What happened
Shares of UiPath (PATH 1.35%) soared on Thursday after the company reported financial results for the first quarter of its fiscal 2023. These results beat analysts' expectations, and the company raised guidance for the year. As of noon ET today, the stock was up 17%.
NYSE: PATH
Key Data Points
So what
UiPath provides automation software for businesses. In the first quarter, the company generated revenue of $245 million, which was up 32% year over year. This far outpaced its previous revenue guidance of $223 million to $225 million. Moreover, this was roughly $20 million more than what analysts had expected on average. This encouraging beat was likely enough to send the stock soaring.
Image source: Getty Images.
Ironically, the analyst community is lowering its price targets for UiPath stock today. According to The Fly, Evercore ISI analyst Kirk Materne lowered his price target by almost 18% to $23 per share, cautioning investors "as the macro environment weighs on fundamentals." And BMO Capital Markets analyst Keith Bachman lowered his price target by over 27% to $21 per share, essentially saying he sees stocks trading at better valuations and with better cash flow than UiPath.
So the professional analyst community is lowering expectations for UiPath stock, whereas the market is cheering results. This seems to highlight the complexities in navigating the stock market right now.
Now what
One area for UiPath investors to watch is overall customer growth. In the first quarter of fiscal 2022, the company added roughly 600 new customers compared to the previous quarter, good for almost 8% sequential growth. This customer growth decelerated in the first quarter of 2023 as it added just 230 new customers for only 2% sequential growth.
The timing of adding new customers can be tricky, so it's simply something for investors to monitor for now. And to end on a more encouraging note, management raised its full-year revenue guidance to a range of $1.085 billion to $1.090 billion, up from a range of $1.075 billion to $1.085 billion. So it clearly is growing more optimistic for how the rest of the year is shaping up, even if overall first-quarter customer growth was a little light.
