What happened
Shares of UiPath (UI -1.24%) were gaining this week in the wake of the delivery of its better-than-expected fourth-quarter report. The stock was up roughly 24% from the previous week's close at the end of Thursday's trading session, according to data from S&P Global Market Intelligence.
UiPath posted non-GAAP (adjusted) earnings of $0.15 per share on revenue of $308.5 million. The average analyst estimate had targeted earnings of $0.07 per share on sales of $278.69 million. In addition to delivering results that beat on both the top and bottom lines, management issued guidance that exceeded the market's expectations.
So what
Despite macroeconomic pressures, UiPath managed to grow revenue by roughly 6.5% year over year in the fourth quarter, and it expects that growth to accelerate in Q1. It's guiding for sales of between $270 million and $272 million, which at the midpoint would amount to year-over-year growth of roughly 10.6%. The average analyst had been forecasting Q1 revenue of $269.55 million.
Following the better-than-expected results and forward guidance, multiple analysts upgraded their price targets for the stock and helped send UiPath's share price higher.
Now what
With the company sporting a market cap of approximately $9.4 billion and trading at roughly 7.8 times this year's expected sales, UiPath has a highly growth-dependent valuation. On the other hand, the business has been posting consistent profits on an adjusted basis and recording solid sales momentum.
PATH PS Ratio (Forward) data by YCharts.
Management's guidance suggests that sales growth will accelerate later in 2023 and wind up somewhere in the neighborhood of 18.5% for the full year. Even after their recent rally, UiPath shares are trading down by roughly 80% from their peak, and could be worth a look for investors looking to capitalize on the growing trends of artificial intelligence and automation.
