Investors will naturally turn to the two headline metrics when looking at quarterly reports: the top-and bottom-line numbers. But in the world of SaaS stocks, ARR (annual recurring revenue) is often noted as just as important.
Looking at the latest results for UiPath (PATH), the company delivered the goods on all fronts.
In 3QF22, the robotic-process automation software company’s revenue increased by 49.9% year-over-year to reach $220.82 million, in the process beating Wall Street’s expectations by $11.59 million. Adjusted EPS of $0.00 also came in ahead of the analysts’ forecast - by $0.04.
ARR grew quarter-over-quarter by a record $92 million, rising from last quarter’s $74 million record, exhibiting 58% growth compared to the same period last year to reach $818.4 million in total.
While Q3's growth rate was just below Q2's 60% growth, Needham’s Scott Berg says the 58% uptick “likely calms some concerns of ARR growth decelerating more than expected.”
The fact net new ARR growth accelerated sequentially from 33% to 42% “aligns with the demand commentary” Berg was given in October by partners at the company's annual customer conference. “ARR growth continues to be driven by upsells into the base,” the 5-star analyst went on to say, “But commentary on net new customer growth suggests the demand environment is returning to healthy levels.”
Looking ahead, UiPath anticipates Q4 revenue will come in between $281 million and $283 million and ARR will be in the range of $901 million to $903 million. The Street was expecting $281.5 million and $880 million, respectively.
Therefore, based on the “acceleration in net new ARR expecting post-pandemic demand to be positive versus recent checks,” Berg reiterated a Buy rating, backed by an $85 price target. Should the target be met, investors are looking at returns of 82% in the year ahead. (To watch Berg’s track record, click here)
The rest of Wall Street’s analyst corps are split down the middle on this one. With an additional 6 Buys and Holds, each, the stock has a Moderate Buy consensus rating. However, the outlook is more conclusive where the share price is concerned; going by the $67.42 average target, the stock is expected to add 38% of value over the coming year. (See PATH stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
