UiPath Inc. (PATH) Q2 2026 Earnings Call Transcript

Access earnings results, analyst expectations, report, slides, earnings call, and transcript.

Overview

The earnings call summary and Q&A suggest a positive outlook. Strong partnerships with Google Cloud and Deloitte, alongside new product launches, indicate growth potential. Revenue guidance is optimistic, and shareholder returns are stable with no debt. The Q&A highlights positive client demand for Agentic solutions and stable go-to-market strategies. While there are macroeconomic uncertainties, the guidance remains prudent. The overall sentiment leans towards positive due to strategic partnerships and product development, despite some cautious guidance.

Key Financial Performance

Second Quarter ARR $1.723 billion, grew 11% year-over-year, driven by $31 million in net new ARR.

Second Quarter Revenue $362 million, an increase of 14% from the prior year period. Normalizing for FX tailwind, revenue grew 12%.

Non-GAAP Operating Income $62 million, representing a 17% margin and an improvement of more than 1,500 basis points year-over-year, reflecting operational efficiencies and discipline.

Cloud ARR More than $1.08 billion, an increase of more than 25% year-over-year, driven by customer migration to the cloud.

Customer Metrics Approximately 10,820 customers, with customers having $100,000 or more in ARR increasing to 2,432, and customers with $1 million or more in ARR increasing to 320.

Dollar-Based Gross Retention 98%, indicating strong customer retention.

Dollar-Based Net Retention Rate 108%, reflecting customer expansion and adoption of new solutions.

Remaining Performance Obligations (RPO) $1.209 billion, up 12% year-over-year. Normalizing for FX tailwind, RPO grew 10%.

Current RPO $789 million, up 15% year-over-year.

Software Gross Margin 90%, contributing to overall gross margins of 84%.

GAAP Operating Loss Improved by $83 million year-over-year to $20 million, including $78 million of stock-based compensation expense.

Non-GAAP Adjusted Free Cash Flow $45 million, reflecting disciplined expense management.

Balance Sheet $1.5 billion in cash, cash equivalents, and marketable securities, with no debt.

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Operating Highlights

Agentic AI offerings: Introduced new AI capabilities like Intelligent Document Processing (IDP) and Agentic AI offerings that can reason, plan, and act. These are helping to win deals and increase deal sizes faster than traditional automation.

UiPath Maestro: Launched UiPath Maestro to unify agents, robots, and people across systems with governance and transparency, delivering measurable and repeatable outcomes.

API Workflows: Introduced API Workflows to simplify deployment and securely interact with business systems and data.

UiPath Coded Agents: Launched UiPath Coded Agents for developers to customize and deploy secure agents.

UiPath Data Fabric: Introduced UiPath Data Fabric to provide a unified data layer for agents, apps, and workflows, ensuring seamless integration across systems.

Customer Expansion: Added new enterprise customers like Henry Schein and Watches of Switzerland Group. Expanded relationships with existing customers, with 2,432 customers having $100,000+ ARR and 320 customers with $1 million+ ARR.

Public Sector Growth: Expanded automation initiatives with the U.S. Navy and other public sector agencies.

Partnerships: Strengthened alliances with Microsoft, Deloitte, and Cognizant to co-create solutions and expand market reach.

Operational Efficiency: Non-GAAP operating income increased to $62 million, representing a 17% margin, an improvement of over 1,500 basis points year-over-year.

Restructuring: Completed restructuring to drive productivity and disciplined execution.

Cloud Migration: Cloud ARR grew by over 25%, with customers like KLM Royal Dutch Airlines migrating to the cloud.

Focus on AI and Automation: Positioned AI and automation as complementary, driving innovation in both areas to lead enterprise transformation.

Agentic Ecosystem: Building an open agentic ecosystem with integrations like LangChain and LlamaIndex to support developers.

Customer-Centric Approach: Deepened customer centricity by aligning field organizations and partners to expand usage across the installed base.

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Risk or Challenges

Macroeconomic Environment: The company acknowledges a variable macroeconomic environment, which could impact customer spending and adoption rates of new technologies.

Early Adoption of Agentic Capabilities: While the company is optimistic about its newly launched Agentic capabilities, adoption is still in its early phases and is not expected to contribute materially to fiscal 2026 revenue.

Foreign Exchange (FX) Impact: Fluctuations in FX rates, particularly in European currencies and the yen, could impact ARR and revenue at the time of renewal and contract signing.

Public Sector Buying Patterns: Although public sector buying patterns are normalizing, delays in budget finalization could impact the timing of revenue recognition.

Operational Execution: The company has undergone restructuring and is focused on operational rigor, but any missteps in execution could impact growth and profitability.

Competitive Pressures: The company faces competition in the automation and AI space, which could impact its ability to win new customers and retain existing ones.

Customer Attrition: While customer attrition is low, it is concentrated on the lower end, which could impact overall ARR growth.

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Guidance & Outlook

Revenue Guidance for Q3 FY 2026: Expected revenue in the range of $390 million to $395 million, reflecting a $2 million FX tailwind.

ARR Guidance for Q3 FY 2026: Expected ARR in the range of $1.771 billion to $1.776 billion, reflecting a $2 million FX tailwind.

Non-GAAP Operating Income for Q3 FY 2026: Expected to be approximately $70 million.

Revenue Guidance for FY 2026: Expected revenue in the range of $1.571 billion to $1.576 billion, reflecting a $7 million FX tailwind.

ARR Guidance for FY 2026: Expected ARR in the range of $1.834 billion to $1.839 billion, reflecting a $7 million FX tailwind.

Non-GAAP Operating Income for FY 2026: Expected to be approximately $340 million.

Non-GAAP Adjusted Free Cash Flow for FY 2026: Expected to be approximately $370 million.

Non-GAAP Gross Margin for FY 2026: Expected to be approximately 85%.

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Shareholder Return Plan

Share Repurchase: During the second quarter, UiPath repurchased 8.3 million shares of its Class A common stock at an average price of $12.10. This activity reflects the company's confidence in its long-term opportunity and its commitment to returning capital to shareholders.

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Key Q&A

Q:Can you talk about the client demand progression on your agentic solutions and the mix of clients developing agents?

A:The progress on Agentic solutions is encouraging, with 450 customers actively working on building agents for production. These deals uncover more automation opportunities, combining orchestration, RPA, API, and agentic solutions. This has led to significant deals and increased deal sizes.

Q:Do you expect DBNRR to sustain as you go through the second half?

A:DBNRR is stabilizing, as implied in the guidance. While the macroeconomic environment remains uncertain, the government is returning to normal buying behavior, which is positive. However, the guidance remains prudent.

Q:What is the key pitch for Maestro when talking with customers, and who are you seeing in those deals?

A:The key pitch for Maestro is its agnostic approach, allowing integration across multiple business systems. Customers prefer this over being tied to a single business platform. Maestro is tightly integrated with the automation platform, making it easy to combine agents, people-in-the-loop, and robotic actions. This breadth of offering makes it competitive against major orchestration platforms.

Q:How would you assess the overall health of the go-to-market motion after a year of changes?

A:The go-to-market motion is stable and customer-centric, with progress in breaking silos and aligning closer with product development. This structure is functioning well in an era driven by customer interactions.

Q:Can you provide more color on the U.S. federal business and how you are navigating uncertainty there?

A:The public sector had a strong quarter with momentum in selling Agentic solutions. Budget finalization shows signs of stabilization, and there were significant wins with Veterans Affairs and the Coast Guard. The feedback from large customers like the Navy and IRS is positive.

Q:Was there anything specific or one-time in nature that impacted the big sequential step-up in subscription revenue this quarter?

A:The step-up was due to a leap year impact from the previous quarter, which has now stabilized.

Q:What is driving the confidence in the ARR guidance for the full year?

A:The confidence comes from field sentiment, pipeline momentum, and improvements in go-to-market strategies and Agentic solutions. These factors are reflected in the guidance.

Q:Is the market still divided between traditional RPA and agentic solutions, or are they merging?

A:The market shows a spectrum. Some customers believe AI agents will handle everything, while most realize the importance of combining orchestration, automation, and agentic solutions. Agentic initiatives often uncover more automation opportunities.

Q:What has been the reception to the pricing of the Agentic portfolio, and have there been any learnings or changes?

A:The Agentic portfolio uses a consumption-based model, aligning well with customer interests. Predictability of pricing is a challenge, but overall, the reaction has been positive.

Q:Are there specialized sellers for Agentic solutions, and how is the go-to-market motion evolving?

A:There are no specialized sellers for horizontal Agentic solutions, as the entire go-to-market team is equipped to handle them. However, there are specialized sellers for vertical solutions like Peak, and this motion will continue.

Q:What causes the ARR growth from existing customers to flatten out, and when might it improve?

A:The flattening is due to macroeconomic conditions and disruptions in the public sector. Improvement is expected in the second half as the public sector stabilizes and go-to-market momentum increases.

Q:Does the new Agentic portfolio enable RPA in additional workflows or focus on existing ones?

A:The portfolio extends RPA and automation capabilities, uncovering new opportunities and renewing interest in identifying processes suited for automation and agentic initiatives.

Q:What patterns across geographies or verticals persisted in the second quarter, and how does the macro outlook inform guidance?

A:Strength was seen in U.S. financial and healthcare sectors, public sector momentum, and European manufacturing. The macro environment remains variable, influencing a prudent outlook.

Q:Does the ARR guidance raise include prudence for the U.S. public sector, or are incremental contributions expected?

A:The guidance includes prudence but also anticipates incremental contributions from the stabilizing U.S. public sector.

Q:Review of Unclear Management Responses

A:Management avoided providing specific details on the predictability of Agentic pricing and the exact timeline for its meaningful contribution to ARR. Additionally, they did not comment on out-quarter DBNRR expectations or provide precise guidance on ARR growth from existing customers.

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Earnings Word Cloud

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The earnings call summary and Q&A reveal a mixed sentiment. While there are positive elements such as partnerships, AI integration, and improved execution, there are also concerns about unclear guidance on future OpEx investments and monetization strategies. The lack of significant pipeline build from partnerships and vague responses on automation balance add uncertainty. Despite optimistic guidance, the absence of strong catalysts like record high revenue or new partnerships with immediate impact tempers the outlook. Thus, the stock price is likely to remain stable, leading to a neutral sentiment.

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