UiPath Stock is Nearing Rock Bottom Down Here

Robotic process automation (RPA) platform provider UiPath NASDAQ: PATH stock has been getting crushed to new lows ever since hitting highs of $90 nearly a year ago. The Company is a leader in RPA, which enables companies to better automate their repetitive processes. It’s both software robotics and an artificial intelligence (AI) play. UiPath helps enterprises become more efficient, like Paychex NASDAQ: PAYX saving over 425,000 manual hours with over 35 million bought transactions with over 40 workflows enabling them to save 40,000 hours annually. Unfortunately or fortunately for bargain hunters, AI companies are no longer the darling of Wall Street as evidenced by the carnage in companies like C3.ai NYSE: AI which plunged from a high of $183.90 on Dec. 20, 2020, to a low of $16.59 on March 15, 2022. The Company lowered its fiscal 2023 top-line guidance as it gets affected by the Russian invasion of Ukraine impacts on Europe and the UK but shares are nearing a bottom. Digital transformation is driving growth. Prudent investors willing to be patient enough to wait out fiscal 1H 2023 headwinds for a recovery in the second half can watch for opportunistic pullbacks in shares of UiPath.

Fiscal Q4 2022 Earnings Release

On March 22, 2022, UiPath released its fiscal fourth-quarter earnings report for the quarter ending in January 2022. The Company saw earnings-per-share (EPS) of $0.05, excluding non-recurring items, versus consensus analyst estimates of $0.03, beating by $0.02. Revenues rose 39.3% year-over-year (YoY) to $289.7 million beating analyst estimates for $283.25 million with ARR rising 59% to $925.3 million.

Lowered Guidance

UiPath issued downside guidance for fiscal Q1 2023 revenues between $223 million to $225 million versus $246.80 million estimates. The Company expected ARR in the range of $960 million to $965 million as of April 30, 2022. UiPath issued downside guidance for fiscal full-year 2023 revenues to come in between $1.075 billion to $1.085 billion versus $1.18 billion with ARR expected in the range of $1.2 billion to $1.21 billion as of January 31, 2023.  

Conference Call Takeaways

UiPath CEO Daniel Dines pointed out that the Company will exceed the $1 billion ARR mark by the end of fiscal 2023 as fiscal Q4 2022 saw net new ARR grow 72% YoY. He commented, “Our continued growth at scale reflects broad-based adoption of our end-to-end automation platform and our focused execution. Automation is critical to digital transformation and to unlock new levels of innovation, agility, and productivity.” Its land and expands model has a dollar-based net retention rate of 145% making it the best in class. The Company’s client-based grew to 10,100 with 1,493 clients having an ARR of over $100,000, up 49% YoY. It includes over 158 million dollar clients, up 78% YoY. The deployment of more software robots and the adoption of its products is driving the growth. Its end-to-end automation platform has helped clients speed up their automation life cycle. The Company ended the quarter with over 3,800 cloud clients with over 55% of new logos choosing cloud. UiPath ended the quarter with 5,100 partners. CEO Dines stated, “Building a best-in-breed go-to-market ecosystem requires us to sell with global GSIs and automation experts, as well as enable a broad range of organizations with distribution capabilities like Ingram Micro. These collaborations include sell through like with Deloitte, which has decided to expand their UiPath usage for their internal automation journey, sell-with, and sell-through during the quarter, we closed several new and expanded partnerships, including Finastra and ISID.” He concluded that after a two-week stay in Europe, the war is obviously having “profound” effects on both physical and economic security. They have paused business in Russia. The uncertainty and rising interest rates will impact the macro environment which is leading them to cut guidance.

PATH Price Trajectories

Using the rifle charts on the weekly and daily time frames enables a more precise near-term view of the price action playing field for PATH stock. The weekly rifle chart collapsed again after rejecting near the $31.47 Fibonacci (fib) level to trigger a low band mini inverse pup back down. The weekly market structure low (MSL) buy triggers on a breakout through $27.94. The weekly rifle chart has a downtrend with a steadily falling 5-period moving average (MA) resistance at $25.40 and a falling 15-period MA at $32.40 with weekly lower Bollinger Bands (BBs) at $15.26. The weekly stochastic formed another mini inverse pup to the 10-band. The daily rifle chart downtrend has a falling 5-period MA at $21.42 with a 15-period MA falling at $26.02. The daily lower BBs sit at $16.18. The daily stochastic formed a mini inverse pup lean under the 10-band. Prudent investors can watch for opportunistic pullback levels at the $17.69 fib, $15.56, $14.62 fib, $12.50, $10.49, $9.49, and the $7.60 price level. Upside trajectories range from the $25.65 fib level up to the $39.00 fib level.