UiPath, Inc.

PATH Details

UiPath, Inc. (NYSE: PATH) operates as an enterprise automation software company that provides an end-to-end automation platform that combines the Robotic Process Automation (RPA) solution with a set of capabilities that allow businesses to scale their digital business processes. PATH's platform uses artificial intelligence (AI)-based computer vision to enable its software robots to execute various tasks similar to those performed by humans when carrying out commercial procedures. The company's ordinary shares were listed on the NYSE on April 21, 2021, at an issue price of USD 56.00 per share.

Latest News:

• Driving Efficiency: On November 15, 2021, PATH announced integrating its end-to-end automation platform into PwC Perform, a proprietary operational improvement methodology and management system that encourages new behaviors to improve an organization's effectiveness and efficiency while also improving customer outcomes.
• Strengthening its Platform: On November 08, 2021, PATH enhanced its end-to-end automation platform with more than 100 feature additions across its product portfolio, thus providing its customers with greater capabilities and accessibility in researching, designing, managing, and operating automation.

Q2FY22 Results:

• Surge in Topline: The company reported an increase of 40.28% in total revenue to USD 195.52 million in Q2FY22 (ended July 31, 2021) compared to USD 139.38 million in Q2FY21, attributable to 20.17% and 73.92% growth in Licenses and Maintenance & Support segments, respectively.
• Sharp Uptick in ARR: PATH's annualized renewal run-rate (ARR) witnessed a YoY growth of 60.20% to USD 726.47 million in Q2FY22 from USD 453.47 million in Q2FY21.
• Decline in Profitability: PATH reported a net loss of USD 100.03 million in Q2FY22 vs. net income of USD 4.99 million in Q2FY21.
• Cash and Debt Position: As of July 31, 2021, the company had cash and cash equivalents (including short-term investments) of USD 1.90 billion and no outstanding debt.

Key Risks:

• Competition Risk: PATH faces direct competition from Appian Corporation and Microsoft Corporation, and others in RPA solutions markets and iBPMS and iPAAS vendors in the automation lifecycle technology market. Should this competition further intensify, it could adversely impact the company's financial and operational performance.
• Customer Concentration Risk: PATH generates the majority of its revenue and ARR from the top 10% of customers. The loss of any of these key customers could hurt the company's financials.

Outlook:

• Q3FY22 Estimates: PATH expects to clock revenue in the range of USD 207 – 209 million, with non-GAAP operating loss to the tune of USD (30) – (15) million. Its estimated ARR range is USD 796 – 798 million.
• FY22 Guidance: PATH forecasts its ARR of USD 876 – 881 million for the full fiscal year.

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.

PATH Daily Technical Chart (Source: REFINITIV)

Stock Recommendation:

PATH' stock price has declined 21.31% in the past six months and is currently leaning towards the lower band of its 52-week range of USD 47.20 to USD 90.00. The stock is currently trading above its 50 DMA level, and its RSI Index is at 48.65. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 64.07.

Considering the growth prospects of a newly listed company, surge in ARR, strong top-line performance, encouraging outlook, current valuation, and associated risks, we recommend a "Buy" rating on the stock at the current price of USD 53.51, down 0.35% as of November 15, 2021, 10:02 AM ET.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.

*Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached.