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UiPath Stock Falls 50% Year to Date: Should You Buy the Dip?
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UiPath, Inc.’s (PATH - Free Report) shares have lost 49.8% in the year-to-date period. This drop is in stark contrast to 29.7% growth of the industry and 21.5% increase of the Zacks S&P 500 composite.
YTD Price Performance
Image Source: Zacks Investment Research
The decline aligns with the performance of its close competitors like Dolby Laboratories, Inc. (DLB - Free Report) and SentinelOne, Inc. (S - Free Report) , whose shares have lost 12% and 12.1%, respectively, over the same period.
PATH’s shares closed at $12.95 in the last trading session, 115% below its 52-week high of $27.87.
Given the continued weakness in UiPath’s shares, investors might be tempted to buy the stock. But, is this the right time to invest? Let’s delve deeper to analyze the situation.
Autopilot for Everyone: A Game-Changer From UiPath
PATH launched several product innovations that incorporate generative AI (GenAI) into its automation platform. These include new specialized Large Language Models (LLM) for Intelligent Document Processing, GenAI activities, and Autopilot for Developers and Testers. UiPath has witnessed remarkable early adoption and positive feedback from its customers.
A multinational digital company that was an early adopter of Autopilot for Testers showed massive improvements in its operations. The company’s GenAI testing roadmap revolved around leveraging PATH’s LLM capabilities throughout the testing lifecycle, from creating user stories to generating test cases and reporting. It anticipates that it will be able to consolidate the tools using its testing framework and lower manual testing by nearly 50%. Therefore, UiPath is excited for the next phase of Autopilot for Everyone, which it expects to launch this fall.
PATH has been working closely with some of its customers in private previews and received accolades on its Autopilot for Everyone. Customers have found this product to be more responsive and valuable than other LLM-based chat solutions due to its ability to immediately automate an action.
We believe that UiPath’s commitment to providing solutions using GenAI to meet the evolving customer requirements and improve customer experiences puts the company ahead of the curve and future-proofs its businesses.
Customer-Centric Approach: Key to PATH’s Success
UiPath ended the second quarter of fiscal 2025 with 10,810 customers, down from the year-ago quarter’s 10,890. The decline in this number could be 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 2,163 from 1,930 in the year-ago quarter. Customers with $1 million or more in ARR amounted to 293 in the second quarter of fiscal 2025, up 15.3% from the year-ago quarter’s level.
UiPath’s dollar-based gross retention of 97% continues to be the best in class and its dollar-based net retention rate for second-quarter fiscal 2025 was 115%. Expansions were driven by the quick time to value and broad applicability of the company’s automation platform.
The versatility of platform capabilities continues to drive customer base expansion for PATH, including Australian multinational corporations and customers since 2021 who originally used PATH’s Test Suite to support their SAP S/4HANA migration. After the successful migration, the company expanded and is working with UiPath’s team to establish an automation program at a global scale encompassing core automation, testing and AI.
UiPath’s success revolves around its ability to serve its customers, making a customer-centric mindset more important than ever.
Strong Liquidity Position for PATH
UiPath’s current ratio of 3.6 at the end of the second quarter of fiscal 2025 was higher than the industry’s 0.92. A current ratio above 1 indicates that the company can meet its short-term obligations with ease.
Image Source: Zacks Investment Research
UiPath Raises Revenue Guidance
The company raised its revenue forecast. It now expects third-quarter fiscal 2025 revenues to be in the $345-$350 million range compared with the preceding quarter’s $300-$305 million. The company also raised its fiscal 2025 revenue guidance to $1.420-1.425 billion from the preceding quarter’s $1.405-$1.410 billion. The management was optimistic about PATH’s actions to drive operational efficiencies and streamline its business, which made them raise the guidance.
PATH’s EPS Estimates Move North
Five estimates for fiscal 2025 earnings moved north over the past 60 days versus no southward revision. For fiscal 2026, five estimates also moved north over the past 60 days versus no southward revision. This reflects confidence among analysts in the company's ability to perform well in the future.
UiPath to Witness Strong Sales, Weak Earnings in FY25
The Zacks Consensus Estimate for UiPath’s fiscal 2025 revenues is pegged at $1.4 billion, implying 8.7% year-over-year growth. Sales are expected to retain the upward momentum, with 11.2% year-over-year growth in fiscal 2026.
Meanwhile, the company’s bottom line appears gloomy. The consensus estimate for UiPath’s fiscal 2025 earnings is pegged at 41 cents per share, implying a 24.1% year-over-year decline. However, earnings in fiscal 2026 are anticipated to increase 10.6% year over year.
PATH’s Low Valuation
Due to a significant decline in its stock value year to date, UiPath’s current valuation appears low. The stock is trading at a trailing 12-month Price/Earnings ratio of 28.67X, which is below the industry average of 35.85X.
Image Source: Zacks Investment Research
Consider Waiting for a Better Entry Point
PATH stock has experienced a substantial decline year to date, significantly underperforming the industry and the broader market. However, the company's focus on innovative solutions, such as integrating generative AI into its platform with Autopilot for Developers and Testers, positions it well for long-term growth. Despite the drop in customer count, PATH has seen an increase in high-revenue clients, signaling strong customer retention and expansion.
The company has also raised its revenue guidance for fiscal 2025, reflecting confidence in its operational efficiencies. However, despite promising sales projections, PATH’s earnings outlook remains weak.
With PATH currently trading at a lower valuation compared to industry averages, investors may find its long-term potential attractive. However, given the ongoing challenges in earnings growth, a "Hold" recommendation is prudent. Monitoring the company’s ability to execute its AI-driven strategies should be key to future investment decisions.
Image: Bigstock
UiPath Stock Falls 50% Year to Date: Should You Buy the Dip?
UiPath, Inc.’s (PATH - Free Report) shares have lost 49.8% in the year-to-date period. This drop is in stark contrast to 29.7% growth of the industry and 21.5% increase of the Zacks S&P 500 composite.
YTD Price Performance
The decline aligns with the performance of its close competitors like Dolby Laboratories, Inc. (DLB - Free Report) and SentinelOne, Inc. (S - Free Report) , whose shares have lost 12% and 12.1%, respectively, over the same period.
PATH’s shares closed at $12.95 in the last trading session, 115% below its 52-week high of $27.87.
Given the continued weakness in UiPath’s shares, investors might be tempted to buy the stock. But, is this the right time to invest? Let’s delve deeper to analyze the situation.
Autopilot for Everyone: A Game-Changer From UiPath
PATH launched several product innovations that incorporate generative AI (GenAI) into its automation platform. These include new specialized Large Language Models (LLM) for Intelligent Document Processing, GenAI activities, and Autopilot for Developers and Testers. UiPath has witnessed remarkable early adoption and positive feedback from its customers.
A multinational digital company that was an early adopter of Autopilot for Testers showed massive improvements in its operations. The company’s GenAI testing roadmap revolved around leveraging PATH’s LLM capabilities throughout the testing lifecycle, from creating user stories to generating test cases and reporting. It anticipates that it will be able to consolidate the tools using its testing framework and lower manual testing by nearly 50%. Therefore, UiPath is excited for the next phase of Autopilot for Everyone, which it expects to launch this fall.
PATH has been working closely with some of its customers in private previews and received accolades on its Autopilot for Everyone. Customers have found this product to be more responsive and valuable than other LLM-based chat solutions due to its ability to immediately automate an action.
We believe that UiPath’s commitment to providing solutions using GenAI to meet the evolving customer requirements and improve customer experiences puts the company ahead of the curve and future-proofs its businesses.
Customer-Centric Approach: Key to PATH’s Success
UiPath ended the second quarter of fiscal 2025 with 10,810 customers, down from the year-ago quarter’s 10,890. The decline in this number could be 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 2,163 from 1,930 in the year-ago quarter. Customers with $1 million or more in ARR amounted to 293 in the second quarter of fiscal 2025, up 15.3% from the year-ago quarter’s level.
UiPath’s dollar-based gross retention of 97% continues to be the best in class and its dollar-based net retention rate for second-quarter fiscal 2025 was 115%. Expansions were driven by the quick time to value and broad applicability of the company’s automation platform.
The versatility of platform capabilities continues to drive customer base expansion for PATH, including Australian multinational corporations and customers since 2021 who originally used PATH’s Test Suite to support their SAP S/4HANA migration. After the successful migration, the company expanded and is working with UiPath’s team to establish an automation program at a global scale encompassing core automation, testing and AI.
UiPath’s success revolves around its ability to serve its customers, making a customer-centric mindset more important than ever.
Strong Liquidity Position for PATH
UiPath’s current ratio of 3.6 at the end of the second quarter of fiscal 2025 was higher than the industry’s 0.92. A current ratio above 1 indicates that the company can meet its short-term obligations with ease.
UiPath Raises Revenue Guidance
The company raised its revenue forecast. It now expects third-quarter fiscal 2025 revenues to be in the $345-$350 million range compared with the preceding quarter’s $300-$305 million. The company also raised its fiscal 2025 revenue guidance to $1.420-1.425 billion from the preceding quarter’s $1.405-$1.410 billion. The management was optimistic about PATH’s actions to drive operational efficiencies and streamline its business, which made them raise the guidance.
PATH’s EPS Estimates Move North
Five estimates for fiscal 2025 earnings moved north over the past 60 days versus no southward revision. For fiscal 2026, five estimates also moved north over the past 60 days versus no southward revision. This reflects confidence among analysts in the company's ability to perform well in the future.
UiPath to Witness Strong Sales, Weak Earnings in FY25
The Zacks Consensus Estimate for UiPath’s fiscal 2025 revenues is pegged at $1.4 billion, implying 8.7% year-over-year growth. Sales are expected to retain the upward momentum, with 11.2% year-over-year growth in fiscal 2026.
Meanwhile, the company’s bottom line appears gloomy. The consensus estimate for UiPath’s fiscal 2025 earnings is pegged at 41 cents per share, implying a 24.1% year-over-year decline. However, earnings in fiscal 2026 are anticipated to increase 10.6% year over year.
PATH’s Low Valuation
Due to a significant decline in its stock value year to date, UiPath’s current valuation appears low. The stock is trading at a trailing 12-month Price/Earnings ratio of 28.67X, which is below the industry average of 35.85X.
Consider Waiting for a Better Entry Point
PATH stock has experienced a substantial decline year to date, significantly underperforming the industry and the broader market. However, the company's focus on innovative solutions, such as integrating generative AI into its platform with Autopilot for Developers and Testers, positions it well for long-term growth. Despite the drop in customer count, PATH has seen an increase in high-revenue clients, signaling strong customer retention and expansion.
The company has also raised its revenue guidance for fiscal 2025, reflecting confidence in its operational efficiencies. However, despite promising sales projections, PATH’s earnings outlook remains weak.
With PATH currently trading at a lower valuation compared to industry averages, investors may find its long-term potential attractive. However, given the ongoing challenges in earnings growth, a "Hold" recommendation is prudent. Monitoring the company’s ability to execute its AI-driven strategies should be key to future investment decisions.
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.