UiPath Stock Down: Faces Caution Despite Margin Gains, Analyst Doubtful About Company's AI Transition Capability

UiPath, Inc. PATH shares are trading lower on Thursday.

The company released its fourth-quarter results after Wednesday’s closing bell. Here’s a look at the key figures from the report.  

UiPath reported quarterly earnings of nine cents per share, which beat the analyst consensus estimate of three cents.

Quarterly revenue of $424 million missed the analyst consensus estimate of $425.36 million and is an increase over revenue of $405.25 million from the same period last year.

Scotia Bank analyst Nick Altmann reiterated the Sector Perform rating on the stock, lowering the price forecast to $12 from $15.

Altmann expresses caution about rewarding UiPath for its margin improvements, given that medium-term concerns persist regarding the company’s ability to effectively transition into AI, with growth continuing to face pressure.

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While the analyst acknowledges the company’s 9% ARR growth forecast, which aligns with its guidance, and a second-half weighted NNARR guide, Altmann highlights the stock is likely to remain range-bound.

The analyst notes the public sector represents UiPath’s third-largest vertical, although management refrains from specifying the exact mix. Given the ongoing macroeconomic pressures, management is adopting a more cautious approach to its guidance.

Additionally, the analyst highlights a dip in NRR, which fell to 110% from the previous 113%.

The low-end segment continues to face challenges, as evidenced by a decline in net adds, with a drop of 40 this quarter compared to a smaller loss of 20 in the prior quarter.

Despite these concerns, the analyst acknowledges margins remain a positive aspect, with record operating margins of 32%, and the FY26 guidance of approximately 18%, which is above the consensus of 15%.

The primary focus for the company continues to be stabilizing growth, which has yet to materialize, Altmann adds.

PATH Price Action: UiPath shares are trading lower by 14.38% to $10.15 at publication Thursday.

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Photo: Courtesy of UiPath, Inc.