What happened

On a day when AI stocks were soaring after a bullish first-quarter report from Nvidia, shares of UiPath (PATH -1.47%) were moving in the opposite direction after investors seemed disappointed with its guidance in its first-quarter earnings report. 

As of 12:19 p.m. ET, the stock was down 10.7%.

So what

UiPath, which provides cloud-based software for robotic process automation (RPA), or bots to automate workflows, said that revenue in the quarter rose 18% to $290 million, which was well ahead of the consensus at $271.1 million.  

Annual recurring revenue rose 28% in the quarter to $1.249 billion, and the dollar-based net retention rate was 122%, showing existing customers increased their spending by 22% over the last four quarters. 

Gross margin in the quarter was 85%, showing the benefits of its cloud-based model, but the company continued to lose money on a generally accepted accounting principles (GAAP) basis with a loss of $46.4 million. After adjusting for share-based compensation and some special expenses, it had an operating profit of $48.2 million.

On the bottom line, it reported adjusted earnings per share of $0.11, up from a loss of $0.03 in the quarter a year ago and better than estimates of a profit of $0.02.

Management talked up its moves in AI as co-CEO Daniel Dines said, "As a leader in AI-powered automation, customers are partnering with UiPath to harness the combination of generative AI and automation in an enterprise-grade platform."

Now what

While UiPath beat expectations in the first quarter, guidance for the second quarter was on the lighter side, with the company forecasting revenue of $279 million to $284 million, which represents 16% growth and compares to the consensus at $283.9 million.

Analysts also don't seem convinced yet that the company can pull off the transition to being an AI platform solution beyond just RPA.

With top-line growth slowing and the company still unprofitable on a GAAP basis, UiPath will have to overcome those doubts in order for the stock to rebound to its previous heights.