On Thursday, Evercore ISI adjusted its outlook on UiPath Inc. (NYSE:PATH) shares, reducing the price target to $13 from the previous $27, while retaining an In Line rating.
The firm noted that the robotic process automation company faces near-term pressure due to a recent CEO change and strategic alterations to its go-to-market model. These factors are expected to place UiPath in a "show me" mode for an extended period.
The firm pointed out that the leadership change at UiPath is intended to initiate a significant cultural transformation, centering on customer focus and internal collaboration. Analysts believe that realigning sales compensation and stabilizing execution will be a multi-quarter effort.
Additionally, the company has attempted to mitigate risks in its guidance to reflect these transitions, though a challenging macroeconomic environment continues to impact confidence in future performance.
UiPath's second-quarter revenue guidance was set at $300 million to $305 million, a 5% increase, which falls short of the anticipated $342.3 million, or 19% growth forecasted by analysts.
Similarly, the company's second-quarter operating margin guidance is at breakeven, compared to the expected 12.8%.
For fiscal year 2025, revenue guidance was revised down to $1,405 million to $1,410 million, a 7.5% increase, against the previously estimated 19% growth, and operating margin expectations were adjusted to 10.3% from the 19% projected by analysts.
The firm also highlighted that UiPath's annual recurring revenue (ARR) guidance for the second quarter and fiscal year 2025 is $1,543 million to $1,548 million and $1,660 million to $1,665 million, respectively.
These figures represent an 18% and 14% year-over-year growth, which is below the 20% and 18% growth estimated by the Street. Moreover, UiPath's dollar-based net retention rate slightly declined to 118% from 119% in the prior quarter.
Despite these downward adjustments, the number of UiPath's large customers remained stable.
The count of customers generating over $1 million in ARR remained at 288 quarter over quarter, and the number of customers with $100k+ in ARR increased from 2,054 to 2,092. Additionally, the company repurchased 938,000 shares at an average price of $23.46 during the quarter.
InvestingPro Insights
As UiPath Inc. navigates through its leadership transition and strategic shifts, the real-time data from InvestingPro provides a nuanced perspective on the company's financial health. With a market capitalization of $10.48 billion, UiPath holds more cash than debt on its balance sheet, which is a reassuring sign of financial stability. This is complemented by an impressive gross profit margin of 85.09% in the last twelve months as of Q4 2024, indicating strong operational efficiency in generating earnings before interest, taxes, depreciation, and amortization.
Even though UiPath is not currently profitable, with a negative P/E ratio of -115.09, analysts are optimistic about the company's future, predicting profitability within the year. Furthermore, UiPath's liquid assets exceed its short-term obligations, showcasing its ability to cover immediate financial liabilities. These InvestingPro Tips can offer additional insights into the company's potential for growth and financial resilience. For those interested in deeper analysis, there are 5 additional tips available on InvestingPro.
Moreover, investors may find solace in the company's revenue growth, which stands at 23.57% for the last twelve months as of Q4 2024, indicating a robust capacity to increase sales. To access these insights and more, consider using the promo code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro.
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