Stocks Fall Wednesday as UiPath, Expensify Disappoint on Guidance

The stock market finally took a break on Wednesday from its string of big wins. Wall Street remained hopeful for favorable resolutions on key issues like inflation and the war in Ukraine, but that didn't stop the Dow Jones Industrial Average (^DJI 0.69%), Nasdaq Composite (^IXIC 1.59%), and S&P 500 (^GSPC 1.20%) from giving up some ground after an impressive rally over the past few weeks.

Data source: Yahoo! Finance.

High-growth stocks have had a particularly turbulent ride in recent months, and investors have hoped that earnings reports would confirm their long-term prospects for success. However, shareholders in UiPath (PATH 3.49%) and Expensify (EXFY -9.12%) didn't get everything they had wanted to see in the two companies' latest financial results. Below, we'll take a closer look at both companies and how investors are reacting.

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UiPath takes a tumble

Shares of UiPath fell further late Wednesday, dropping 19% in after-hours trading. That followed a 7.5% down move in the regular session and reflected disappointment with the enterprise automation-software company's fourth-quarter and full-year results.

UiPath's report showed similar results to those reported by its software-as-a-service (SaaS) stock peers in recent weeks. Revenue growth was still impressive, with sales of $290 million rising 39% from year-earlier levels. Annualized recurring revenue (ARR) grew even more quickly, jumping 59% year over year. UiPath added nearly $107 million of new ARR in just the past three months, and it posted a dollar-based net retention rate of 145%. Full-year figures were similarly impressive, with sales rising 47%.

Yet investors have been worried about what the future will bring, and they found UiPath's guidance for the future troubling. In particular, full-year revenue of $1.075 billion to $1.085 billion would represent growth of just 21% from the $892 million UiPath posted in its just-completed fiscal year. Moreover, the company doesn't appear likely to become profitable in the near future.

There's no doubt that UiPath's technology is interesting, with intelligent software robots promising to help automate business processes. Still, the extent of its future growth is still in question, and that's what's making shareholders uncertain today.

Expensify tries to keep its growth up

Meanwhile, shares of Expensify fell 17% in after-hours trading. The move added to a 5% loss in the regular session for the payments super-app provider.

Expensify's fourth-quarter financial results included some significant wins. Revenue for the quarter jumped 56% year over year, closing its fiscal year with nearly 62% sales growth. Although the company reversed a year-earlier profit with a $22 million loss on a reported basis, most of it was due to an IPO-related bonus expense. Expensify eked out positive adjusted net income of $4.4 million for the quarter, closing fiscal 2021 with a $49.4 million adjusted profit.

Again, though, guidance seemed to catch shareholders by surprise. Expensify sees revenue coming in between $38.6 million and $39.6 million for the first quarter. That would actually be below the company's Q4 sales figure, and investors didn't seem happy with the prospect of a sequential drop.

Expensify's value proposition to businesses is substantial as streamlined expense reporting is quite useful. However, the company will need to bolster its expansion prospects in order to keep growth-hungry shareholders satisfied.