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Is the UiPath share price on a growth journey?

Shares of UiPath [PATH], a robotic process automation (RPA) business, have been on the rise as it partners companies to complement its offerings.

“The challenge of keeping companies, customers and employees safe increases every day,” said Ted Kummert, executive vice president of products and engineering at UiPath. To address the concern the company announced a partnership with CrowdStrike [CRWD].

UiPath – whose solutions help free up office workers from monotonous tasks, has been busy making deals.

On 5 October, it announced the partnership with CrowdStrike to secure its digital and software tasks executed by UiPath bots, like inserting data and moving files.

UiPath will also use CrowdStrike's Falcon tool to track robot activity, put limits on the data they can access and get alerts if robots exceed commands. It will also allow RPAs to access critical systems and data with escalated privileges.

The hope is that this extra security will make UiPath’s services more appealing to risk-conscious chief information officers.

 

 

 

Addition of Snowflake in the mix

Two weeks later, on October 19, UiPath announced a collaboration with data cloud company Snowflake [SNOW] to boost its analytics capabilities.

As part of the deal, UiPath will integrate its Insights analytics solution with Snowflake’s platform. Insights calculates the business impact of automations, including time and money saved,​ and aligns it with strategic business outcomes.

“End-to-end automation can only be fulfilled with a robust analytics platform that can handle today’s explosion of complex data,” said Dhruv Asher, senior vice president of business development and product alliances at UiPath.

This flurry of corporate activity has helped the UiPath share price to climb from $48.08 at the close on 11 October to close at $50.95 on 21 October. This is down from its listing price of $56 back on 21 April, and the $85.12 high it hit on 24 May, valuing it at $43.2bn. Its market cap is now just over $26bn.

 

UiPath's recent earnings performance

In the second quarter, UiPath posted a 40% rise in revenues to $195.5m. This marked a slowdown from a 65% year-on-year revenue rise in the first quarter.

It also reported a net loss of $100m as it pumps more funds into R&D to fight off increasing competition from the likes of tech giant Microsoft [MSFT].

Its share price has also largely been hit by the move to value investing and away from growth stocks and, arguably, a lack of exciting news around its products and services.

But the potential is clear, especially if workers stay away from the office or don’t want to return to a working life of repetitive tasks. UiPath’s technology could free up employees to offer more of themselves when it comes to creativity and innovation.

$60billion

Potential value of UiPath's total addressable market by 2024

 

 

What's in store for UiPath?

As reported by the Motley Fool, for the full year, UiPath expects its annualised renewal run rate (ARR) to increase by 51%-52%. Analysts expect its total revenue to increase 43% to $869.7m, before rising 33% to $1.16bn next year.

UiPath believes its total addressable market can hit $60bn by 2024. It also has big name clients with, according to the Motley Fool, 80% of the Fortune 10 and 63% of the Fortune Global 500 using its services.

Jamie Louko, writing in the Motley Fool, is confident. “UiPath is in an industry that is projected to grow at 16% annually or more,” he said. “That stat alone suggests that this company has a bright future ahead. Keeping competition out of the market will also be important.”

“UiPath is in an industry that is projected to grow at 16% annually or more. That stat alone suggests that this company has a bright future ahead. Keeping competition out of the market will also be important” - Jamie Louko

 

ARK Invest is a fan, giving UiPath around a 6.34% weighting in its Autonomous Technology & Robotics ETF [ARKQ].

According to Market Screener, analysts are also extremely bullish, holding a consensus outperform rating and a $70.80 target price.

There are concerns about slowing revenues, and there is an expectation that given its rate of spend it will remain unprofitable for some time to come.

Still, the prospect of a robotic future suggests that the stock could eventually prove its mettle.

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