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UiPath Stock Price Decreases 46% in 6 Months: Is It Worth Buying?
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UiPath, Inc. (PATH - Free Report) shares have declined 45.9% in the past six months against the 6.9% rally of the industry it belongs to and the 12.1% rise in Zacks S&P 500 composite.
Six-Months Price Performance
Image Source: Zacks Investment Research
Compared with other close competitors, PATH’s performance falls short. Oracle Corporation (ORCL - Free Report) has risen 25.1% and SAP SE (SAP - Free Report) has gained 16.7% over the same period.
Looking at the recent performance, PATH has gained 2.6% over the past month, suggesting that there might be a reversal or a halt in the correction phase. The stock is trading above its 50-day moving average, an indication of bullish sentiment among investors.
50-Day Moving Average
Image Source: Zacks Investment Research
Given the recent correction in UiPath’s shares, investors might be tempted to buy the stock. But is this the right time to buy?
Tech Innovation Leads to PATH’s Success
PATH has been adding several features to the platform. For instance, it is capable of performing processing mining and task log analysis to recognize manual processes. Autopilot can suggest the next steps for workflows, introducing an element of gen-AI to the platform. AI’s ability to observe and understand screens is a tactful addition to conventional screen scraping that is creating pathways for less-technical users to also create automation. Also, it opens the door to multi-screen and app ecosystems, like banking applications, which are fragmented and could gain from this.
Tech giants such as Microsoft have considered UiPath as their vendor of preference for automation. They co-operate and compete on several occasions. However, they have been able to assist each other. For instance, PATH utilizes Azure, which heightens cloud usage for Microsoft. The company has referred to UiPath as its automation enterprise partner.
The company is developing other products that will scale well in the future. Its commitment to rapid technology innovation, strategic partnerships and focus on the expansion of product position PATH well for success.
UiPath’s Customer-Centric Growth Looks Promising
UiPath ended the first quarter of fiscal 2025 with 10,800 customers, declining from the year-ago quarter’s 10,850 customers. The decline in this number is due to attrition in smaller customers that represent an immaterial portion of the company’s overall business.
Despite this marginal decline, customers with $100,000 or more in annual recurring revenues (ARR) increased to 2,092 from 1,860 in the year-ago quarter. Customers with $1 million or more in ARR amounted to 288 in the first quarter of fiscal 2025, increasing 20% from the year-ago quarter. PATH’s largest customers are also continuing to expand on its platform. The company added a record number of customers with $5 million or more in ARR.
UiPath’s dollar-based gross retention of 98% continues to be the best in class and its dollar-based net retention rate for first-quarter fiscal 2025 was 118%. The versatility of platform capabilities continues to drive customer base expansion for PATH, including Red Bull, which began with core automation and expanded in the quarter by purchasing Test Suite and Document Understanding. It plans to utilize Test Suite to propel its S/4 HANA migration while using Document Understanding to automate numerous use cases across its Finance, Operations and HR departments. In addition to that, Etihad Airways plans to leverage PATH’s platform to support and build more AI automation across commercial and operational functions.
Overall, UiPath’s financial performance remains strong, driven by its customer base. It focuses on high-ARR-generating customers to demonstrate its ability to sustain growth and maintain a strong market position.
Robust Liquidity Position Benefits PATH
UiPath’s liquidity remains healthy, with a current ratio of 4.13 at the end of the first quarter of fiscal 2025, rising from the preceding quarter’s 3.63. This compares with the industry average of 1.02. PATH’s strong liquidity position provides it with financial flexibility and helps it with efficient mitigation of credit risks.
Image Source: Zacks Investment Research
UiPath’s Trimmed Revenues Projection Disappoints
The company reduced its revenue forecast and predicts second-quarter fiscal 2025 revenues between $300 million and $305 million, with a breakeven non-GAAP operating income. The company also trimmed the fiscal 2025 revenue projection to $1.405-$1.410 billion and anticipates a non-GAAP operating income of $145 million. We believe that the recent decrease in PATH’s stock price is due to a lowered revenue outlook as it can erode investor confidence.
PATH to See Strong Sales, Weak Earnings in FY25
The Zacks Consensus Estimate for UiPath’s fiscal 2025 revenues is pegged at $1.4 billion, implying 7.6% year-over-year growth. Sales are anticipated to retain the upward momentum, with 11.7% year-over-year growth in fiscal 2026.
However, despite the strong revenue growth prospects, the company’s bottom line appears gloomy. The consensus estimate for UiPath’s fiscal 2025 earnings stands at 38 cents per share, which represents a 29.6% year-over-year decline. On the brighter side, earnings in fiscal 2026 are estimated to gain 11.8% year over year.
Wait for the Right Moment to Invest in UiPath
The probable reversal in the stock performance does not signal the end of a correction phase. Waiting for a more advantageous entry point could yield better returns for investors. UiPath's rapid technological innovation, customer-driven growth, strength in liquidity position, and positive top-line prospects make it a compelling investment in the long term. However, potential investors should remain patient and watch for further adjustments in the stock price before making their move.
Image: Bigstock
UiPath Stock Price Decreases 46% in 6 Months: Is It Worth Buying?
UiPath, Inc. (PATH - Free Report) shares have declined 45.9% in the past six months against the 6.9% rally of the industry it belongs to and the 12.1% rise in Zacks S&P 500 composite.
Six-Months Price Performance
Compared with other close competitors, PATH’s performance falls short. Oracle Corporation (ORCL - Free Report) has risen 25.1% and SAP SE (SAP - Free Report) has gained 16.7% over the same period.
Looking at the recent performance, PATH has gained 2.6% over the past month, suggesting that there might be a reversal or a halt in the correction phase. The stock is trading above its 50-day moving average, an indication of bullish sentiment among investors.
50-Day Moving Average
Given the recent correction in UiPath’s shares, investors might be tempted to buy the stock. But is this the right time to buy?
Tech Innovation Leads to PATH’s Success
PATH has been adding several features to the platform. For instance, it is capable of performing processing mining and task log analysis to recognize manual processes. Autopilot can suggest the next steps for workflows, introducing an element of gen-AI to the platform. AI’s ability to observe and understand screens is a tactful addition to conventional screen scraping that is creating pathways for less-technical users to also create automation. Also, it opens the door to multi-screen and app ecosystems, like banking applications, which are fragmented and could gain from this.
Tech giants such as Microsoft have considered UiPath as their vendor of preference for automation. They co-operate and compete on several occasions. However, they have been able to assist each other. For instance, PATH utilizes Azure, which heightens cloud usage for Microsoft. The company has referred to UiPath as its automation enterprise partner.
The company is developing other products that will scale well in the future. Its commitment to rapid technology innovation, strategic partnerships and focus on the expansion of product position PATH well for success.
UiPath’s Customer-Centric Growth Looks Promising
UiPath ended the first quarter of fiscal 2025 with 10,800 customers, declining from the year-ago quarter’s 10,850 customers. The decline in this number is due to attrition in smaller customers that represent an immaterial portion of the company’s overall business.
Despite this marginal decline, customers with $100,000 or more in annual recurring revenues (ARR) increased to 2,092 from 1,860 in the year-ago quarter. Customers with $1 million or more in ARR amounted to 288 in the first quarter of fiscal 2025, increasing 20% from the year-ago quarter. PATH’s largest customers are also continuing to expand on its platform. The company added a record number of customers with $5 million or more in ARR.
UiPath’s dollar-based gross retention of 98% continues to be the best in class and its dollar-based net retention rate for first-quarter fiscal 2025 was 118%. The versatility of platform capabilities continues to drive customer base expansion for PATH, including Red Bull, which began with core automation and expanded in the quarter by purchasing Test Suite and Document Understanding. It plans to utilize Test Suite to propel its S/4 HANA migration while using Document Understanding to automate numerous use cases across its Finance, Operations and HR departments. In addition to that, Etihad Airways plans to leverage PATH’s platform to support and build more AI automation across commercial and operational functions.
Overall, UiPath’s financial performance remains strong, driven by its customer base. It focuses on high-ARR-generating customers to demonstrate its ability to sustain growth and maintain a strong market position.
Robust Liquidity Position Benefits PATH
UiPath’s liquidity remains healthy, with a current ratio of 4.13 at the end of the first quarter of fiscal 2025, rising from the preceding quarter’s 3.63. This compares with the industry average of 1.02. PATH’s strong liquidity position provides it with financial flexibility and helps it with efficient mitigation of credit risks.
UiPath’s Trimmed Revenues Projection Disappoints
The company reduced its revenue forecast and predicts second-quarter fiscal 2025 revenues between $300 million and $305 million, with a breakeven non-GAAP operating income. The company also trimmed the fiscal 2025 revenue projection to $1.405-$1.410 billion and anticipates a non-GAAP operating income of $145 million. We believe that the recent decrease in PATH’s stock price is due to a lowered revenue outlook as it can erode investor confidence.
PATH to See Strong Sales, Weak Earnings in FY25
The Zacks Consensus Estimate for UiPath’s fiscal 2025 revenues is pegged at $1.4 billion, implying 7.6% year-over-year growth. Sales are anticipated to retain the upward momentum, with 11.7% year-over-year growth in fiscal 2026.
However, despite the strong revenue growth prospects, the company’s bottom line appears gloomy. The consensus estimate for UiPath’s fiscal 2025 earnings stands at 38 cents per share, which represents a 29.6% year-over-year decline. On the brighter side, earnings in fiscal 2026 are estimated to gain 11.8% year over year.
Wait for the Right Moment to Invest in UiPath
The probable reversal in the stock performance does not signal the end of a correction phase. Waiting for a more advantageous entry point could yield better returns for investors. UiPath's rapid technological innovation, customer-driven growth, strength in liquidity position, and positive top-line prospects make it a compelling investment in the long term. However, potential investors should remain patient and watch for further adjustments in the stock price before making their move.
PATH carries a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.