UiPath (NYSE:PATH) Surprises With Q4 Sales But Stock Drops 20.8%

Radek Strnad /
2022/03/30 4:17 pm EDT

Automation software company UiPath (NYSE:PATH) reported Q4 FY2022 results beating Wall St's expectations, with revenue up 39.3% year on year to $289.6 million. However, guidance for the next quarter was less impressive, coming in at $224 million at the midpoint, being 9.23% below analyst estimates. UiPath made a GAAP loss of $63.1 million, down on its profit of $26.2 million, in the same quarter last year.

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UiPath (PATH) Q4 FY2022 Highlights:

  • Revenue: $289.6 million vs analyst estimates of $283.2 million (2.27% beat)
  • EPS (non-GAAP): $0.05 vs analyst estimates of $0.03 ($0.02 beat)
  • Revenue guidance for Q1 2023 is $224 million at the midpoint, below analyst estimates of $246.7 million
  • Management's revenue guidance for upcoming financial year 2023 is $1.08 billion at the midpoint, missing analyst estimates by 8.18% and predicting 21% growth (vs 48.5% in FY2022)
  • Free cash flow of $9.78 million, up from negative free cash flow of $7.67 million in previous quarter
  • Gross Margin (GAAP): 85.7%, down from 90.3% same quarter last year

“The UiPath team delivered a strong finish to fiscal year 2022 with fourth quarter net new ARR reaching a record $107 million, an increase of 72 percent year-over-year. We believe this is a testament to our highly differentiated end-to-end platform,” said Daniel Dines, UiPath Co-Founder and 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 impressive over the last year, growing from quarterly revenue of $207.8 million, to $289.6 million.

UiPath Total Revenue

And unsurprisingly, this was another great quarter for UiPath with revenue up 39.3% year on year. On top of that, revenue increased $68.8 million quarter on quarter, a very strong improvement on the $25.2 million increase in Q3 2022, and a sign of re-acceleration of growth.

Guidance for the next quarter indicates UiPath is expecting revenue to grow 20.2% year on year to $224 million, slowing down from the 64.6% year-over-year increase in revenue the company had recorded in the same quarter last year. For the upcoming financial year management expects revenue to be $1.08 billion at the midpoint, growing 21% compared to 48.5% increase in FY2022.

There are others doing even better than UiPath. Founded by ex-Google engineers, a small company making software for banks has been growing revenue 90% year on year and is already up more than 150% since the IPO last December. 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 85.7% in Q4.

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. Significantly up from the last quarter, 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 Q4 Results

With a market capitalization of $16.4 billion, more than $1.86 billion in cash and the fact it is operating close to free cash flow break-even, we're confident that UiPath has the resources it needs to pursue a high growth business strategy.

We were very impressed by the strong improvements in UiPath’s gross margin compared to the previous quarter. And we were also excited to see the really strong revenue growth. On the other hand, it was unfortunate to see that UiPath's revenue guidance for the full year missed analysts' expectations and the revenue guidance for next year indicates quite a significant slowdown in growth. Overall, this quarter's results were not the best we've seen from UiPath. The company is down 20.8% on the results and currently trades at $22.98 per share.

UiPath may have had a tough quarter, but does that actually create an opportunity to invest 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.