UiPath shares dropped 14% on Friday after the company's fiscal second-quarter revenue beat was overshadowed by third-quarter guidance implying growth would slow by roughly half. The stock's reaction stood out against a broader market that was flat to higher, pointing to a company-specific reassessment rather than a sector-wide pullback.
UiPath (NYSE:PATH) stock fell 14% to $15.69 in Friday morning trading, unwinding a chunk of the rally that had pushed the shares up 29% over the prior month through Thursday's close. The selloff came even as the Invesco QQQ Trust rose 0.5% to $721.08, keeping the Nasdaq 100 firmly in the green, while the SPDR S&P 500 ETF Trust slipped 0.1% to $772.31.
Guidance overshadows a clean beat
UiPath reported fiscal second-quarter revenue of $410.3 million against a $397.9 million consensus, up 13.4% year over year, with adjusted earnings of $0.15 per share in line with estimates. Adjusted operating income came in at $89.03 million against a $75.22 million consensus, and the company also lifted its full-year revenue guidance to $1.79 billion at the midpoint from $1.78 billion.
But the coming quarter is the problem. UiPath guided third-quarter revenue to about $442.5 million, implying 7.6% year-over-year growth, roughly half the pace just delivered. Billings of $375.5 million rose 24.8% year over year but slightly missed consensus, a sign the pipeline isn't refilling as fast as bulls had priced in.
Pegasystems offers a read on sector versus company
Pegasystems, the closest listed peer in enterprise workflow automation, flagged the same demand-hesitation theme in its July results, when clients delayed purchasing decisions amid AI-market uncertainty. That backdrop shapes the question of whether UiPath's soft outlook reflects a broader slowdown or a company-specific stumble.
Friday's session points toward the latter, since large-cap tech traded higher while the punishment landed squarely on UiPath. Still, UiPath's own commentary echoed some of the same themes Pegasystems raised, including customers pausing to weigh build-versus-buy decisions on artificial intelligence tools.
Leadership reshuffle reinforces the trajectory
UiPath promoted Hitesh Ramani to Chief Financial Officer, kept Ashim Gupta as Chief Operating Officer, named Brad Brubaker Chief Legal and Administrative Officer, and appointed Yazdi Bagli to the board. Founder and Chief Executive Officer Daniel Dines said the changes "position us to operate with even greater speed and accountability."
The next scheduled catalyst is UiPath's investor day and annual user conference in Las Vegas, where management plans to detail its longer-term strategy and product roadmap.
Source: 24/7 Wall St.
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