AI stock UiPath falls 8% as analysts say light forecast likely fuels bear view

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UiPath (NYSE:PATH) shares fell 8.2% in pre-market Thursday after the automation software company offered a weaker-than-expected forecast for its second quarter.

As far as Q1 results are concerned, the company reported adjusted EPS of $0.11 on revenue of $289.6 million, which is up 18% year-over-year. Analysts were expecting earnings of $0.02 per share on revenue of $271.86M.

Subscription revenue was $146.4M, ahead of Street, while annualized recurring revenue was in-line with estimates at $1.25B.

“First quarter fiscal 2024 results reflect our focus on driving growth at scale and increasing profitability as we meaningfully expanded our operating margin and increased cash flow for the second consecutive quarter,” said Rob Enslin, UiPath co-chief executive officer. “

However, shares took a hit after PATH said it expects Q2 revenue to be in the range of $279-284M, below the $284.3M expected. The annualized recurring revenue is seen between $1.30B and $1.31B while analysts were expecting $1.3B.

“As a leader in AI-powered automation, customers are partnering with UiPath to harness the combination of generative AI and automation in an enterprise-grade platform,” said Daniel Dines, UiPath co-founder and co-chief executive officer. “For years UiPath has invested in ML models and domain specific AI for understanding interfaces, mining tasks, and processing documents and communications.

For FY24, PATH sees revenue in the range of $1.267-1.272B, ahead of the forecast at $1.254B.

Needham & Company analysts expect shares to trade lower as “the weak 2Q revenue guidance likely fuels the bear view in the interim.”

“We remain positive on the Gen AI impact on PATH's business,” the analysts said.

Mizuho analysts commented:

“While we are encouraged by UiPath's profitability improvements, we expect the shares to remain range-bound over the near term until the company makes significant progress on its strategic repositioning.to deliver growth.”