Shares of enterprise automation platform UiPath (PATH -1.33%) rallied on Friday, rising 5.8% as of 11:33 a.m. EDT.
UiPath delivered second-quarter results last night, handily beating analyst expectations. The results seemed at odds with the current fear among software-as-a-service companies that generative artificial intelligence may be a threat to their business models.
Automation and agentic in one package
In the second quarter, UiPath grew revenue 14.4% to $362 million, while adjusted (non-GAAP) earnings per share more than tripled, albeit off a very low base of $0.04, to $0.15. Both figures handily beat analysts' expectations.
Annualized recurring revenue (ARR) was up 11%, and management also guided to ending at $1.834 billion to $1.839 billion in ARR for the current fiscal year, which would amount to 10.2% ARR growth at the midpoint.
UiPath appears to have done a good job infusing its automation software with agentic AI, harnessing AI rather than being disrupted. CEO Daniel Dines said on the conference call, "Our AI and agentic solutions are helping us win deals and increase deal sizes faster than traditional automation engagements and now represent a growing share of commercial activity."
Image source: Getty Images.
UiPath on a path to better things?
Part of the reason UiPath is having a good day is that yes, the company beat expectations, but the stock has also struggled in 2025. Even after today's rally, the stock is down 11% for 2025.
Many software stocks have struggled this year as generative AI model builders such as OpenAI begin to build enterprise products and could potentially become future competitors.
That threat still appears to be a drag on the company's valuation. UiPath trades at just 3.3 times this year's ARR guidance. The company also has $1.45 billion in cash and no debt on the balance sheet. So on an enterprise-basis-to-ARR ratio, the company trades at an even lower 2.5 times.
If UiPath is able to harness AI and fend off competition in the space, the stock looks like a potentially great value. However, investors may not know if that's the case for years, so expect the discounted valuation to remain.
