UiPath Shares Surge. Is It Too Late to Buy the Stock?

Shares of UiPath (NYSE: PATH) surged after the company reported strong fiscal third-quarter results and issued upbeat guidance. The stock is now up about 38% on the year, as of this writing.

For those unfamiliar with UiPath, it started as a robotic process automation (RPA) company that lets customers use software bots to perform repetitive, rule-based tasks. However, with the advent of artificial intelligence (AI), it's been transforming itself into an AI orchestration platform to help manage both bots and AI agents.

Let's take a close look at the company's quarterly results and prospects to see if it's too late to buy the stock, or if its momentum is just getting started.

Moving in the right direction

UiPath said it was seeing strong momentum in its AI agent orchestration strategy, although it said it was still early. It noted that more than 950 companies are already creating AI agents using its platform, and that its Maestro has orchestrated more than 365,000 processes.

It also highlighted its recent innovation push and integrations with top AI companies, like Nvidia, Alphabet, and Microsoft. It said one of its most exciting new solutions is ScreenpPlay, which provides more reliable automation by combining RPA with the power of large language models (LLMs).

For its fiscal third quarter, revenue rose 16% year over year to $411 million, cruising past analyst expectations of $392.9 million, as compiled by Fiscal AI data. Its annualized renewal run rate (AAR) rose by 11% year over year to $1.78 billion. Meanwhile, it added $59 million in new ARR in the quarter.

UiPath's ARR consists of its annualized invoiced amounts from subscription licenses as well as maintenance and support obligations. It doesn't include invoiced amounts related to perpetual licenses or professional services. The metric is similar to bookings and is a potential indicator of future revenue, although contract lengths play a role.

Dollar-based net retention came in at 107%, showing that the company is still growing within its existing customer base. It also had 98% gross retention.

UIPath ended the quarter with 10,860 customers, an increase of 40 from the second quarter and 70 year over year. Customers with $100,000 or more in ARR increased by 74 sequentially to 2,506, and were up from 2,235 a year ago. Meanwhile, clients with $1 million or more in ARR rose to 333 from 320 in the second quarter and 302 a year ago.

Adjusted earnings per share (EPS) surged 45% to $0.16, topping the $0.15 consensus. The company generated $28 million in both operating cash flow and free cash flow. It ended the quarter with $1.5 billion in cash and marketable securities and no debt.

Looking ahead, UIPath forecast fourth-quarter revenue in the range of $462 million to $467 million, with the midpoint above the $463.1 million analyst consensus. It guided for ARR between $1.844 billion and $1.849 billion.

Image source: Getty Images.

Can the stock's momentum continue?

Following the return of founder Daniel Dines as CEO, UiPath has cut costs and stabilized its business, and now it's starting to go on the offensive. Agentic AI is likely to become the next big AI market, so having an orchestration platform that can help customers coordinate various first-party and third-party AI agents is a huge opportunity.

The company's background in RPA is also important, since in many cases, using software bots is going to be a lot cheaper than using AI agents. By offering a platform that can determine and assign which one to use for particular tasks will be a huge cost saver for customers.

Meanwhile, from a valuation perspective, UiPath's stock is still inexpensive, especially if it can continue to accelerate its growth. It currently trades at a forward price-to-sales ratio of 5.4. Take out its $1.5 billion in cash and marketable securities, and the stock trades at an enterprise-value-to-forward-sales ratio of under just 4.5.

Given its valuation and the fact that it could just be on the brink of a huge growth opportunity, it's not too late to buy UiPath's stock, even after the big run-up.

Geoffrey Seiler has positions in Alphabet and UiPath. The Motley Fool has positions in and recommends Alphabet, Microsoft, Nvidia, and UiPath. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.