What happened
Shares of automation software company UiPath (PATH 3.49%) skyrocketed on Thursday after the company reported financial results for the fourth quarter of its fiscal 2023. As of 9:45 a.m. ET, UiPath stock was up about 19% and is now up about 37% for the year.
So what
In Q4, UiPath significantly outpaced guidance from management. Management guided for revenue of up to $279 million, annual recurring revenue (ARR) of up to $1.176 billion, and adjusted operating income of $35 million. It beat guidance on all three counts with revenue of almost $309 million, ARR of $1.204 billion, and adjusted operating income of over $69 million.
Underpinning UiPath's better-than-expected growth was a record number of million-dollar deals in Q4. The company now has 229 customers spending more than $1 million annually, up 45% year over year. Moreover, it added almost $94 million in net new ARR during Q4, which was up more than 8% just from last quarter.
In a time when many tech companies are cutting back, it appears that they're turning to UiPath's software to become more efficient. And that's why the stock was up so much today.
Now what
Looking ahead to its fiscal 2024 (which started in February), UiPath expects to grow revenue by 18% to 19% to between $1.253 billion and $1.258 billion. That's approximately in line with its growth rate of 19% in fiscal 2023 -- encouraging given the general slowdown in the tech industry.
Moreover, it appears that UiPath is becoming a more efficient company. Management is guiding for adjusted operating income of $120 million in its fiscal 2024, nearly double what it generated in fiscal 2023. This trend was happening before Q4. But it appears it's getting more established, which does put UiPath stock in a category of higher-quality tech stocks right now, in my opinion.
