Shares of UiPath (PATH +7.57%) rocketed 26.7% on Friday, following the enterprise automation software company's release on the prior afternoon of a better-than-expected report for the third quarter of fiscal 2024 (ended Oct. 31).
The stock's steep rise is attributable to revenue and adjusted earnings exceeding Wall Street's estimates, with the bottom-line beat a sizable one. Fourth-quarter revenue guidance, which was slightly stronger than analysts had expected, likely also provided a tailwind for the stock.
UiPath's key numbers
| Metric | Fiscal Q3 2023 | Fiscal Q3 2024 | Change |
|---|---|---|---|
| Revenue | $262.7 million | $325.9 million | 24% |
| GAAP operating income | ($67.0 million) | ($55.8 million) | Loss narrowed 17% |
| GAAP net income | ($57.7 million) | ($31.5 million) | Loss narrowed 45% |
| Adjusted operating income | $18.0 million | $43.7 million | 143% |
| Adjusted net income | $26.7 million | $69.1 million | 159% |
| GAAP earnings per share | ($0.10) | ($0.06) | Loss narrowed 40% |
| Adjusted EPS | $0.05 | $0.12 | 140% |
Data source: UiPath. GAAP = generally accepted accounting principles. Fiscal Q3 2024 ended on Oct. 31, 2023.
Investors should focus on the adjusted numbers because they exclude one-time items.
Wall Street was looking for adjusted EPS of $0.07 on revenue of $315.6 million, so UiPath easily exceeded both expectations.
GAAP gross margin was 85%, up from 84% in the year-ago period. Adjusted gross margin was 87%, up from 86% in the third quarter of fiscal 2023.
In fiscal Q3, UiPath generated cash of $42 million running its operations, bringing its fiscal-year-to-date total cash flow from operations up to $153.5 million. This is a huge improvement from the first nine months of the prior fiscal year when the company used $104 million running its operations.
The company ended the period with cash, cash equivalents, and marketable securities of $1.82 billion, up from $1.76 billion in the year-ago quarter.
NYSE: PATH
Key Data Points
What happened with UiPath in the quarter?
- License revenue was $148.1 million, up 25% year over year.
- Subscription services revenue landed at $167.5 million, up 29%.
- Professional services and other revenue was $10.3 million, down 28%.
- Annualized renewal run-rate (ARR) grew 24% year over year to nearly $1.38 billion.
- Dollar-based net retention rate was 121%. This means that existing customers expanded their spending on the company's services by an average of 21% over the last year. This is a very good result and suggests that customers are finding value in UiPath's services.
What management had to say
Here's what Co-CEO Ron Enslin had to say in the earnings release:
I am pleased with our strong third quarter results with ARR [annualized renewal run-rate] growing 24 percent year-over-year to $1.378 billion, driven by the team's execution and the transformational results we deliver. My conversations with customers and partners validate the strategic role enterprise automation plays in digital transformation and I am excited about the investments we continue to make in AI [artificial intelligence] to further extend our market leadership.
Guidance
For the fourth quarter of fiscal 2024, management guided for revenue in the range of $381 million to $386 million. This would represent growth of 24% to 25% year over year. At the midpoint ($383.5 million), the outlook slightly exceeds the $382 million Wall Street had been projecting.
Moreover, the company expects the quarter's adjusted operating income to be about $78 million, which would represent growth of approximately 13% year over year.
In short, UiPath turned in a robust quarter, with all key metrics moving solidly in the right direction. Investors had good reasons to send shares significantly higher on Friday.
