TLDR
- UiPath (PATH) stock tumbled 18% after issuing disappointing revenue forecast
- Company cited uncertainty in U.S. government spending, potentially linked to Trump’s DOGE initiative
- Q4 revenue grew 5% year-over-year to $424 million, slightly below analyst expectations
- UiPath forecasts fiscal 2026 revenue of $1.525-1.53 billion, below market expectations of $1.58 billion
- The company acquired UK-based AI company Peak for an undisclosed price
UiPath shares plunged 18% in premarket trading on Thursday after the automation software company released a disappointing revenue forecast. The stock dropped to $9.65 as investors reacted to the company’s lower-than-expected guidance.
The sell-off came after UiPath’s Wednesday earnings report. The company projected sales of $330 million to $335 million for its current fiscal quarter.
This forecast fell well short of analyst expectations of $367.5 million, according to FactSet data.
UiPath executives pointed to uncertainty in government spending as a key factor behind the lowered outlook. “Over the last several weeks, we have seen increasing global macroeconomic uncertainty, particularly in the U.S. public sector,” said Ashim Gupta, UiPath’s chief operating and financial officer.
This uncertainty has directly affected the company’s financial projections for both the fiscal first quarter and full year 2026.
The timing suggests UiPath may be feeling the impact of President Donald Trump’s efforts to reduce federal spending. The Department of Government Efficiency, known as DOGE and led by Elon Musk, claims to have already cut $115 billion in federal spending.
However, previous analysis by The Wall Street Journal indicated that many of these claimed savings were overstated.
During an earnings call, Gupta addressed the government situation directly. “They [U.S. government officials] see us as a real avenue to meet a lot of DOGE’s goals. But we have to give the appropriate space to let them work through the transition,” he told analysts.
Potential weakness in U.S. federal business
KeyBanc analyst Jason Celino noted that UiPath appears to be one of the first software companies to specifically highlight weakness in its U.S. federal business. Celino maintained a Sector Weight rating on the stock without a target price.
“Though concerning and with potential negative implications for broader software, we do wonder if it is more company/sub-segment specific,” Celino wrote in a research note titled “DOGE’s First Casualty in Software?”
UiPath specializes in “robotic process automation” technology designed to automate repetitive information tasks. The company has been working to counter concerns that the rise of artificial intelligence might reduce demand for its automation products.
UiPath launches AI products
In response to the AI challenge, UiPath has launched its own suite of AI products. The company also announced on Wednesday that it had acquired UK-based AI company Peak for an undisclosed amount.
For the fiscal fourth quarter ended January 31, UiPath reported $424 million in sales. This represented a 5% increase year over year but fell slightly below analyst forecasts of $425.1 million.
The company’s adjusted earnings were 26 cents per share, exceeding estimates of 20 cents per share.
Looking ahead, UiPath now projects full-year fiscal 2026 revenue between $1.525 billion and $1.53 billion. This falls short of market expectations of $1.58 billion.
The company expects annual recurring revenue (ARR) to reach between $1.816 billion and $1.821 billion by January 31, 2026. This follows a fiscal 2025 ARR of $1.66 billion, which represented a 14% year-over-year increase.
During the fourth quarter, UiPath generated $60 million in net new ARR.
CEO Daniel Dines acknowledged the challenging environment during the post-earnings call. He noted a sharp increase in macroeconomic volatility that has impacted customer budgets and led to foreign exchange fluctuations.
Despite the cautious short-term outlook, Dines expressed confidence in the long-term value of UiPath’s automation platform.
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