UiPath, Inc. Q3 FY2024 earnings

UiPath closed the third quarter of fiscal 2024 with revenue of $325.9 million, up 24 percent from $262.7 million in the prior-year quarter. Year-to-date revenue was $902.8 million, up 20 percent. Annualized renewal run-rate hit $1.378 billion, also up 24 percent, and net new ARR was $70 million. The customer base keeps moving upmarket: 264 customers now generate ARR of at least $1 million, up from 201 a year ago, and 1,974 generate at least $100 thousand, up from 1,711. Customers at or above the $1 million threshold accounted for 49 percent of current period revenue, versus 41 percent a year earlier.

That growth still carries a caveat. Dollar-based net retention slipped to 121 percent from 126 percent a year earlier, so existing accounts are expanding more slowly than they did twelve months ago. Management said 18 percent of the ARR growth rate came from new customers and 82 percent came from existing ones. Gross profit rose to $276.0 million for the quarter from $220.0 million, and GAAP gross margin was 84.7%, up from 83.7%. The mix shift toward subscription and Flex Offerings, which bundle term license, maintenance, and SaaS, keeps lifting margins, and the company expects that trend to continue as Flex sales replace legacy on-premise terms. Year-to-date gross margin was 84.2% against 82.4%, and non-GAAP gross margin was 87 percent in the quarter versus 86 percent.

Profitability improved on both lines. The operating loss narrowed to $55.8 million from $67.0 million, and operating margin was -17.1% versus -25.5%. Net loss shrank to $31.5 million from $57.7 million, and diluted loss per share was $0.06 against $0.10. Through nine months, the operating loss was $179.8 million, the net loss was $123.8 million, and diluted loss per share was $0.22, compared with a $303.1 million operating loss, a $300.7 million net loss, and $0.55 per share a year earlier. Year-to-date operating margin moved to -19.9% from -40.4%. Much of the gap between the GAAP and non-GAAP pictures comes from non-cash charges: non-GAAP operating income was $44 million in the quarter, while stock-based compensation expense alone was $95.9 million.

Cash is the clearest bright spot. Operating cash flow was $41.9 million for the quarter, a swing from a $27.3 million outflow a year earlier, and $153.5 million for the nine months against a $103.9 million outflow. Non-GAAP adjusted free cash flow, which is a different measure, was $44 million for the quarter and $163.0 million for the nine months. Capital expenditures were only $0.7 million in the quarter, down from $5.3 million. Deferred revenue, current portion, rose 40.7 percent to $405.8 million, and remaining performance obligations rose 31.0 percent to $994.6 million, a sign of booked work ahead. In September 2023 the board authorized repurchases of up to $500.0 million of Class A common stock.

Guidance for the fourth quarter of fiscal 2024 puts ARR at $1.450 billion to $1.455 billion as of January 31, 2024 and non-GAAP operating income at roughly $78 million. The company did not reconcile that operating income target to GAAP, citing the unpredictable size of stock-based compensation. Risks remain heavy. Management flags macroeconomic and geopolitical strain, including the Russia-Ukraine and Israel-Hamas conflicts, inflation, interest rate moves, foreign currency volatility, and instability in the financial services sector. Competition in AI-driven automation is intensifying, the model still leans on renewals and expansion from existing accounts, and the fiscal year 2023 restructuring actions that cut roughly 5 percent and then 6 percent of the global workforce were completed only in the second quarter of fiscal 2024.