UiPath, Inc.
PATH Details
UiPath, Inc. (NYSE: PATH) provides an end-to-end automation platform that combines the industry's best Robotic Process Automation (RPA) solution with a comprehensive set of features that enables any organization to scale digital business processes swiftly. It generates revenue by selling software licenses, maintaining and servicing those licenses, providing access to specific products (software as a service, or SaaS), and offering extra services such as professional services.
Latest News:
- Change in Leadership: On March 30, 2022, PATH announced that Chris Weber would join its executive team as its first-ever Chief Business Officer (CBO) beginning April 4, 2022. Weber, a former Microsoft executive with over 25 years of corporate software experience, will be in charge of the company's global go-to-market strategy. PATH also announced that Chief Revenue Officer Thomas Hansen is departing to pursue other possibilities. Mr. Hansen will stay with the company until the end of the first quarter of fiscal 2023 to help with the transition.
FY22 Results:
- Strong Revenues: The company reported 46.84% increase in total revenues to USD 892.25 million in FY22 (ended January 31, 2022) from USD 607.64 million in FY21, due to increase in revenue across all segments.
- Net New ARR: PATH's annualized renewal run-rate (ARR) increased by 51.00% YoY in FY22 to USD 344.8 million.
- Debt-Free Balance Sheet: As of January 31, 2022, the company had cash and cash equivalents (including short-term investments) of USD 1.87 billion with no outstanding debt.
Key Risk:
- Customer Concentration Risk: The top 10% of customers account for a sizable amount of the company's revenue and ARR. Any of the company's key customers could decide to buy less or not license its platform and products, resulting in a decrease in revenue and ARR and a negative impact on the company's operations.
Outlook:
- Q1FY23 Estimates: PATH anticipates Q1FY23 ARR of USD 960 – 965 million, with revenues of USD 223-225 million as of April 30, 2022. The non-GAAP operating loss is estimated to be in the USD (30)- (25) million range.
- FY23 Estimates: The company expects FY23 ARR to be around USD 1,200 – 1,210 million, with revenues to be in between USD 1,075 – 1,085 million as of January 31, 2023. The non-GAAP operating income is expected to be around USD 0 - 10 million.
Valuation Methodology: EV/Sales Multiple Based Relative Valuation
(Analysis by Kalkine Group)
* % Premium/(Discount) is based on our assessment of the company's FY1 trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.
Stock Recommendation:
PATH's stock price has fallen 66.67% in the past nine months and is currently leaning towards the lower end of its 52-week range of USD 20.53 to USD 90.00. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 28.40. Investors with a longer time horizon that see automation as a solid growth category, with PATH as a segment leader, may want to take advantage of the slump to buy some shares at the current levels.
Considering the significant correction in the stock price, a rise in ARR, strong top-line performance, debt free status, optimistic outlook, associated risks, and current valuation, we recommend a "Buy" rating on the stock at the closing price of USD 22.18, up 2.73% as of April 01, 2022.
One-Year Technical Price Chart (as on April 01, 2022). Source: REFINITIV, Analysis by Kalkine Group
Technical Analysis Summary:
Technical Indicators Defined: -
Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.
Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
Note 1: The reference data in this report has been partly sourced from REFINITIV.
Note 2: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.
Disclaimer - This report has been issued by Kalkine Pty Limited (ABN 34 154 808 312) (Australian financial services licence number 425376) (“Kalkine”) and prepared by Kalkine and its related bodies corporate authorised to provide general financial product advice. Kalkine.com.au and associated pages are published by Kalkine.
Any advice provided in this report is general advice only and does not take into account your objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your objectives, financial situation and needs before acting upon it.
There may be a Product Disclosure Statement, Information Statement or other offer document for the securities or other financial products referred to in Kalkine reports. You should obtain a copy of the relevant Product Disclosure Statement, Information Statement or offer document and consider the statement or document before making any decision about whether to acquire the security or product.
You should also seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice in this report or on the Kalkine website. Not all investments are appropriate for all people.
The information in this report and on the Kalkine website has been prepared from a wide variety of sources, which Kalkine, to the best of its knowledge and belief, considers accurate. Kalkine has made every effort to ensure the reliability of information contained in its reports, newsletters and websites. All information represents our views at the date of publication and may change without notice.
Kalkine does not guarantee the performance of, or returns on, any investment. To the extent permitted by law, Kalkine excludes all liability for any loss or damage arising from the use of this report, the Kalkine website and any information published on the Kalkine website (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine hereby limits its liability, to the extent permitted by law, to the resupply of services.
Please also read our Terms & Conditions and Financial Services Guide for further information.
On the date of publishing this report (referred to on the Kalkine website), employees and/or associates of Kalkine and its related entities do not hold interests in any of the securities or other financial products covered on the Kalkine website unless those persons comply with certain safeguards, procedures, and disclosures.
Kalkine Media Pty Ltd, an affiliate of Kalkine Pty Ltd, may have received, or be entitled to receive, financial consideration in connection with providing information about certain entity(s) covered on its website.