UiPath (NYSE:PATH) Q1 Sales Beat Estimates But Stock Drops 11.3% On Mixed Guidance

Radek Strnad /
2023/05/24 4:16 pm EDT

Automation software company UiPath (NYSE:PATH) reported Q1 FY2024 results topping analyst expectations, with revenue up 18.2% year on year to $289.6 million. The company expects that next quarter's revenue would be around $281.5 million, which is the midpoint of the guidance range. That was slightly under analyst expectations. UiPath made a GAAP loss of $31.9 million, improving on its loss of $122.6 million, in the same quarter last year.

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UiPath (PATH) Q1 FY2024 Highlights:

  • Revenue: $289.6 million vs analyst estimates of $271.2 million (6.76% beat)
  • EPS (non-GAAP): $0.11 vs analyst estimates of $0.02 ($0.09 beat)
  • Revenue guidance for Q2 2024 is $281.5 million at the midpoint, below analyst estimates of $284.3 million
  • The company lifted revenue guidance for the full year, from $1.26 billion to $1.27 billion at the midpoint, a 1.12% increase
  • Free cash flow of $65.5 million, down 28.6% from previous quarter
  • Gross Margin (GAAP): 84.9%, up from 81.7% same quarter last year

“First quarter fiscal 2024 results reflect our focus on driving growth at scale and increasing profitability as we meaningfully expanded our operating margin and increased cash flow for the second consecutive quarter,” said Rob Enslin, UiPath Co-Chief Executive Officer.

Started in 2005 in Romania as a tech outsourcing company, UiPath (NYSE:PATH) makes software that helps companies automate repetitive computer tasks.

The whole purpose of software is to automate tasks to increase productivity. Today, innovative new software techniques, often involving AI and machine learning, are finally allowing automation that has graduated from simple one- or two-step workflows to more complex processes integral to enterprises. The result is surging demand for modern automation software.

Sales Growth

As you can see below, UiPath's revenue growth has been strong over the last two years, growing from quarterly revenue of $186.2 million in Q1 FY2022, to $289.6 million.

UiPath Total Revenue

This quarter, UiPath's quarterly revenue was once again up 18.2% year on year. But the revenue actually decreased by $19 million in Q1, compared to $45.8 million increase in Q4 2023. UiPath's sales do seem to have a seasonal pattern to them, however the management is guiding for a further drop in revenue in the next quarter, so we think it is worth keeping an eye on the situation.

Guidance for the next quarter indicates UiPath is expecting revenue to grow 16.2% year on year to $281.5 million, slowing down from the 23.9% year-over-year increase in revenue the company had recorded in the same quarter last year. Ahead of the earnings results the analysts covering the company were estimating sales to grow 18.8% over the next twelve months.

In volatile times like these we look for robust businesses with strong pricing power. Unknown to most investors, this company is one of the highest-quality software companies in the world, and their software products have been the default standard in critical industries for decades. The result is an impressive business that is up an incredible 18,152% since the IPO. You can find it on our platform for free.


What makes the software as a service business so attractive is that once the software is developed, it typically shouldn't cost much to provide it as an ongoing service to customers. UiPath's gross profit margin, an important metric measuring how much money there is left after paying for servers, licenses, technical support and other necessary running expenses was at 84.9% in Q1.

UiPath Gross Margin (GAAP)

That means that for every $1 in revenue the company had $0.85 left to spend on developing new products, marketing & sales and the general administrative overhead. Trending up over the last year this is a great gross margin, that allows companies like UiPath to fund large investments in product and sales during periods of rapid growth and be profitable when they reach maturity.

Key Takeaways from UiPath's Q1 Results

With a market capitalization of $9.32 billion UiPath is among smaller companies, but its more than $1.78 billion in cash and positive free cash flow over the last twelve months give us confidence that UiPath has the resources it needs to pursue a high growth business strategy.

We liked to see that UiPath beat analysts’ revenue expectations pretty strongly this quarter. And we were also glad that the revenue guidance for the rest of the year exceeded expectations and that cash flow turned positive year on year. On the other hand, guidance for the next quarter missed and that likely spooked the market. Overall, it seems to us that this was a mixed quarter for UiPath. The company is down 11.3% on the results and currently trades at $14.5 per share.

Should you invest in UiPath right now? It is important that you take into account its valuation and business qualities, as well as what happened in the latest quarter. We look at that in our actionable report which you can read here, it's free.

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The author has no position in any of the stocks mentioned.