PATH earnings

UiPath (PATH) was brought to this board’s attention by RMTZP on March 28, 2021 at…

Today (June 8, 2021) the company reported good earnings for the first quarter, but the stock traded down after hours. It closed after hours at $70.50 down 7.24%. That’s a little misleading as it surged the last hour of regular trading. Here are key metrics:

Fiscal First Quarter 2022 Financial Highlights
• Revenue of $186.2 million increased 65% year-over-year.
• ARR of $652.6 million increased 64% year-over-year.
• GAAP gross margin was 74 percent.
• Non-GAAP gross margin was 88 percent.
• Non-GAAP operating income margin was 8.63%
• Cash flow used in operations was $(17.5) million.
• Non-GAAP free cash flow was $(20.1) million.
• Balance sheet: Cash, cash equivalents, restricted cash, and marketable securities increased
to $1.9 billion as of April 30, 2021.

On an EV/Revenue basis, this is an expensive stock. The EV/S is 57. Although less than SNOW, that’s one of the highest numbers of the stocks we follow and it certainly doesn’t have SNOW’s rate of growth.


I think the problem was guidance (not unknown on this board). They guided Q2 at 182.5 total revenue which was less than Q1’s 186.2. Another factor is growth slowed from 81% to 65%. Those two factors combined raises concern about how growth will trend.

I haven’t listened to the call yet, but not a “firing on all cylinders” kind of report in my opinion. Difficult since its their first report as a public company.

I struggled some with their full year guidance of ARR of X. I would prefer they give full year revenue guidance like most (confident) companies. I think the ARR metric is interesting and helpful, and you can kind of back into full year revenue. But just not optimal.

I wouldn’t at all be surprised if the stock traded down further tomorrow. Will re-evaluate once I listen to the call.

Not negative on PATH. I have been watching them for a few years. Tried to get in on the IPO but couldn’t get much of a share allocation (I think I got 80 shares…).



Important to note is that UiPath sells term-based licenses, where revenue recognition occurs differently compared to ratable SaaS license revenue recognition. We have seen this in Alteryx where a significant part of revenue (35%) is recognized upfront, this may inflate the revenue growth in good times but also has the opposite effect when growth slows down and could lead to significant lumpiness in the growth figures. I have no idea how the revenue recognition exactly occurs in UiPath and how much is recognized upfront, but it’s something to pay attention to when comparing with other software stocks.


Unless there is a seasonality involved - clear revenue growth deceleration from 120% (2019) to 80%s (2020) and now 60%s is a huge concern - considering second highest valuation after Snowflake. Aside from Snowflake all our other companies have lower multiples. I guess that the market could re-assess Uipath valuation after first earnings report as a public company.

No position in PATH, but have it in an “extended” watchlist.


The CFO repeatedly reminded analysts/investors to use ARR as the key metric to measure the strength of the business. From the call:

"Before discussing the details of the quarter, I would like to emphasize the financial strengths of our business model. We have a highly recurring subscription based business primarily contracted annually and billed in advance. Our technology is incredibly sticky, resulting in best in class dollar base gross retention and net retention rates. We offer our customers flexible deployment models on-prem, hybrid cloud and SaaS, the mix of which can create lumpy revenue recognition, particularly from licensed revenue under ASC 606. As a result, we remind you that we run and manage our business on ARR, which is most representative of the underlying performance of our business.

Turning to the numbers, this afternoon’s guidance reflects confidence in our market, product portfolio and competitive position. For the second quarter fiscal 2022, we expect ARR to be in the range of 702 million to $704 million. As I emphasized repeatedly, ARR is the key metric for measuring UiPath and it lays a strong foundation for the company as we scale.

We expect revenue to be in the range of $180 million to $185 million given the variability introduced by ASC 606, we do not focus the business on short-term revenue growth, which can be lumpy quarter-to-quarter and dislocated from ARR and the long-term growth in the health of the business. This is evidenced by the fact that second quarter revenue is expected to grow 31% at the midpoint of guidance, while ARR is expected to grow 55%."


further to the above … I found the following 2 statements from the call somewhat inconsistent … unless the bulk of ARR is actually happening in Q2:

  • For the second quarter fiscal 2022, we expect ARR to be in the range of 702 million to $704 million.

  • For fiscal 2022, we expect ARR to be in the range of $850 million to $855 million.

Can anyone else make sense of this as I am quite baffled!

Long PATH 5%


What they are saying, I think is that their run-rate of recurring business will be 850-855 by the end of Q4. They are saying the same metric will be 702 to 704 in Q2. So if you straight line that, it would mean it would be around 780 in recurrent revenue in Q3.

Basically each quarter they are generating 80M in new revenue.

However their Q2 revenue forecast (not recurring) doesn’t really jive with that (somewhat implies that Q3 and Q4 will be back loaded in terms of growth). But it could also just be the vagaries of their revenue recognition (ala AYX complexity).

Personally I think they sandbagged Q2 to start the “raise and beat” game. At least, I hope so.


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PLEASE do not post these one liners, it just clutters the board. This is an amazing board for many reasons, and has helped me in so many ways, but it is daunting on how much there is to read. I try to read all posts so I can gather as much knowledge as possible to make decisions on investing. If we keep the posts to the subject matter and follow the rules of the board it would benefit us all. Cheers,


Fireblade, Please think. Does a post that says, in its entirety, Thanks for clarifying Rob, have a rec! add anything to the board, clarify any stock, or any relevant situation? It will be deleted, of course.