UiPath Stock's Price Struggles Continue After Earnings

(Image credit: Andrei Pungovschi/Bloomberg via Getty Images)

UiPath (PATH) stock is struggling for direction Friday even after the enterprise automation company beat top- and bottom-line expectations for its second quarter and raised its full-year outlook.

In the three months ended July 31, UiPath's revenue increased 10.1% year-over-year to $316.3 million, driven by a 21.7% jump in subscription revenue to $194.7 million. Its earnings per share (EPS) declined to 4 cents from 9 cents in the year-ago period.

"We are pleased with our second quarter results, with annual recurring revenue growing 19% year-over-year, a testament to the team's improved execution and the compelling value that our AI-powered automation platform delivers to our customers," said UiPath CEO Daniel Dines in a statement.

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The executive adds that conversations with clients "deepen our conviction that there is an increasing need for AI and automation, and our unwavering commitment to innovation continues to position us as the automation platform of choice for capturing the opportunities that AI brings to an enterprise."

The results beat analysts' expectations. Wall Street was anticipating revenue of $304 million and earnings of 3 cents per share, according to CNBC.

"We delivered durable growth at scale while driving disciplined decision-making, enabling us to raise our profitability guidance for the full year," said UiPath Chief Financial Officer Ashim Gupta in a statement. The company now anticipates revenue in the range of $1.42 billion to $1.425 billion, up from its previous forecast of $1.405 billion to $1.41 billion.

UiPath also announced a $500 million expansion to its share repurchase program. With the new authorization, the company can now repurchase up to $554 million of its outstanding shares, or roughly 8% of its current market cap. Stock buybacks can help boost the share price.

Is UiPath stock a buy, sell or hold?

Today's technical troubles are just more of the same for UiPath, which is down roughly 51% for the year to date. And Wall Street is on the sidelines when it comes to the tech stock.

According to S&P Global Market Intelligence, the average analyst target price for the PATH stock is $15.71, representing implied upside of over 20% to current levels. Meanwhile, the consensus recommendation is a Hold.

Financial services firm Oppenheimer is one of those with a Perform rating (equivalent to a Hold) on PATH stock.

"UiPath is the defining pure-play software supplier in Robotic process automation and exerts a market leadership position," says Oppenheimer analyst Brian Schwartz. "It is the largest pure-play company by revenue and is also one of the fastest growers in the category too. However, execution has been inconsistent and the business is in transition. We believe shares are fairly valued at current levels, and we would wait on the sidelines for a better entry point."

Joey Solitro is a freelance financial journalist at Kiplinger with more than a decade of experience. A longtime equity analyst, Joey has covered a range of industries for media outlets including The Motley Fool, Seeking Alpha, Market Realist, and TipRanks. Joey holds a bachelor's degree in business administration.