UiPath Revenue Jumps 14 Percent

UiPath(NYSE:PATH) reported second quarter fiscal 2026 results (period ended July 31, 2025) on September 4, 2025, delivering 14% year-over-year revenue growth to $362 million (non-GAAP) and 11% annual recurring revenue (ARR) growth to $1.723 billion (non-GAAP), both above the high end of guidance. The company’s pivot toward agentic automation and disciplined cost management resulted in non-GAAP operating income of $62 million with a 17% margin, representing over 2,500 basis points of non-GAAP margin expansion year-over-year. This summary unpacks material strategic moves, risks, and execution highlights shaping UiPath's long-term thesis, based strictly on the transcript’s content.

Cloud adoption and agentic platform expand UiPath ARR

Cloud annual recurring revenue (ARR) surpassed $1.080 billion at quarter end, growing more than 25% year-over-year as UiPath continued to migrate legacy deployments to hybrid and SaaS models. The May 2025 launch of the AgenTeq orchestration and agent builder offerings resulted in approximately 450 customers actively developing agentic solutions, reflecting demand for next-generation automation across both new and existing customers.

"With the launch of our AgenTeq automation platform, we continue to see customers moving to the cloud. We ended the quarter with more than $1.080 billion in cloud ARR, which includes both hybrid and SaaS, an increase of more than 25%. A great example is KLM Royal Dutch Airlines. After saving over 200,000 hours in 2024 with UiPath automation, they are migrating to the cloud, exploring agentic automation initiatives, and implementing UiPath test cloud for SAP. We ended the quarter with approximately 10,820 customers. As with prior quarters, the vast majority of customer attrition continues to be on the lower end. We continue to be successful in signing new enterprise logos that align with our strategy of targeting long-term customers with a propensity to invest. Including newer logos like Henry Schein, a Fortune 500 global healthcare solutions provider, selected UiPath due to the breadth of our agentic automation platform capabilities. And other notable logos in key sectors, like the Watches of Switzerland Group, Community Financial Credit Union, and the Vida Coco Company."
— Ashim Gupta, Chief Operating and Financial Officer

This sustained shift in product mix, logo acquisition, and platform adoption signals a durable and growing recurring revenue base anchored by cloud migration and differentiated AI-automation convergence, providing long-term leverage as the customer cohort matures.

Operational discipline drives record UiPath profitability

Operating expenses decreased 6% year-over-year to $243 million, while non-GAAP gross margin held at 84% and software gross margin reached 90%. The company’s cost control and completed restructuring enabled a non-GAAP operating income margin of 17%, supported by $1.5 billion in cash, no debt, and the repurchase of 8.3 million shares at $12.10 per share.

"We delivered second-quarter overall gross margins of 84%, and software gross margin was 90%. Second-quarter operating expenses were $243 million, a reduction of 6% from the prior year. Second-quarter GAAP operating loss improved $83 million versus the prior year, to $20 million, and included $78 million of stock-based compensation expense. Our continued growth and disciplined expense management for cloud, operating expenses, and stock-based compensation, positions us well to achieve GAAP profitability in the near term. Second-quarter non-GAAP operating income was $62 million, representing a 17% margin, up more than 1,500 basis points year over year and driven by our continued focus on operational efficiency. Second-quarter non-GAAP adjusted free cash flow was $45 million. We ended the quarter with a healthy balance sheet of $1.5 billion in cash, cash equivalents, and marketable securities, and no debt. Our disciplined buyback activity reflects both confidence in our long-term opportunity and our ongoing commitment to return capital to shareholders. During the second quarter, we repurchased 8.3 million shares of our Class A common stock at an average price of $12.10."
— Ashim Gupta, Chief Operating and Financial Officer

Robust non-GAAP margin expansion and capital returns, coupled with improved non-GAAP free cash flow, demonstrate effective management response to macroeconomic headwinds and validate UiPath’s ability to translate operational momentum into tangible shareholder value.

Agentic platform drives dual upsell and land strategy

Over 95% of new customers included core automation in their initial purchases, while agentic platform adoption generated close to 1 million agent runs and 170,000 Maestro process orchestrations, with 450 customers developing agents. Multi-solution deals, such as a seven-figure Fortune 15 contract for SAP transformation, highlight cross-sell opportunities enabled by UI, API, and AI-powered automation integration.

"For new customers, the terminating automation remains a high ROI low barrier entry point. That's why over 95% of new logos this quarter included our core automation capabilities. For our large installed base, our new AI and Agenty capabilities are translating into real momentum. Since launching our AgenTeq platform, customers executed almost 1 million agent runs. Maestro orchestrated over 170,000 process instances. And over 450 customers are actively developing agents."
— Daniel Dines, Founder and Chief Executive Officer

This blended entry and expansion model—anchored by high-retention core automation and accelerated uptake of advanced agentic features—positions UiPath to capture higher wallet share, reduce churn risk, and build enduring enterprise relationships as automation complexity grows.

Looking Ahead

Management raised third quarter fiscal 2026 revenue guidance to $390 million-$395 million and full-year revenue guidance to $1.571 billion-$1.576 billion for fiscal 2026, with ARR (non-GAAP) forecasted at $1.834 billion-$1.839 billion for fiscal 2026 and non-GAAP operating income targeted at $340 million for fiscal 2026. Adoption of agentic solutions is expected to remain in the early phases through fiscal 2026, deferring material top-line impact, while non-GAAP adjusted free cash flow is guided to approximately $370 million for fiscal 2026 and non-GAAP gross margins are expected to be about 85% for fiscal 2026. Public sector momentum is embedded with prudence, reflecting recent U.S. federal wins and continued macroeconomic caution.

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This article was created using Large Language Models (LLMs) based on The Motley Fool's insights and investing approach. It has been reviewed by our AI quality control systems. Since LLMs cannot (currently) own stocks, it has no positions in any of the stocks mentioned. The Motley Fool has positions in and recommends UiPath. The Motley Fool has a disclosure policy.