- ARR: $1.508 billion, an increase of 21% year-over-year.
- Net New ARR: $44 million, excluding FX headwind of $3 million, net new ARR totaled $47 million.
- Revenue: $335 million, an increase of 16% year-over-year; normalizing for FX headwind of $8 million, revenue grew 18% year-over-year.
- Gross Margin: Overall gross margin of 86%; software gross margin of 90%.
- Operating Expenses: $238 million.
- GAAP Operating Loss: $49 million, including $89 million of stock-based compensation expense.
- Non-GAAP Operating Income: $50 million, resulting in a non-GAAP operating margin of 15%; including FX headwind of $6 million, non-GAAP operating income was $57 million or a non-GAAP operating margin of 17%.
- Non-GAAP Adjusted Free Cash Flow: $101 million.
- Cash and Equivalents: $1.9 billion as of April 30, with no debt.
- Customer Metrics: Approximately 10,800 customers; customers with $100,000 or more in ARR increased to 2,092; customers with $1 million or more in ARR totaled 288.
- Dollar-Based Gross Retention Rate: 98%.
- Dollar-Based Net Retention Rate: 118%.
- Remaining Performance Obligations (RPO): $1.101 billion, up 22% year-over-year; current RPO increased to $683 million.
- Share Repurchase: 938,000 shares of Class A common stock repurchased at an average price of $23.46.
- Q2 Fiscal 2025 Guidance: Revenue in the range of $300 million to $305 million; ARR in the range of $1.543 billion to $1.548 billion; non-GAAP operating income of approximately breakeven.
- Fiscal Full Year 2025 Guidance: Revenue in the range of $1.405 billion to $1.410 billion; ARR in the range of $1.660 billion to $1.665 billion; non-GAAP operating income of approximately $145 million; non-GAAP adjusted free cash flow of approximately $300 million.
Release Date: May 29, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- ARR grew 21% year-over-year to $1.508 billion, driven by net new ARR of $44 million.
- Revenue increased to $335 million, a 16% year-over-year growth.
- UiPath Inc (PATH, Financial) expects to generate $300 million of non-GAAP adjusted free cash flow for the full fiscal year 2025.
- Strong customer retention with a dollar-based gross retention rate of 98% and a dollar-based net retention rate of 118%.
- Positive feedback and excitement around new AI innovations, including Autopilot and large language models (LLMs).
Negative Points
- Leadership transition with Rob Enslin leaving the company, which may cause short-term disruption.
- Challenging macroeconomic environment impacting large multiyear deals and mid-market customers.
- Inconsistent execution, including contract execution challenges and sales compensation changes.
- Investments to reaccelerate growth have fallen short of expectations, creating short-term pressure on operating margins.
- Revised second quarter and fiscal 2025 guidance are lower than expected, reflecting ongoing macroeconomic challenges and leadership changes.
Q & A Highlights
Q: Could you help us better understand what's changed over the last few months regarding large multiyear deals? Are you seeing more competitive pressures or other issues?
A: We started seeing pressure on large multiyear deals around 6-7 weeks ago. Some deals shrank or were postponed, but this wasn't due to competitive pressures. It's a combination of macroeconomic factors and increased customer scrutiny. Additionally, changes in our sales compensation at the beginning of the fiscal year, which de-incentivized multiyear deals, contributed to this issue. We also faced some late-stage deal execution challenges.
Q: For customers renewing at lower rates, how pronounced has that partial churn been? Are customers turning off use cases or just digesting what they overbought in prior contracts?
A: Our churn rates, as a percentage of our renewable base, remain relatively constant and are not having an outsized impact. We don't see customers turning off use cases significantly; it's more about optimizing their existing deployments.
Q: You mentioned a shift towards a more verticalized sales motion. Why is this the right approach now, and what is the timeline for implementation?
A: We've been planning this strategy for some time, and the advancements in AI make it even more relevant now. We're seeing strong returns in sectors like healthcare, financial services, and public sector, driven by our investments in AI and industry-specific models. The timeline for full implementation is ongoing, but we're already seeing positive impacts.
Q: Regarding the lengthening sales cycles for large multiyear deals, is the solution to break these deals down into smaller ones or to incentivize larger deals more?
A: We need to adjust our sales compensation to find a middle ground that incentivizes multiyear deals appropriately. We went too far in de-incentivizing them, and we're now tuning our approach to better support growth.
Q: Can you speak to the investment in HAI and how it fits into your overall AI strategy?
A: Our investment in HAI is part of our strategy to advance agentic process automation, combining task knowledge with execution capabilities on our platform. This collaboration aims to build advanced AI models that can handle complex tasks, particularly in personal productivity where traditional automation isn't feasible.
Q: Are large customers extending their cycles due to reevaluating their Gen AI strategies? How does UiPath's positioning evolve as their AI strategies mature?
A: Gen AI is a tailwind for us, and we've invested significantly in it. While AI creates some confusion among customers, the combination of Gen AI and our automation platform makes sense to them. Our upcoming Autopilot launch is generating excitement and will help drive adoption and reduce costs.
Q: Is the deal scrutiny and postponement broad-based across the business or more pronounced in specific industries or regions?
A: The scrutiny and postponements are broad-based across the business. However, the macroeconomic impact is more pronounced on smaller mid-market customers.
Q: What broader strategy changes will you make as you return to the CEO role? Will you step away from the product side?
A: I plan to bring together functional teams to enhance customer centricity across product, go-to-market, marketing, and other divisions. I aim to restore the collaborative ethos that drove our initial success. While I will focus on the CEO role, our new CTO, Raghu Malani, will lead the product and engineering efforts.
Q: Can you provide more clarity on Rob Enslin's departure and your long-term plans as CEO?
A: Rob left for personal reasons, and we remain on good terms. He will continue as an advisor. I am committed to the CEO role for the foreseeable future, having driven the company from inception to its current state. I am fully back and focused on leading UiPath.
Q: How should we think about margin leverage going forward? Are there opportunities to adjust the cost structure?
A: Free cash flow is a more appropriate measure of our margin, and we continue to generate robust free cash flow. We see opportunities to drive efficiencies in G&A and sales and marketing while continuing to invest in growth areas like AI. We believe we can balance investment and margin improvement as the environment moderates.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
