We came across a bullish thesis on UiPath Inc. (PATH) on The Chop Wood, Carry Water Newsletter’s Substack by Alexandru Dragut. In this article, we will summarize the bulls’ thesis on PATH. UiPath Inc. share was trading at $12.56 as of Oct 10th. PATH’s forward P/E was 29.24 according to Yahoo Finance.
A marketing manager looking at the data dashboard of a marketing automation software showing successful campaign results.
UiPath Inc. provides an end-to-end automation platform that empowers organizations to streamline their business processes through advanced AI and machine learning technologies. UiPath generates revenue through a subscription-based model, offering its software solutions to over 10,810 customer accounts globally. Its platform includes UiPath Studio for developers to build automation workflows, UiPath Orchestrator to manage and deploy robots, and Automation Cloud™ for SaaS-based automation. These tools allow enterprises to automate routine tasks, boost efficiency, and reduce costs. The company’s Annualized Renewal Run-Rate (ARR) reached $1.551 billion in July 2024, showcasing its strong customer retention and expansion efforts. UiPath also targets larger enterprise clients, with 2,163 customers generating over $100,000 in ARR, further securing long-term revenue streams.
Investing in UiPath presents an opportunity for growth, especially given its position in the automation sector. With a 24% revenue growth to $1.3 billion in FY2024 and an ARR growth of 22%, UiPath has demonstrated its ability to scale its subscription-based business model while expanding its AI-driven capabilities. Recent product updates, including Communications Mining and enhanced intelligent document processing, have broadened its use cases across industries, making it an appealing choice for enterprises seeking efficiency through automation. Furthermore, UiPath achieved GAAP profitability in Q4 FY2024, a significant milestone that shows its path toward sustained profitability despite short-term losses.
The company faces competition from larger enterprise players like Microsoft and Salesforce, but its strategic partnerships with AWS, Google, and Microsoft enhance its scalability and integration capabilities. UiPath’s solid financials also highlight a promising outlook. In Q2 FY2025, it reported $316 million in revenue, a 10% year-over-year increase, and exceeded EPS estimates with $0.04. Its dollar-based net retention rate of 115% reflects strong customer satisfaction and continued revenue growth from existing clients.
Although still unprofitable overall, with ($0.16) earnings per share over the last year, UiPath’s long-term focus on AI development and enterprise growth will help the stock exceed $20 per share as it continues to capture market share in the growing automation space.
UiPath Inc. is also not on our list of the 31 Most Popular Stocks Among Hedge Funds. As per our database, 29 hedge fund portfolios held PATH at the end of the second quarter which was 33 in the previous quarter. While we acknowledge the risk and potential of PATH as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than PATH but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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PATHclosure: None. This article was originally published at Insider Monkey.