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UiPath (NYSE:PATH) Q3 Sales Beat Estimates, Stock Soars

StockStory - Thu Nov 30, 2023

PATH Cover Image

Automation software company UiPath (NYSE:PATH) reported results ahead of analysts' expectations in Q3 FY2024, with revenue up 24% year on year to $325.9 million. The company expects next quarter's revenue to be around $383.5 million, in line with analysts' estimates. It made a GAAP loss of $0.06 per share, improving from its loss of $0.10 per share in the same quarter last year.

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UiPath (PATH) Q3 FY2024 Highlights:

  • Revenue: $325.9 million vs analyst estimates of $315.6 million (3.3% beat)
  • ARR: $1.38 billion vs. analyst estimates of $1.36 billion (1.1% beat)
  • EPS (non-GAAP): $0.12 vs analyst estimates of $0.07 ($0.05 beat)
  • Revenue Guidance for Q4 2024 is $383.5 million at the midpoint, roughly in line with what analysts were expecting (although ARR guide beat)
  • Free Cash Flow of $41.17 million, similar to the previous quarter (beat)
  • Gross Margin (GAAP): 84.7%, up from 83.7% in the same quarter last year (beat vs. expectations of 84.3%)

“I am pleased with our strong third quarter results with ARR growing 24 percent year-over-year to $1.378 billion, driven by the team’s execution and the transformational results we deliver,” said Rob Enslin, UiPath Co-Chief Executive Officer.

Started in 2005 in Romania as a tech outsourcing company, UiPath (NYSE:PATH) makes software that helps companies automate repetitive computer tasks.

Automation Software

The whole purpose of software is to automate tasks to increase productivity. Today, innovative new software techniques, often involving AI and machine learning, are finally allowing automation that has graduated from simple one- or two-step workflows to more complex processes integral to enterprises. The result is surging demand for modern automation software.

Sales Growth

As you can see below, UiPath's revenue growth has been strong over the last two years, growing from $220.8 million in Q3 FY2022 to $325.9 million this quarter.

UiPath Total Revenue

This quarter, UiPath's quarterly revenue was once again up a very solid 24% year on year. On top of that, its revenue increased $38.61 million quarter on quarter, a strong improvement from the $2.28 million decrease in Q2 2024. This is a sign of re-acceleration of growth and very nice to see indeed.

Next quarter, UiPath is guiding for a 19.5% year-on-year revenue decline to $383.5 million, a further deceleration from the 6.5% year-on-year decrease it recorded in the same quarter last year. Looking ahead, analysts covering the company were expecting sales to grow 19.7% over the next 12 months before the earnings results announcement.

Our recent pick has been a big winner, and the stock is up more than 2,000% since the IPO a decade ago. If you didn’t buy then, you have another chance today. The business is much less risky now than it was in the years after going public. The company is a clear market leader in a huge, growing $200 billion market. Its $7 billion of revenue only scratches the surface. Its products are mission critical. Virtually no customers ever left the company. You can find it on our platform for free.

Cash Is King

If you've followed StockStory for a while, you know that we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills. UiPath's free cash flow came in at $41.17 million in Q3, turning positive over the last year.

UiPath Free Cash Flow

UiPath has generated $241.7 million in free cash flow over the last 12 months, an impressive 20% of revenue. This high FCF margin stems from its asset-lite business model and strong competitive positioning, giving it the option to return capital to shareholders or reinvest in its business while maintaining a cash cushion.

Key Takeaways from UiPath's Q3 Results

With a market capitalization of $11.26 billion, a $1.82 billion cash balance, and positive free cash flow over the last 12 months, we're confident that UiPath has the resources needed to pursue a high-growth business strategy.

It was good to see UiPath beat analysts' ARR (annual recurring revenue), reported revenue, and non-GAAP operating profit expectations this quarter. Guidance for next quarter was fine, with ARR ahead while revenue and non-GAAP operating profit were roughly in line. Lastly, management highlighted that the most recent platform release "delivered scores of new capabilities that seamlessly translate the potential of AI into tangible action, accelerate productivity, spark innovation, and drive business outcomes for our customers." Overall, this quarter's results were solid and shareholders should feel optimistic. The stock is up 8.4% after reporting and currently trades at $21.41 per share.

So should you invest in UiPath right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.

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