UiPath Surges on Surprise Profit and Strong Outlook
Software automation firm achieves first GAAP profitable quarter, signaling a potential turnaround and sending shares up more than 4% in early trading.
Shares of UiPath Inc. (PATH) jumped in Wednesday morning trading after the enterprise automation software company posted a surprise third-quarter profit and delivered a stronger-than-expected forecast, fueling optimism that its growth trajectory is stabilizing.
The New York-based firm saw its stock climb more than 4% to $14.87 after it announced its first-ever profitable quarter on a GAAP basis. For its third quarter of fiscal 2026, UiPath reported a GAAP operating income of $13 million, a significant milestone for a company that has historically focused on aggressive growth and market capture, often at the expense of profitability.
On an adjusted basis, the results also comfortably beat Wall Street expectations. The company posted earnings of $0.16 per share, surpassing the analyst consensus of $0.146 by 9.6%. Revenue for the quarter came in at $411.1 million, a 4.6% beat over the anticipated $392.9 million and representing a 14.4% increase from the same period last year.
"Our third-quarter results reflect our commitment to driving profitable growth and innovation," said Daniel Dines, UiPath's Chief Executive Officer, in a statement. The achievement of GAAP operating profitability was a key focus, signaling a new phase of fiscal discipline for the software maker.
A crucial metric for the software-as-a-service industry, Annualized Recurring Revenue (ARR), grew 11% year-over-year to $1.782 billion. This figure indicates a steady, if not explosive, demand for its robotic process automation (RPA) tools, which help businesses automate repetitive digital tasks.
Investors responded positively not only to the historical performance but also to the company's forward-looking guidance. UiPath projected fourth-quarter revenue in the range of $462 million to $467 million. The midpoint of this range is slightly ahead of the analyst consensus of $463.1 million, assuaging investor fears of a slowdown in enterprise tech spending.
The strong report prompted immediate reactions from analysts. CFRA upgraded UiPath's rating from "Hold" to "Buy", while RBC Capital Markets raised its price target on the stock to $14, according to market reports. Despite these positive moves, the broader analyst community remains somewhat cautious, with the majority of ratings on the stock being 'Hold' and an average price target of $13.86.
UiPath, a leader in the RPA sector, has navigated a challenging environment over the past year. After a celebrated IPO, the stock has faced headwinds from rising interest rates, which have compressed valuations for growth-oriented tech companies, and concerns about intense competition from giants like Microsoft and a host of specialized startups.
The company's path to profitability is seen as a critical step in rebuilding investor confidence. With a market capitalization now hovering around $7.5 billion and a forward P/E ratio of approximately 19, the valuation is becoming more palatable for investors who had previously balked at its high-flying multiples.
Looking ahead, UiPath will be watched closely to see if it can maintain profitability while fending off competition and expanding its footprint within large enterprises. The company's ability to integrate artificial intelligence into its automation platform is considered key to its long-term strategy and a potential catalyst for future growth.