UiPath (NYSE:PATH) First Quarter Results: Revenues in line with expectations, but shares fall 29.9%

Automation software company UiPath (NYSE:PATH) announced results in line with analysts’ expectations in the first quarter of 2024, with revenue growing 15.7% year-over-year to $335.1 million. On the other hand, next quarter revenue forecasts of $302.5 million were less impressive, coming in 11.6% below analyst estimates. It posted non-GAAP earnings of $0.13 per share, an improvement over earnings of $0.11 per share in the same quarter last year.

Is now the time to buy UiPath? Find out with our full research report, which is free.

UiPath (PATH) Q1 CY2024 Highlights:

Income: $335.1 million vs. analyst estimates of $333 million (small increase)
EPS (non-GAAP): $0.13 vs. analyst estimates of $0.12 (up 11.7%)
Revenue forecasts for the second quarter of fiscal year 2024 is $302.5 million at the midpoint, below analyst estimates of $342.1 million
Business lowered its revenue forecast for the entire year from $1.56 billion to $1.41 billion at the midpoint, a decline of 9.6%.
Gross margin (GAAP): 83.5%, compared to 85% in the same quarter last year
Free cash flow amounted to USD 98.8 million, a decrease of 32.5% compared to the previous quarter
Annual fixed income: $1.51 billion at the end of the quarter, up 20.7% year-over-year
Maintaining net revenues: 118%
Market capitalization: $10.74 billion

“We are pleased to announce that ARR exceeded $1.5 billion in the first quarter of fiscal 2025, demonstrating our market-leading Business Automation platform and the strategic role automation plays in digital transformation,” said Daniel Dines, founder of UiPath and director of innovation.

Founded in 2005 in Romania as a technology outsourcing company, UiPath (NYSE:PATH) creates software that helps companies automate repetitive computing tasks.

Automation software

The purpose of the software is to automate tasks to increase productivity. Today, new and innovative software techniques, often involving artificial intelligence and machine learning, are finally enabling automation, which has moved from simple one- or two-step workflows to more complex processes that are integral to enterprises. The result is a growing demand for modern automation software.

Increase in sales

As you can see below, UiPath’s revenue growth has been strong over the past three years, rising from $186.2 million in Q1 2022 to $335.1 million this quarter.

This quarter, UiPath’s quarterly revenues again increased 15.7% year-over-year. However, the company’s revenue actually decreased by $70.14 million in the first quarter compared to an increase of $79.33 million in the fourth quarter of fiscal 2023. This situation is worth monitoring as UiPath sales have historically been seasonal, but management anticipates further revenue decline in the next quarter.

Guidance for the next quarter suggests that UiPath expects revenue to grow 5.3% year-over-year to $302.5 million, a slowdown from the 18.6% year-over-year growth it reported in the same quarter last year year. Looking ahead, analysts covering the company expected sales to grow 19.9% over the next 12 months ahead of the earnings announcement.

At StockStory, we certainly understand the potential of thematic investing. A variety of winners, from Microsoft (MSFT) to Alphabet (GOOG), Coca-Cola (KO) to Monster Beverage (MNST), could be identified as promising growth stories with a megatrend driving growth. In that spirit, we’ve identified a relatively invisible, profitable growth stock benefiting from AI developments, available for FREE via this link.

Money is everything

If you’ve been following StockStory for a while, you know that we place an emphasis on free cash flow. Why are you asking? We believe that cash is king at the end of the day and accounting profits cannot be used to pay bills. UiPath’s free cash flow was $98.8 million in the first quarter, up 35.9% year over year.

Over the last 12 months, UiPath generated $335.5 million in free cash flow, representing an impressive 24.8% of revenue. This high FCF margin is driven by an asset-based business model and strong competitive position, which gives the company the ability to return capital to shareholders or reinvest in its business while maintaining a cash cushion.

Key takeaways from UiPath’s first quarter results

We tried to find a lot of strong positives in these results. Revenue and EPS beat analyst estimates but lowered full-year revenue forecasts, falling well short of Wall Street expectations. The company noted that it has “increased transaction control and extended sales cycles for large multi-year deals.” Additionally, CEO Rob Enslin unexpectedly resigned; Founder and current Chief Innovation Officer Daniel Dines will re-assume the role of CEO on June 1, 2024. Overall, the results could have been better. The company’s earnings dropped 29.6% and are now trading at $12.88 per share.

UiPath may have had a difficult quarter, but does that actually create an investment opportunity right now? When making this decision, you need to take into account its valuation, business features, as well as what happened in the last quarter. We cover this in our full, practical research report, which you can read here – it’s free.