Summary UiPath is upgraded to Buy, driven by a strategic pivot toward industry partnerships with leading AI players like Microsoft, Nvidia, and Google. UiPath's new alliances are expected to accelerate ARR growth, with management guiding for the first positive ARR inflection in years by Q4. Valuation remains attractive, with forward revenue multiples below historical averages and potential for further upside if growth accelerates as forecasted. Insider selling is a concern, but UiPath's improved positioning in the AI ecosystem supports a bullish investment thesis. Investment Thesis It’s been a while since I wrote about the automation platform company, UiPath (PATH). In May last year, I explained why I expected “the company’s revenue run rates to mature over time" as its large enterprise customers would slow spending on UiPath’s platform. Since my previous coverage, UiPath’s shares fell, and without the lack of meaningful catalysts over the last 2-3 quarters, I did not feel compelled to update my thesis on the company. Exhibit A: Author’s coverage history of UiPath over the past year and ratings performance. (Seeking Alpha) But I have been following the company, especially the recent round of updates the company has shared, and I believe the company is set to see its first signs of meaningful inflection in its ARR by the end of CY25. The company has realized the value of industry partnerships in the age of AI and has been moving quickly. Per my observations, markets are discounting the coming inflection in its ARR, giving investors an opportunistic entry point in UiPath’s shares. I am upgrading UiPath to a Buy. What Is UiPath Doing Differently This Time? Investors are quite familiar with cloud services such as companies such as ServiceNow ( NOW ) or Snowflake (SNOW) that have done reasonably well for themselves in the age of AI versus most of the other players in the cloud services industry. In my view, one of the reasons these cloud services companies have succeeded when others have not is because they moved quickly to forge partnerships with important industry leaders in the same market or adjacent markets to create micro AI ecosystems. The big benefit of these industry partnerships in the age of AI is that it enhances mutual productivity and accelerate AI-powered innovations at scale, eventually becoming accretive to the revenue bases of all partners within the micro ecosystem, as MIT Sloan suggests . Companies like ServiceNow or Snowflake moved quickly to partner with other rapidly growing AI beneficiaries such as Nvidia ( NVDA ) or Microsoft ( MSFT ) early on. So far, UiPath has never really understood the value strategic partnerships could provide, in my view, and has relied on a legacy-based revenue-sourcing framework of completely leaning on GSIs (global system integrators). GSIs are business partners, typically value-added resellers and/or business consultants like Deloitte, Accenture ( ACN ), etc. When asked about the impact these partners were having on UiPath’s sales at a conference early last year , here is how management reasoned for the case of partnering with GSIs: GSIs, they are a great introductory into customers where they are in the midst of big transformation process projects of which automation can be an important part of that. Automation can play a key role in driving success and accelerating that migration. So, we're super excited. It's early stages, gone through enablement, education, there is a quota component, so they can retire quotas, as part of co-selling automation. In the same conference they even announced the hiring of Bronwyn Hastings , “a seasoned executive who has built very large channel and partner models.” 21 months later, Ms. Hastings appears to have moved out of UiPath, while the company’s ARR kept decelerating every single quarter, strongly indicating how the GSI sales strategy failed UiPath in lifting up their revenues & ARR. Exhibit B: UiPath’s ARR vs TTM revenue trends and management’s guidance indicates acceleration for the first time in Q4 this year. (Company sources) However, all of that has changed, based on the recent slate of updates that I noticed in UiPath’s IR page . Here are all the announcements UiPath made on a single day in September: Allowing customers to automate end-to-end processes using UiPath agents interacting with Microsoft’s Azure AI Foundry agents and models . Uniting UiPath’s Agentic Automation platform with Snowflake’s Cortex AI platform of AI agents Expanding UiPath’s Agentic Automation capabilities into Alphabet-owned ( GOOG ) Google Gemini. And the big one is collaborating with Nvidia ( NVDA ) to bring automation capabilities to Nvidia’s automation platform Nemotron as well as to Nvidia’s NIM, the microservices inference platform. All these partnerships indicate a pivotal shift in UiPath’s sales strategy in forming alliances with some of the largest beneficiaries of the AI ecosystem today, which I strongly believe will give the company’s ARR inflection a much-needed facelift. I cannot recall a time in the company’s history where UiPath has made such strong shifts away from its usual GSI-led revenue engine. I suspect management is already accounting for a small boost on the backdrop of these partnerships, which is why they have guided ARR to inflect higher and be positive for its first acceleration of many years in Q4 this year. UiPath is banking on its agentic automation product Maestro, which automates agentic orchestration and the process of building AI agents. Here is another way. I have charted the y/y growth in ARR and TTM revenues, which factors in management’s FY26 revenue guidance of $1.6B and FY26 ARR outlook of $1.8B. Exhibit C: UiPath's growth trends in ARR and TTM Revenues. (Company sources) If ARR inflects towards the trajectory that management has forecasted, I would not be surprised if UiPath’s FY26 revenues eventually come in higher than the $1.6B revenue guidance. Valuations Indicate UiPath’s Multiple Could Expand At the moment, UiPath’s shares trade at a forward-looking revenue multiple of 4.9x FY26 revenues of $1.6B, growing 10% y/y. This is slightly under the 24-month average forward revenue multiple of 5.1-5.8x forward revenues. Markets have also become optimistic about UiPath’s strategic shift away from GSI partners towards industry alliances with leading AI beneficiaries, which explains the ~30% expansion in revenue multiples in the past 30 days. Exhibit D: UiPath’s forward-looking revenue multiples for this year and next year. ( YCharts ) But if investors observe the forward-looking revenue multiple for FY27, they will observe that UiPath’s revenue multiple of ~4.5x FY27 revenues worth $1.7B, growing 8.5%, is still cheap. With ARR moving up, I suspect analysts will eventually upgrade their revenue outlook for next year, possibly expecting ~10% y/y growth in FY27 as well. That implies a forward valuation of 5.1-5.5x FY27 revenues, above the 4.5x UiPath’s shares currently trade at. This suggests a PT of $19.6 per share, or ~15% upside from current levels of ~$17. Risks & Other Factors To Note As optimistic as I’d like to be, I have to admit, I’m not fond of the broad-based insider selling that can be seen in UiPath’s shares. It does not echo conviction shared by management in their own shares at a time when I do see signs of an inflection in the business. It doesn’t stop my analysis from recommending a Buy rating but it is a risk investors should note nevertheless. Exhibit E: Trends of insider selling in UiPath’s shares (finviz.com) Takeaway I am beginning to like UiPath’s strategy to position itself as a beneficiary of the AI revolution. I think they have one of the best shots at regaining control of their growth narrative in the age of AI to offer their agentic automation products to customers. I am recommending a Buy rating on UiPath.
