Should You Buy, Sell or Hold UiPath Stock Ahead of Q2 Earnings?

UiPath Inc. PATH is set to report second-quarter fiscal 2026 results on Sept. 4, after market close.

The Zacks Consensus Estimate for earnings is pegged at 8 cents, indicating a more than 100% surge from the year-ago reported number. The consensus estimate for revenues is pegged at $347.8 million, marking a 10% year-over-year increase.

The company has an impressive earnings surprise history. Earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average surprise of 34.3%.

Low Possibility of Q2 Earnings Beat for PATH

Our proven model does not conclusively predict an earnings beat for PATH this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.

PATH has an Earnings ESP of 0.00% and a Zacks Rank #3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

License Revenues Prospects: PATH’s Major Q2 Headwind

The Zacks Consensus Estimate for license services revenues is pegged at $111 million, indicating a 19.1% year-over-year decline. The consensus mark for subscription revenues is pegged at $227.1 million, implying a 9.7% year-over-year rise. The consensus estimate for professional services and other revenues is pegged at $9.6 million, down 8.7% year over year.

PATH Stock Lags Industry, Valuation Low

UiPath shares have plummeted 13.7% in a year against the 39.6% surge of its industry and the 15.5% increase of the Zacks S&P 500 Composite.

1-Year Price Performance

PATH stock appears to be cheaper than the industry average. UiPath is currently trading at a trailing 12-month price-to-earnings ratio of 18.87X, lower than the industry’s 38.82X.

Investment Considerations for PATH

UiPath’s strategic partnership with Microsoft MSFT and Amazon’s AMZN AWS has been a key driver for its success. Microsoft considers UiPath as the preferred enterprise automation platform, and Amazon has incorporated the UiPath Platform with Amazon Web Services’ enterprise-ready cloud infrastructure, cloud contact center solution, and AI offerings. These partnerships have enhanced PATH’s credibility and expanded its reach.

During the second quarter of fiscal 2026, PATH registered a 6% year-over-year increase in its top line, with annual recurring revenues (ARR) witnessing 12% year-over-year growth. With the ARR touching the $1.6 billion mark, we are impressed with the company’s subscription model effectiveness and strong client loyalty.

Meanwhile, the unchanged estimates for earnings per share over the past 60 days for the second quarter of fiscal 2026 signal that analysts are neither optimistic nor pessimistic about the company’s near-term performance, thus painting a blurry image.

Final Verdict

PATH’s collaborations with Microsoft and Amazon have enhanced its credibility, attracting more customers, which has translated into an outstanding first-quarter fiscal 2026 performance. The top-and-bottom-line expectations for the to-be-reported quarter look motivating on a year-over-year basis. However, a lower chance of an earnings beat, coupled with an absence of analyst confidence in the form of positive earnings revisions, leads us to suggest that investors take a cautious approach. Low license revenues add to the concern.

We can safely conclude that investors should refrain from rushing to buy PATH, which is facing quite a few challenges, ahead of its earnings release on Sept. 4. Instead, they should monitor the developments of the stock closely for a more appropriate entry point, as an erroneous and hasty decision could affect portfolio gains. PATH’s current Zacks Rank supports our thesis.

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This article originally published on Zacks Investment Research (zacks.com).

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