UiPath (Nasdaq: PATH) was one of the most hyped and anticipated companies when it went public as it is one of the leading players in the automation space. The company's potential is tantalizing as its AI software essentially is able to lean and automate various processes that companies regularly engage in.
Many believe that AI or machine learning-enabled automation is the next step in the technological revolution for companies that has seen waves of investment in areas like IT, enterprise software, or cloud computing. At first, these are ways to increase efficiency and cut costs but quickly become necessities in order to remain competitive. For investors, these trends have created fantastic opportunities in the leading companies of these new innovations.
The company made its debut in April 2021 and opened at $65. The stock initially rallied before peaking just over $90 in May 2021. Since then, shares are down by 80%. Even with this decline, the company has a market cap of $10.3 billion and just under $900 million in revenue. A major part of its decline is the change in market environment as high-multiple growth stocks have fallen out of favor due to rising rates and inflation.
Inside the Numbers
Following its fiscal Q4 earnings report, UiPath reported $0.05 in EPS, beating analysts' expectations of $0.03 per share. Revenue also came in above expectations at $290 million vs $283 million.
Despite this beat, shares of UiPath declined by 25.7% following the results and continued moving lower in subsequent sessions due to its underwhelming forecast for the next quarter.
The company also warned that it could be negatively impacted by the war in Ukraine due to its heavy exposure to Eastern Europe and operations in these countries.
It anticipates Q1 revenue between $223 million and $225 million. This was below expectations of $236 million. For the full year, it sees revenue of $1.08 billion which was below estimates of $1.13 billion.
UiPath is a stock that investors should certainly keep on their radar given its potential. Stepping back, the company has managed to grow revenue by 50% over its last 3 years, but it's expecting a major deceleration next year as revenue growth should slow to 23%. In this market, it's hard to justify a $10 billion valuation with just over $1 billion in revenue. Therefore, investors should remain patient and wait for a more attractive valuation.