Shares of UiPath (PATH 26.72%) rocketed 26.7% on Friday, following the enterprise automation software company’s release on the prior afternoon of a better-than-expected report for the third quarter of fiscal 2024 (ended Oct. 31).
The stock’s steep rise is attributable to revenue and adjusted earnings exceeding Wall Street’s estimates, with the bottom-line beat a sizable one. Fourth-quarter revenue guidance, which was slightly stronger than analysts had expected, likely also provided a tailwind for the stock.
UiPath’s key numbers
| Metric | Fiscal Q3 2023 | Fiscal Q3 2024 | Change |
|---|---|---|---|
| Revenue | $262.7 million | $325.9 million | 24% |
| GAAP operating income | ($67.0 million) | ($55.8 million) | Loss narrowed 17% |
| GAAP net income | ($57.7 million) | ($31.5 million) | Loss narrowed 45% |
| Adjusted operating income | $18.0 million | $43.7 million | 143% |
| Adjusted net income | $26.7 million | $69.1 million | 159% |
| GAAP earnings per share | ($0.10) | ($0.06) | Loss narrowed 40% |
| Adjusted EPS | $0.05 | $0.12 | 140% |
Data source: UiPath. GAAP = generally accepted accounting principles. Fiscal Q3 2024 ended on Oct. 31, 2023.
Investors should focus on the adjusted numbers because they exclude one-time items.
Wall Street was looking for adjusted EPS of $0.07 on revenue of $315.6 million, so UiPath easily exceeded both expectations.
GAAP gross margin was 85%, up from 84% in the year-ago period. Adjusted gross margin was 87%, up from 86% in the third quarter of fiscal 2023.
In fiscal Q3, UiPath generated cash of $42 million running its operations, bringing its fiscal-year-to-date total cash flow from operations up to $153.5 million. This is a huge improvement from the first nine months of the prior fiscal year when the company used $104 million running its operations.
The company ended the period with cash, cash equivalents, and marketable securities of $1.82 billion, up from $1.76 billion in the year-ago quarter.
What happened with UiPath in the quarter?
- License revenue was $148.1 million, up 25% year over year.
- Subscription services revenue landed at $167.5 million, up 29%.
- Professional services and other revenue was $10.3 million, down 28%.
- Annualized renewal run-rate (ARR) grew 24% year over year to nearly $1.38 billion.
- Dollar-based net retention rate was 121%. This means that existing customers expanded their spending on the company’s services by an average of 21% over the last year. This is a very good result and suggests that customers are finding value in UiPath’s services.
What management had to say
Here’s what Co-CEO Ron Enslin had to say in the earnings release:
I am pleased with our strong third quarter results with ARR [annualized renewal run-rate] growing 24 percent year-over-year to $1.378 billion, driven by the team’s execution and the transformational results we deliver. My conversations with customers and partners validate the strategic role enterprise automation plays in digital transformation and I am excited about the investments we continue to make in AI [artificial intelligence] to further extend our market leadership.
Guidance
For the fourth quarter of fiscal 2024, management guided for revenue in the range of $381 million to $386 million. This would represent growth of 24% to 25% year over year. At the midpoint ($383.5 million), the outlook slightly exceeds the $382 million Wall Street had been projecting.
Moreover, the company expects the quarter’s adjusted operating income to be about $78 million, which would represent growth of approximately 13% year over year.
In short, UiPath turned in a robust quarter, with all key metrics moving solidly in the right direction. Investors had good reasons to send shares significantly higher on Friday.
Beth McKenna has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends UiPath. The Motley Fool has a disclosure policy.
