UiPath stock spikes more than 20% after earnings beat, generative AI integration

UiPath stock popped more than 20% on Friday, one day after the company released quarterly earnings that beat Wall Street’s top and bottom line expectations.

The enterprise automation software company posted $325.9 million in revenue for the quarter ending Oct. 31, in contrast to the LSEG (formerly Refinitiv) estimate of $315.6 million. Adjusted earnings per share came in at $0.12, more than the $0.07 analyst projection.

UiPath also raised its fourth-quarter and full-year fiscal 2024 outlook for annual recurring revenue. Its ARR was up 24% year-over-year to $1.38 billion. For companies like UiPath that are reliant on subscriptions, annual recurring revenue is an important metric that reveals how much money a company receives on a recurring basis.

Analysts across the board were pleased with the ARR raise and the company’s strategy to target new businesses.

“Its strategic bet, almost a year old, on driving value for big clients with the longest/broadest automation journeys is paying off; these customers are driving the lion’s share of growth,” analysts from Davidson wrote in a note to investors.

Bank of America analysts highlighted UiPath’s expansion into new verticals, like retail, IT and manufacturing, as part of their optimistic expectations for the company’s growth.

“We expect to see a healthy reacceleration in key growth metrics such as ARR and NRR (net revenue retention), in Q1 when we reach easier comparisons in the small business segment,” Bank of America analysts wrote in a note to investors.

Davidson analysts believe that the more widespread adoption can be attributed, at least in part, to UiPath’s integration of generative AI.

“The weaving of Generative AI into its broadened automation platform, is driving strong adoption amongst enterprises,” the analysts wrote.

— CNBC’s Michael Bloom contributed to this report.