shares were rising early Thursday after the automation-software company beat expectations for revenue growth. UiPath, however, was still working to convince analysts that artificial intelligence will be a boon to its business.
(ticker: PATH) shares were up 4.3% at $16.92 in premarket trading following its earnings report late Wednesday.
Shares have risen 28% this year through Wednesday’s close but have been volatile as investors debate whether the company is likely to benefit or be harmed by the rise of artificial-intelligence technology. The latest results don’t seem to have settled the debate.
“We have yet to see if Generative AI will drive truly inimitable differentiation for UiPath in a very competitive and disruptive automation software landscape,” D.A. Davidson’s Gil Luria wrote in a research note.
Luria raised his target price on UiPath stock to $17 from $16 but kept a Neutral rating. He said that the company was executing well on improving its margins and free cash flow but the company still faces a tough environment for software sales.
UiPath posted adjusted earnings for the quarter ended in July of 9 cents a share, higher than analysts’ estimates of 4 cents. Revenue rose 19% to $287.3 million; analysts expected $281.5 million, according to FactSet.
Analysts peppered UiPath executives with a series of questions about how the growth of generative AI was affecting client spending on its software. Co-CEO Daniel Dines said generative AI hadn’t changed competition when it came to its automation platform company and that he expected AI to be a tailwind to UiPath’s business going forward.
For the third quarter, the company forecast revenue between $313 million and $318 million, while it put its annual revenue between $1.27 billion and $1.28 billion. Analysts surveyed by FactSet had estimated revenue of $318.5 million for the third quarter and $1.27 billion for the year.
The company also announced a $500 million share buyback program.
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