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01/10 18:56
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
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.
Annual Recurring Revenue (ARR) $1.782 billion, up 11% year-over-year. This growth was driven by $59 million in net new ARR and a $6 million year-over-year FX tailwind.
Revenue $411 million, an increase of 16% year-over-year. Normalizing for the year-over-year FX tailwind of approximately $5 million, revenue grew 14%.
Non-GAAP Operating Income $88 million, representing a 21% margin, up more than 700 basis points year-over-year. This improvement was due to a disciplined approach to operational efficiency.
GAAP Operating Income $13 million, up from the prior year GAAP operating loss of $43 million. This marks the first GAAP profitable third quarter for the company.
Non-GAAP Adjusted Free Cash Flow $28 million. This reflects the company's focus on operational efficiency and cash management.
Gross Margin Overall gross margin was 85%, and software gross margin was 91%. This indicates strong profitability in software operations.
Dollar-Based Gross Retention Rate 98%, which is best-in-class and underscores the durability of the customer base.
Dollar-Based Net Retention Rate 107%, adjusting for FX. This reflects strong customer retention and expansion.
Remaining Performance Obligations (RPO) $1.265 billion, up 12% year-over-year. Normalizing for the FX tailwind of approximately $20 million, RPO grew 10%.
Current RPO $840 million, up 17% year-over-year. This reflects strong short-term commitments from customers.
Agentic Automation: UiPath showcased advancements in Agentic Automation, including integrations with OpenAI, Microsoft, NVIDIA, Google, and Snowflake. Over 950 companies are developing agents, and 365,000 processes have been orchestrated with Maestro.
UiPath ScreenPlay: Introduced ScreenPlay technology combining RPA with LLMs for faster automation of complex UI tasks.
Intelligent Extraction and Processing (IXP): Enhanced IXP with agentic capabilities for document-heavy processes, reducing manual review and setup time.
API Workflows: Announced general availability of API-centric automations to complement RPA and agents.
Cloud Expansion: Expanded cloud footprint to Switzerland and launched Automation Cloud in the UAE to meet regional data residency and governance requirements.
Vertical Solutions: Focused on building vertical solutions, including agentic merchandising, pricing, and inventory solutions for retailers and manufacturers.
Federal Sector: Expanded in the federal sector with projects for the U.S. Coast Guard, Department of Veterans Affairs, and Social Security Administration.
Operational Efficiency: Achieved first GAAP profitable third quarter with $88 million non-GAAP operating income and a 21% margin.
Customer Engagement: Strengthened customer relationships and improved sales team performance, leading to deeper engagements and faster scaling of automation.
Technology Partnerships: Expanded collaborations with Microsoft, OpenAI, Google, NVIDIA, and Snowflake to enhance platform capabilities.
Public Sector Focus: Increased focus on federal sector opportunities, leveraging automation and AI to address efficiency mandates.
Macroeconomic Environment: The macroeconomic environment remains variable, which could impact customer spending and overall business performance.
Early Adoption of Agentic Capabilities: Adoption of agentic capabilities is still in its early phases, and no material top-line contribution is expected in fiscal 2026, which could delay revenue growth from these innovations.
Foreign Exchange (FX) Headwinds: Fluctuations in foreign exchange rates, particularly the depreciation of the Japanese yen, have created headwinds for revenue and ARR guidance.
Public Sector Dynamics: The federal purchasing environment remains dynamic, which could impact the growth and stability of public sector engagements.
Operational Execution: While progress has been made, continued focus on operational rigor and execution is necessary to maintain profitability and growth.
Revenue Guidance for Q4 FY 2026: UiPath expects revenue in the range of $462 million to $467 million for the fourth fiscal quarter of 2026. This range reflects an approximately $3 million headwind driven by FX rate movements since the prior guidance.
Annual Recurring Revenue (ARR) Guidance for Q4 FY 2026: UiPath projects ARR in the range of $1.844 billion to $1.849 billion for the fourth fiscal quarter of 2026. This range also reflects an approximately $3 million headwind due to FX rate movements.
Non-GAAP Operating Income Guidance for Q4 FY 2026: The company expects non-GAAP operating income of approximately $140 million for the fourth fiscal quarter of 2026.
Fiscal Year 2026 Non-GAAP Adjusted Free Cash Flow: UiPath continues to expect non-GAAP adjusted free cash flow of approximately $370 million for fiscal year 2026.
Fiscal Year 2026 Non-GAAP Gross Margin: The company maintains its expectation of a non-GAAP gross margin of approximately 85% for fiscal year 2026.
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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.
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.
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