Shares of UiPath (NYSE:PATH) sank about 9% in Wednesday’s extended trade despite strong Q1 results. The decline can be attributed to weak Q2 revenue guidance from the robotic process automation (RPA) software provider.
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Q1 revenues increased 18% year-over-year to $289.6 million, surpassing analysts’ estimates of $271.2 million. Meanwhile, the company posted adjusted earnings of $0.11 per share, greater than the Street’s estimate of $0.02 per share. Also, it compared favorably with a loss of $0.03 reported in the last year’s quarter.
PATH’s annualized renewal run rate (ARR) rose 28% year-over-year to $1.25 billion. ARR is a key performance metric that reflects the company’s sales expectations based on subscriptions.
During the earnings call, UiPath’s Co-CEO, Rob Enslin, said the company is witnessing strong momentum with customers valued at over $1 million during the reported quarter. Currently, the company has 240 customers that contribute more than $1 million in ARR, along with 1,860 customers that generate $100,000 or more in ARR.
Looking forward, PATH expects to report fiscal second-quarter revenue in the range of $279 million to $284 million, compared with analyst estimates of $284.3 million. For Fiscal Year 2024, the company raised its revenue outlook to between $1.267 billion and $1.272 billion, versus the $1.253 billion and $1.258 billion guided previously.
Is PATH a Good Stock to Buy?
The enduring economic uncertainty will probably prevent corporations from investing heavily in business automation, which will negatively impact UiPath’s top-line growth. The company’s consistent financial performance and initiatives to launch new products, however, offer a compelling argument for the business.
Overall, Wall Street is cautiously optimistic about PATH stock. It has a Moderate Buy consensus rating based on six Buys and nine Holds. The average price target of $19.50 implies 19.3% upside potential from the current level.
