UiPath's (PATH) Q4 results point to "stability" in a challenging environment for automation companies, though stronger artificial intelligence adoption will need to drive faster growth before sentiment improves, Morgan Stanley said in a report Thursday.
The company reported annual recurring revenue of about $1.85 billion in Q4, up 11% year over year and above the high end of its guidance. Net-new ARR rose 20% on a reported basis but declined 5% on a constant-currency basis, broadly in line with recent quarters, the report said.
The investment bank said the results reflect improving execution and a stabilizing business as UiPath focuses on combining AI agents with robotic process automation, process mining and intelligent document processing to automate business processes.
The company said annual recurring revenue from its AI-related offerings reached about $200 million for the first time, representing more than 10% of total ARR, with the firm saying the figure indicates "early AI traction" and growing adoption among large customers.
Morgan Stanley maintained an equal-weight rating on the stock and lowered its price target to $17 from $19, while awaiting clearer signs that expanding adoption of AI agents will translate into sustained acceleration in ARR growth.
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