UiPath Inc (NYSE:PATH) reported mixed first-quarter results on Thursday.
The company's results reflected "improving demand and execution," and management indicated that most of the deals in the quarter involved AI, according to Needham.
• UiPath shares are trending higher. Why are PATH shares climbing?
The UiPath Analyst: Analyst Scott Berg maintained a Buy rating and price target of $15.
The UiPath Thesis: While the company reported strong results for the quarter, the forex tailwinds could turn into "minor headwinds for the remainder of the year," Berg said in the note.
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He mentioned the highlights of UiPath's quarterly results:
- Revenue of $418.4 million and non-GAAP earnings of 15 cents per share came in above Needham's estimates of $397.5 million and 14 cents per share, respectively.
- Total revenues grew 17.3% year-on-year, with subscription revenue expanding by 16.4% and license revenue up 16.4%.
- Professional services revenue climbed 46.5% year-on-year, coming in significantly ahead of expectations.
- ARR (annual recurring revenues) grew 12.3% year-on-year to $1.901 billion, accelerating from 11.2% in the previous quarter.
- Gross margin contracted 120 basis points (bps) year-on-year to 83.2%, missing Needham's estimate of 84.3%, mainly due to a mix shift towards professional services.
The analyst highlighted that the company's NRR (net revenue retention) improved sequentially for the first time since the fourth quarter of 2022.
"UiPath is seeing agentic modules become a larger part of upsell negotiations with 16 of the top 20 deals in the quarter leveraging agentic modules," he further wrote.
Management raised their fiscal 2027 revenue guidance to $1.776-$1.781 billion, from their prior outlook of $1.754-$1.759 billion, by more than the beat delivered in the first quarter, Berg further said.
PATH Price Action: Shares of UiPath had risen by 1.12% to $11.71 at the time of publication on Friday.
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