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    UiPath Inc (PATH)

    Q4 2024 Summary

    Published Feb 25, 2025, 2:18 AM UTC
    Initial Price$15.20October 31, 2023
    Final Price$22.98January 31, 2024
    Price Change$7.78
    % Change+51.18%

    What went well

    • Strong Cloud Adoption and Growth: UiPath's Cloud ARR reached $650 million, growing 70% year-over-year, indicating sustained momentum as customers continue migrating to the cloud. This trend is expected to continue, driven by the popularity of their flex offering.
    • Strategic Partnerships Fueling Expansion: Partnerships with industry leaders like SAP and Google Cloud are progressing well, contributing to new customer acquisitions and pipeline generation. The upcoming SAP end-of-support deadline in 2027 for ERP systems presents a significant growth opportunity, as customers accelerate cloud migrations and leverage UiPath's platform and Test Suite.
    • Improving Profitability and Operating Leverage: UiPath achieved its first quarter of GAAP profitability in the fourth quarter and plans to drive at least 100 basis points of non-GAAP operating margin expansion year-over-year in fiscal 2025. This demonstrates strong cost discipline and effective capital allocation, setting the stage for continued margin improvement.

    What went wrong

    • UiPath is not guiding to GAAP profitability for fiscal year 2025, indicating uncertainty about achieving consistent GAAP profitability in the near term. This may concern investors focusing on the company's path to profitability.
    • A significant portion of the fourth quarter license revenue came from prior deals rather than new business, potentially inflating the quarter's performance and suggesting that underlying demand might not be as strong as it appears.
    • The company's guidance for fiscal year 2025 expects net new Annual Recurring Revenue (ARR) to be similar to fiscal year 2024, implying that growth may be stabilizing rather than accelerating, which could signal slowing momentum.

    Q&A Summary

    1. Net New ARR Growth
      Q: What will drive net new ARR growth in FY25?
      A: Management expects net new ARR to grow in FY25, supported by strong execution, a clear strategy, and optimism about the product roadmap. They note that the second half of FY24 saw net new ARR close to neutral, and they feel good about the pipeline and continued momentum going into this year.

    2. Cloud ARR Acceleration
      Q: How will Cloud ARR impact growth in FY25?
      A: Cloud ARR reached $650 million, growing over 70%. Management sees continued momentum as customers adopt their cloud offerings, expecting the cloud mix to continue increasing and contribute to growth acceleration.

    3. AI and Automation Demand
      Q: How is AI affecting customer buying and growth prospects?
      A: AI is driving greater customer interest in automation. Management sees customers expanding automation using Generative AI, benefiting from AI-infused solutions that deliver immediate value. This tailwind is helping to expand discussions with C-level executives and driving more automation projects.

    4. Partner Contributions
      Q: How are partners contributing to growth?
      A: Partners are critical, with over 70% of deals touched by partners. Management feels strong about relationships with Accenture, EY, PwC, and Deloitte, and expects continued focus on driving partnerships to support future growth.

    5. Platform Penetration
      Q: How widespread is platform adoption among customers?
      A: In their top deals, 65 out of 100 had platform components attached. Management sees early stages of platform adoption, with significant upsell opportunities as customers realize the benefits of solutions like intelligent document processing and test automation.

    6. Regional Demand Trends
      Q: What are the demand trends by region and vertical?
      A: Management is positive about North America and sees strong results in the public sector globally. They note significant progress in Europe and are optimistic about opportunities combining AI with their platform to drive growth across regions.

    7. GAAP Profitability Outlook
      Q: Thoughts on GAAP profitability in FY25?
      A: While not providing GAAP profitability guidance, management is pleased with progress in cost discipline and capital allocation, having achieved GAAP profitability in Q4 FY24 and significantly reduced the GAAP operating loss for the year.

    8. SAP Partnership Tailwinds
      Q: How is the SAP partnership influencing growth?
      A: The SAP partnership is strong, with new logos like Marks and Spencer adopting their platform and Test Suite. Management sees their solutions aiding customers in SAP migrations and expects the partnership to drive future growth, especially with upcoming SAP deadlines.

    9. AI Initiatives and Competition
      Q: How does autonomous AI technology affect UiPath's platform?
      A: Management is developing their own digital assistants, combining AI with subject matter expertise. They believe their platform's access to application data and focus on security and governance positions them well in the evolving AI landscape.

    10. Autopilot Feedback
      Q: What's the early feedback on Autopilot?
      A: Early feedback is positive, with over 1,000 companies previewing Autopilot—the largest in UiPath's history. Acceptance rates exceed 65%, indicating material savings in development time and promising increased adoption of the platform.

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