UiPath, Inc.

PATH Details

UiPath, Inc. (NYSE: PATH) develops a complete automation platform with user emulation. Its platform is designed for employees to handle a wide range of use cases within an organisation, from simple activities to long-running, complex business processes. It makes money by selling software licences, maintaining and servicing those licences, providing access to specific products (software as a service, or SaaS), and providing additional services like professional services.

Latest News:

• Accolades Received: On March 15, 2022, PATH announced that it had received the Customer Relationship Management Institute (CRMI) LLC's 2021 NorthFace ScoreBoard Service Award (NFSB) to achieve excellence in customer service and support for the UiPath end-to-end automation platform. Since 2000, this award has been given to companies that have exceeded customer expectations in customer service through a solid commitment to customer-centricity, as judged solely by their customers.

Q3FY22 Results:

• Boost in Revenues: Due to an increase in sales across all categories, the company reported a 49.92% rise in total revenue to USD 220.82 million in Q3FY22 (ended October 31, 2021) compared to USD 147.29 million in Q3FY21.
• Improvement in ARR: PATH's annualized renewal run-rate (ARR) increased by 57.87% in Q3FY22 to USD 818.41 million from USD 518.40 million in Q3FY21.
• Strong Balance Sheet: As of October 31, 2021, the company had cash and cash equivalents (including short-term investments) of USD 1.88 billion and no outstanding debt.

Key Risk:

• Customer Concentration Risk: A significant portion of the company's revenue and ARR comes from the top 10% of customers. Any of the company's important customers could decide to buy less or not licence its platform and products, resulting in a drop in revenue and ARR and a negative impact on the company's operations.

Outlook:

• Q4FY22 Estimates: PATH expects Q4FY22 ARR to be in the range of USD 901 – 903 million, with revenue of USD 281-283 million, as of December 8, 2021. The non-GAAP operating income is expected to be in the range of USD 10-20 million.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks. 

Stock Recommendation:

PATH's stock price has fallen 57.71% in the past nine months and is currently leaning towards the lower end of its 52-week range of USD 23.93 to USD 90.00. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 35.16.

Considering the significant correction in the stock price, a rise in ARR, strong top-line performance, recent accolades, positive outlook, associated risks, and current valuation, we recommend a "Buy" rating on the stock at the current market price of USD 29.50, up 3.09% as of March 18, 2022, at 02:40 AM ET.

Three-Year Technical Price Chart (as on March 18, 2022, at 02:40 PM ET). Source: REFINITIV, Analysis by Kalkine Group

Technical Analysis Summary:

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.