Q2 2027 UiPath Inc Earnings Call Transcript
Key Points
- UiPath Inc (PATH) delivered a strong second quarter with ARR growing 12% year-over-year to $1.938 billion and revenue up 13% to $410 million, beating guidance.
- The company achieved its fourth consecutive quarter of GAAP profitability, with non-GAAP operating margin expanding to 22%, up over 400 basis points year-over-year.
- AI is becoming central to large deals, with 18 of the top 20 deals including AI components, leading to larger expansions and consolidation of automation and AI onto the UiPath platform.
- UiPath Inc (PATH) is seeing strong customer wins and consolidation trends, including a top Canadian bank new logo and a Department of War expansion, highlighting the platform's governance and orchestration capabilities.
- The use of coding agents in implementations has reduced effort by nearly 60%, improving time-to-value and overall ROI for customers, which is expected to expand the automation market.
- Customer retention metrics remain strong, with dollar-based gross retention at 97% and net retention at 109%, a two-point increase year-to-date, indicating stabilization and expansion within the customer base.
- UiPath Inc (PATH) faces a variable macroeconomic environment, with foreign exchange headwinds impacting results, including an $8 million year-over-year revenue headwind in Q2 and a projected $20 million headwind for the full year.
- Net new ARR of $37 million in Q2, while up from $31 million last year, still reflects a relatively modest growth pace compared to the company's overall ARR base.
- The company is still experimenting with pricing models for its agentic offerings, indicating uncertainty in how to best monetize these new AI-driven products.
- While customer attrition is concentrated among the smallest customers, the company continues to see churn in this segment, which could pressure future growth if not managed.
- Adjusted free cash flow decreased to $31 million in Q2 from $45 million in the prior year, driven primarily by the timing of tax-related payments, which could signal cash flow volatility.
- The guidance for Q3 and full-year 2027 implies a deceleration in net new ARR growth in the second half of the year, reflecting a prudent outlook amid ongoing market uncertainty.
Good day, everyone. My name is Megan, and I will be your conference operator today. At this time, I would like to welcome you to the UiPath second quarter 2027 earnings conference call. (Operator Instructions)
At this time, I would like to turn the call over to Allise Furlani, Vice President of Investor Relations.
Good afternoon, and thank you for joining us today to review UiPath second quarter fiscal 2027 financial results, which we announced in our earnings press release issued after the close of the market today. On the call with me are Daniel Dines, Founder and Chief Executive Officer; Ashim Gupta, Chief Operating Officer; and Hitesh Ramani, Chief Financial Officer, to deliver our prepared comments and answer questions. Our earnings press release and financial supplemental materials are posted on the UiPath Investor Relations website.
These materials include GAAP to non-GAAP reconciliations. We will be discussing non-GAAP measures on today's call. This afternoon's call
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