UiPath (NYSE:PATH) Surprises With Q4 Sales, Stock Jumps 15.5%

Petr Huřťák /
2023/03/15 4:16 pm EDT

Automation software company UiPath (NYSE:PATH) reported Q4 FY2023 results topping analyst expectations, with revenue up 6.51% year on year to $308.5 million. The company expects that next quarter's revenue would be around $271 million, which is the midpoint of the guidance range. That was roughly in line with analyst expectations. UiPath made a GAAP loss of $27.7 million, improving on its loss of $63.1 million, in the same quarter last year.

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UiPath (PATH) Q4 FY2023 Highlights:

  • Revenue: $308.5 million vs analyst estimates of $278.7 million (10.7% beat)
  • EPS (non-GAAP): $0.15 vs analyst estimates of $0.07 ($0.08 beat)
  • Revenue guidance for Q1 2024 is $271 million at the midpoint, above analyst estimates of $269.5 million
  • Management's revenue guidance for upcoming financial year 2024 is $1.26 billion at the midpoint, beating analyst estimates by 3.45% and predicting 18.6% growth (vs 20.2% in FY2023)
  • Free cash flow of $91.8 million, up from negative free cash flow of $32.6 million in previous quarter
  • Gross Margin (GAAP): 84.5%, down from 87.7% same quarter last year

“We delivered a very strong close to fiscal year 2023. Fourth quarter fiscal 2023 ARR grew 30 percent year-over-year while revenue outperformance and disciplined cost management resulted in a record fourth quarter non-GAAP operating margin and positive non-GAAP adjusted free cash flow,” 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 very strong over the last two years, growing from quarterly revenue of $207.9 million in Q4 FY2021, to $308.5 million.

UiPath Total Revenue

UiPath's quarterly revenue was only up 6.51% year on year, which might disappoint some shareholders. We can see that the company increased revenue by $45.8 million quarter on quarter re-accelerating up on $20.5 million in Q3 2023.

Guidance for the next quarter indicates UiPath is expecting revenue to grow 10.6% year on year to $271 million, slowing down from the 31.6% 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 $1.26 billion at the midpoint, growing 18.6% compared to 18.6% increase in FY2023.

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 84.5% 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. 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. It is good to see that the gross margin is staying stable which indicates that UiPath is doing a good job controlling costs and is not under pressure from competition to lower prices.

Key Takeaways from UiPath's Q4 Results

With a market capitalization of $7.94 billion UiPath is among smaller companies, but its more than $1.4 billion in cash and the fact it is operating close to free cash flow break-even put it in a robust financial position to invest in growth.

We were impressed by how strongly UiPath outperformed analysts’ revenue expectations this quarter. ARR was also ahead. Additionally, this was the first positive free cash flow quarter since Q1'21. Lastly, we were glad that the revenue guidance for the rest of the year exceeded expectations. Overall, this quarter's results seemed very positive, and shareholders can feel optimistic. The company is up 13.6% on the results and currently trades at $16.66 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.