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Solid earnings beat and strong revenue forecast sends UiPath’s stock higher

Shares of UiPath Inc. were trading slightly higher today after the automation software provider delivered better-than-expected fourth-quarter results and delivered strong guidance for the new fiscal year.

The company reported a net profit of $33.9 million in the quarter, up from a loss of $27.6 million in the same period one year earlier. Earnings before certain costs such as stock compensation came to 22 cents per share, topping the analyst consensus estimate of 16 cents per share, while revenue grew by an impressive 31%, to $405 million, comfortably beating the Street’s forecast of $384 million.

UiPath also reported annual recurring revenue at the end of the quarter of $1.464 billion, up 22% from a year earlier, above its own forecast range of $1.45 billion to $1.455 billion.

The results were initially met with strong enthusiasm, as UiPath’s stock shot up more than 8% in extended trading, though some of those gains were later reversed. The stock was still up 2% at the time of writing.

UiPath is considered a leader in the market for robotic process automation software. It sells tools that help companies reduce costs and operational errors by automating many repetitive work-related tasks, such as data entry. The platform is powered by artificial intelligence models that learn how employees perform common tasks in their business applications. Those models then build software “robots” that can replicate those workflows, meaning they no longer need to be done manually.

UiPath Chief Executive Rob Enslin (pictured) said in a statement that the company’s impressive ARR growth underscores the meaningful outcomes its platform delivers to customers. “The combination of UiPath’s AI and automation is the strategic change enabler for our customers that makes any digital transformation easier and faster, while empowering customers to innovate, adapt more quickly, and grow,” he insisted.

In an interview with Barron’s, Enslin revealed that the company is seeing a lot of interest from enterprises that are keener than ever to invest in automation and AI. Its number of deals worth $5 million or more annually doubled from the same period one year earlier.

According to Enslin, the company has managed to capture a larger share of enterprise spending by adding more AI capabilities to its automation software. The new AI capabilities allow UiPath to deliver more value to customers, and that helps its bottom line too, as its AI software is sold on a consumption-based model, the CEO explained.

UiPath’s guidance for the current quarter wasn’t quite so hot, with the company forecasting revenue of $330 million to $335 million, some way below the Street’s target of $347 million. However, the company forecasts ARR of between $1.408 billion and $1.513 billion, which is ahead of the consensus estimate of $1.489 billion. It also forecast adjusted operating income of $55 million, ahead of the Street’s target of $52 million.

Officials said the projected revenue shortfall is a reflection of seasonal factors rather than any changes in its long term outlook, and it reassured investors with a more optimistic annual forecast. For fiscal 2025, UiPath sees revenue of between $1.555 billion and $1.56 billion, just ahead of the Street’s forecast of $1.53 billion. The company is also looking for full year ARR of between $1.725 billion and $1.73 billion, ahead of the Street’s target of $1.7 billion.

Photo: Google

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