What Happened:
Shares of automation software company UiPath (NYSE:PATH) jumped 6.55% in the pre-market session after the company reported first-quarter revenue and earnings per share (EPS) that surpassed analysts' expectations. Revenue benefited a bit from an accounting change, and hence, ARR was more inline. The key negative was that revenue guidance for the next quarter fell below Consensus, and this seems to be the market's focus. Full year revenue guidance was ahead, and free cash flow stayed positive, marking the second straight quarter of cash inflows. Additionally, profitability improved, with both gross margin and operating income margin ahead of expectations. Overall, the quarter was fine, but the guidance left the market uneasy. Bigger picture, there is likely some skepticism around the overall market for process automation and UiPath's role within that market. After the initial pop the shares cooled down to $14.01, down 14.3% from previous close.
What is the market telling us:
UiPath's shares are quite volatile and over the last year have had 61 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business.
UiPath is up 14.2% since the beginning of the year, but at $14.01 per share it is still trading 36.2% below its 52-week high of $21.94 from August 2022. Investors who bought $1,000 worth of UiPath's shares at the IPO in April 2021 would now be looking at an investment worth $203.33.
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