UiPath Q2 Results Reflect Restructuring Benefits, Analysts Praise 'Laser-Focus' On AI

Shares of UiPath Inc (NYSE:PATH) are down Friday despite the company’s reporting in-line fiscal second-quarter results.

Here are some key analyst takeaways:

• BMO Capital Markets analyst Keith Bachman maintained a Market Perform rating, while raising the price target from $14 to $15.
• DA Davidson analyst Gil Luria reaffirmed a Neutral rating, while lifting the price target from $13 to $15.
• JPMorgan analyst Mark Murphy reiterated an Overweight rating and price target of $19.
• RBC Capital Markets analyst Matthew Hedberg maintained a Sector Perform rating and price target of $16.
• KeyBanc Capital Markets analyst Jason Celino reaffirmed a Sector Weight rating on the stock.KeyBanc Capital Markets

Check out other analyst stock ratings.

BMO Capital Markets: UiPath's quarterly results were broadly in-line with low expectations, Bachman said in a note. This is a positive, after the previous quarter's execution challenges, amid a leadership change, he added.  

The company reported annual recurring revenues of $1.55 billion. This represents 19% year-on-year growth, but a deceleration of 2 points versus the prior quarter, the analyst stated. "We are encouraged by $850M cloud ARR, representing more than half of ARR and growing by 65% y/y, demonstrating PATH's cloud-first strategy is gaining traction," he further wrote.

DA Davidson: UiPath's fiscal second-quarter results "demonstrated early success in the company’s efforts to refocus on customer centricity," Luria said. The company raised its full-year adjusted operating income guidance from $145 million to $170 million.

"The company is laser-focused on cementing its reputation as the world’s leader in enabling actions from AI insight," the analyst wrote. UiPath had several enterprise wins and the net retention among its largest accounts remains at around 120%, he added.

JPMorgan: While there are macro uncertainties, overall conditions are stabilizing compared to the previous quarter, Murphy said. Better execution and streamlining efforts helped UiPath "adapt well to the current environment," he added.

The company indicated that "restructuring efforts primarily in its central functions, with a focus on sales operations and enablement, have enhanced efficiency and agility across the organization," the analyst wrote. Management announced "modest" raises to their full-year revenue and ARR guidance and "decent upticks for operating income and FCF guidance," he further stated.

RBC Capital Markets: UiPath showed "signs of stability," following a "sizable guide-down across the board," Hedberg said. Management raised their fiscal 2025 guidance by more than the beat. The company “continues to work towards its strategic initiatives," he added.

The company continues to focus on "realigning investments to higher ROI areas," adopting a stronger strategy for growth products, and focusing on expanding its channel partner relationships, the analyst stated. "Encouragingly, management highlighted strong early adoption and positive feedback from customers for Autopilot," he further wrote.

KeyBanc Capital Markets: UiPath reported quarterly revenue and operating margin at $316.3 million and 2%. It beat consensus of $303.7 million and 0.9%, respectively. Both gross retention and net retention declined in the quarter to 97% and 115%, from 98% and 118% in the previous quarter.

The company announced another share repurchase program of up to $500 million, the analyst stated. UiPath took its full-year guidance for operating income "meaningfully higher," implying operating margins of 12%, versus the Street estimates of 9.7%, , Celino wrote.

PATH Price Action: Shares of UiPath had declined by 5.34% to $12.06 at the time of publication on Friday.

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Image courtesy of UiPath, Inc.