UiPath Inc. (PATH) FY24 Guidance 'Weaker than Expected'

UiPath Inc. (NYSE: PATH) shares closed Wednesday's session down over 3% despite Tuesday's gains following the company's annual analyst day.

Commenting on the event, Needham analyst Scott Berg said the clear focus was on driving a new platform product message and shifting its GTM approach to focus on expansions to more effectively capitalize upon this strategic platform strategy.

"While we believe the new platform view will resonate well with larger customers who are attempting to systematically automate more of their respective enterprises, we believe investor focus will be on initial FY24 guidance calling for revenue growth of ~18% (below current consensus for 23%) yet a more profitable model (300bps - 400bps of Y/Y margin leverage)," explained Berg.

The analyst, who has a Buy rating and $20 price target on the stock, added: "The biggest delta on the revenue expectations appears driven by a lack of Street visibility into deal mix between SaaS and term license where the guidance suggests more than expected SaaS deals which translates to less up front revenue recognized."

Elsewhere, Mizuho Securities analyst Siti Panigrahi told investors that UiPath's management team provided a detailed overview of its new product strategy, updated sales motion, and guidance for FY24.

The analyst said UiPath provided FY24 revenue guidance of $1.185B (18% Y/Y) and ARR guidance of $1.360B (18% Y/Y).

"While we are positive on UiPath's transition to a platform business (which expands the TAM from $61B to $93B) and the company's refined go-to-market motion (which should drive increased traction within enterprise customers), the financial guidance for FY24 is weaker than expected and reflects the challenges due to restructuring and change in GTM during an uncertain macro environment, while balancing growth and profitability," wrote Panigrahi.

As a result, Mizuho kept a Neutral rating and a $14 price target on the stock.

By Sam Boughedda

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