despite these challenges, UiPath's outlook takes into account the uncertain economic environment, which may cause concern among investors.
- Q4 highlights include UiPath achieving its first quarter of GAAP profitability and a 47% year-over-year increase in profitability to $0.22 per share, adjusting for non-recurring items.
- The company saw a significant increase in customers, with a 26% year-over-year growth in customers with $1 million or more in ARR, and a 50% increase in customers with $5 million or more in ARR. This led to a 31.1% acceleration in revenue growth to $405.25 million, surpassing forecasts.
- UiPath's partnership with SAP SE (SAP, Financial) is progressing well, with positive momentum and pipeline generation across all geographies.
Despite a positive start to the trading session, UiPath's stock reversed its gains as investors focused on some less favorable trends, leading to a negative performance for the year. The company's Q4 report had many positives, and while AI is still in the experimentation phase, its integration into customer workflows over time could significantly boost revenue growth.
