Q4 2025 Earnings Summary
- UiPath's cloud ARR grew over 50% year-over-year to $975 million, driven by both net new business and customers migrating their workloads to the cloud.
- The company's AI products have a high attach rate of approximately 20% of total customers, and over 85% for customers with greater than $1 million in ARR, demonstrating strong adoption among larger customers.
- UiPath's Agentic Automation platform is gaining traction with customers, and the company plans to monetize it via a consumption-based model soon, entering general availability towards the end of April or beginning of May.
- Significant deal delays due to macroeconomic volatility, with some customers reviewing approvals from the last 90 days, leading to prudence in annual guidance. For example, a Canadian bank is now reviewing all approvals in the last 90 days.
- Disruptions and procurement moratoriums in the U.S. public sector, UiPath's third-largest vertical, are expected to continue in the near future, impacting sales. The IRS, a significant customer, is under a 30-day moratorium ,.
- Adoption of new Agentic AI products is still in early stages, with the majority of customers conducting small pilots and proofs-of-concept, potentially indicating a slower ramp-up in revenue from these products.
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | +4.5% (from $405.31M to $423.66M) | Total revenue experienced modest growth, driven by a strong performance in subscription services and professional services, which counterbalanced a decline in licenses revenue; this indicates that the company's strategic focus on recurring revenue streams and geographic expansion from prior periods continued to benefit overall revenue. |
Licenses Revenue | -10% (from $219.96M to $197.64M) | Licenses revenue declined sharply, continuing the trend seen in earlier periods likely driven by the shift in focus toward flexible revenue models (such as Flex Offerings) and a strategic rebalancing away from traditional license sales, which adversely impacted revenue recognition in this segment. |
Subscription Services Revenue | +22% (from $176.05M to $215.26M) | Subscription services revenue grew robustly as a result of increased new sales and recurring revenue from prior period contracts; the significant year-over-year improvement builds on past successes in transitioning customers towards recurring models and reflects enhanced customer retention and geographic expansion. |
Professional Services Revenue | +16% (from $9.30M to $10.77M) | Professional services revenue increased moderately, likely reflecting higher demand for support and implementation services; this growth builds on previous period improvements and suggests that the company’s enhanced service offerings are gaining traction in the market. |
Operating Income | +122% (from $15.10M to $33.61M) | Operating income more than doubled, driven by the improved revenue mix (with stronger subscription and professional services performance) combined with cost efficiencies and better margin management compared to previous periods; these factors signal the success of strategic initiatives towards profitability enhancement. |
Net Income | +52% (from $33.92M to $51.79M) | Net income improved significantly as a result of reduced operating losses and overall cost management improvements, supported by enhanced revenue performance; a favorable tax impact may also have contributed, building on the positive trends observed in earlier periods. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Revenue | Q1 2026 | $422 million to $427 million | $330 million to $335 million | lowered |
ARR | Q1 2026 | $1.669 billion to $1.674 billion | $1.686 billion to $1.691 billion | raised |
Non-GAAP Operating Income | Q1 2026 | Approximately $100 million | Approximately $45 million | lowered |
Basic Share Count | Q1 2026 | Approximately 551 million shares | Approximately 553 million shares | raised |
Revenue | FY 2026 | no prior guidance | $1.525 billion to $1.530 billion | no prior guidance |
ARR | FY 2026 | no prior guidance | $1.816 billion to $1.821 billion | no prior guidance |
Non-GAAP Operating Income | FY 2026 | no prior guidance | Approximately $270 million | no prior guidance |
Non-GAAP Gross Margin | FY 2026 | no prior guidance | Approximately 85% | no prior guidance |
Non-GAAP Adjusted Free Cash Flow | FY 2026 | no prior guidance | Approximately $370 million | no prior guidance |
Dilution from Stock-Based Compensation | FY 2026 | no prior guidance | Expected to be between 2% to 3% year-over-year | no prior guidance |
| Metric | Period | Guidance | Actual | Performance |
|---|---|---|---|---|
Revenue | Q4 2025 | $422 million to $427 million | $423.65 million | Met |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Cloud ARR Growth | Discussed in Q2 2025 with detailed numbers (e.g. $850M, 65% YoY ) and noted in Q3 by mentioning broader hybrid deployments; not mentioned in Q1 | In Q4 2025, detailed strong cloud ARR growth (>50% YoY to $975M) alongside an emphasized cloud‐first strategy that accelerates AI deployments | Consistent growth with increased emphasis on cloud-first innovation. |
AI & Agentic Automation Adoption | Q1 highlighted generative AI and Autopilot as key tailwinds. Q2 and Q3 focused on expanding agentic automation use cases, customer enthusiasm, and landmark deals | Q4 reinforces transformative Agentic Automation with new products (e.g. agent builder, orchestration) and strong customer adoption metrics, integrated with the cloud ARR story | Positive and maturing sentiment; continuous innovation with deeper market penetration. |
Execution & Operational Challenges | Q1 faced issues with sales compensation, late-stage deal challenges, and inconsistent execution. Q2–Q3 noted improvements through organizational streamlining and better cross-functional alignment | Q4 still grapples with operational challenges, especially due to public sector timing and external volatility, though improved internal discipline is noted | Transition from internal execution issues to external, macro-driven challenges. |
Macroeconomic Uncertainty & Deal Delays | Q1 evidenced deal delays and heightened scrutiny; Q2 described a variable yet stable environment; Q3 indicated a relatively stable demand environment | Q4 points to significant macroeconomic volatility in the final weeks, causing increased deal delays and budget caution especially in public sector deals | Shift from stability to heightened external uncertainty impacting deal flow. |
Public Sector Dynamics & Regulatory Challenges | Q1 lauded strong public sector momentum with key wins including FedRAMP. Q2 emphasized FedRAMP as a catalyst for growth; Q3 highlighted opportunities despite election-cycle uncertainties | Q4 acknowledges disruptions tied to government transitions, procurement delays, and volatility, even as the sector remains a strong vertical | Consistent importance but with emerging short-term challenges from government transitions. |
Strategic Partnerships & Ecosystem Expansion | Q1–Q3 consistently showcased partnerships (with Accenture, SAP, Microsoft, EY, GSIs) driving new logos and expansion deals | Q4 features strengthened collaborations (e.g. with Deloitte and deepened Microsoft ties) reinforcing innovative joint offerings like the Agentic ERP solution | Steady expansion with a slight upgrade toward more integrated, innovative collaborations. |
Leadership Transitions & Organizational Changes | Q1 marked major leadership shifts (co-CEO exit, CEO transition) and Q2 documented restructuring for enhanced agility; Q3 discussed ongoing changes with added COO responsibilities | Q4 confirms that go‐to‐market changes and restructuring are largely complete with improved team alignment and operational rigor | Transition now complete; organizational changes have led to stronger operational alignment. |
Financial Guidance & Operating Margin Uncertainty | Q1–Q2 provided guidance with cautious outlooks affected by ASC 606, execution challenges and changing operating margins ; Q3 showed stability with clear Q4 guidance expectations | Q4 reports record non-GAAP operating margins (32%) and sets guidance with caution due to recent macroeconomic volatility and FX concerns | Margins improved, yet future guidance remains cautious amid renewed external uncertainties. |
Customer Expansion & Upsell Opportunities | Q1 featured strong expansion examples (e.g. Red Bull, Etihad) with rising high-ARR customers; Q2–Q3 quantified metrics (increasing customers with >$100K and >$1M ARR and high retention rates) | Q4 continues this positive trend with increased customer spend metrics, robust AI product adoption, and cloud migration fueling upsell opportunities | Robust growth trajectory with consistently positive customer expansion and innovative upsell drivers. |
Declining Emphasis on Traditional Automation Features | Q2 hinted at a strategic evolution beyond traditional RPA, integrating AI and generative AI capabilities ; Q1 & Q3 did not discuss this shift explicitly | Q4 does not specifically mention a decline in traditional automation, but the focus remains on Agentic and AI-driven innovations, implying a subtle deprioritization of legacy RPA features | Emerging shift away from traditional automation in favor of AI-enhanced, agentic solutions. |
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Impact of Macro Uncertainty and Public Sector Delays
Q: How are macro uncertainties and public sector delays affecting your business?
A: We are seeing deal delays due to market volatility; for instance, a Canadian bank is reviewing all approvals from the last 90 days. Public sector disruptions began in January and continue, impacting our third-largest vertical. We expect this to continue in the near future but remain confident in our federal customer relationships. -
Net New ARR Outlook
Q: What is your outlook for net new ARR as we move through the year?
A: The first quarter and first half will be under pressure due to the macro environment and public sector stabilization. However, we feel good about progress in healthcare and financial services. We expect improvements in the second half, with more pronounced seasonality affecting the first half. -
Monetization of Agentic and AI Products
Q: What is your pricing and monetization strategy for the Agentic portfolio?
A: We plan to monetize agents and Agentic orchestration via a consumption-based model, with our strategy to be announced as we enter GA towards the end of April or early May. -
Confidence in Federal Business
Q: Do you have confidence that federal will be a long-term customer of UiPath?
A: Yes, federal is one of our best-performing verticals, and we have tremendous confidence in our connections with federal customers. We view current disruptions as short-term uncertainties during government transition. -
Completion of Go-to-Market Changes
Q: Are the go-to-market changes now complete?
A: Our go-to-market changes are largely complete. After three quarters of significant changes, we're pleased with the progress and plan to execute with stability towards our strategy. -
Acquisition Strategic Rationale
Q: Can you share more about the recent acquisition's strategic rationale and its impact on FY2026?
A: We're excited about the acquisition, which brings a team to help us enter a more verticalized Agentic space, starting with use cases around price and inventory. This acquisition is immaterial to our overall year and is considered a tuck-in acquisition. -
Drivers of Cloud ARR Growth
Q: What's driving cloud ARR growth—migrations or net new business?
A: It's both. Our sales team has done a great job with new logos going directly to the cloud, and existing customers are moving workloads from behind the firewall. The pace of innovation and availability of AI products in the cloud encourage customers to adopt our cloud platform. -
Customer Adoption of Agents
Q: Are customers starting small with agents or diving in immediately?
A: We see both. While most customers start with small POCs to understand the technology, a few have already jumped into large deployments, with significant deals in the third and fourth quarters. -
Impact of Uncertainty on AI Investments
Q: Is uncertainty affecting customer investment in new technologies like AI?
A: Uncertainty applies to all investments, but we're seeing strong interest in Agentic. Customers are excited about our differentiated product, though budget controls may delay deal closures in the short term. -
Geographic Impact of Economic Stresses
Q: Are economic stresses impacting regions differently?
A: The entire globe is feeling environmental pressures. There's pronounced sensitivity in Canada due to current events, but uncertainty is widespread across industries and geographies.