UiPath Declines 25% in a Month: Has the Buying Level Been Reached Yet?

UiPath Inc. PATH shares have come under notable pressure, declining 25% over the past month and 9% over the last three months, signaling a sharp reset in investor sentiment.

The pullback comes despite continued execution in the company’s core business and growing relevance in enterprise automation. With AI-led workflows gaining traction across industries, you may be weighing whether the recent selloff reflects temporary market-driven volatility or a deeper reassessment of UiPath’s near-term growth and profitability outlook.

Let us discuss.

Strong Execution and Partnerships Drive PATH’s Momentum

UiPath continues to reinforce its leadership position in the automation and AI software space, supported by solid financial execution and improving profitability. The company delivered a 16% year-over-year revenue growth alongside a 11% expansion in annual recurring revenue in the last reported quarter, reflecting sustained enterprise demand for its platform. It reported GAAP operating income of $13 million, marking its first GAAP-profitable third quarter, alongside non-GAAP operating income of $88 million. Gross margins remained strong, with GAAP gross margin at 83% and non-GAAP gross margin at 85%, underscoring the high-quality, software-driven nature of the business.

A key positive for UiPath is the growing adoption of its unified agentic automation platform. The company generated net new ARR of $59 million during the quarter, while achieving a dollar-based net retention rate of 107%. Enterprises are increasingly seeking integrated solutions rather than fragmented tools, and UiPath’s ability to combine deterministic automation, agentic automation, and orchestration within a single governed platform is emerging as a clear competitive advantage. Strong dollar-based net retention underscores customer satisfaction and expanding usage within existing accounts. As organizations scale automation across complex workflows, UiPath is well-positioned to capture incremental value by enabling faster deployment, improved productivity, and measurable returns on investment.

Strategically, PATH continues to strengthen its ecosystem through high-profile partnerships such as that with Microsoft MSFT, OpenAI, Alphabet’s GOOGL Google, NVIDIA NVDA and Snowflake. Integrations with Microsoft Azure AI Foundry extend UiPath’s reach into mission-critical workflows, while collaboration with NVIDIA enables deployment of enterprise-grade AI models in sensitive use cases such as fraud detection and healthcare automation. Industry recognition from Gartner, Everest Group, and TIME Magazine further validates UiPath’s technological leadership and long-term vision. With enterprises accelerating AI and automation adoption, UiPath’s focus on trusted, enterprise-grade agentic automation positions it well to benefit from secular demand trends while building a more resilient and profitable growth profile over time.

PATH's Strong Financial Position

PATH boasts a robust financial position, highlighted by its strong balance sheet. As of the fiscal third quarter, the company held $1.4 billion in cash and equivalents, with no outstanding debt. This debt-free status ensures that its cash reserves are available to fuel growth initiatives and strategic investments. Such financial flexibility increases PATH’s ability to drive innovation and expand its market presence without financial strain.

Additionally, the company’s liquidity is robust. At the end of the fiscal third quarter, PATH reported a current ratio of 2.65, exceeding the industry average of 1.95. A current ratio above 1 indicates that a company has sufficient assets to cover its short-term liabilities. The company’s strong liquidity positions it to navigate economic uncertainties and enhances its capacity to capitalize on emerging opportunities in the competitive RPA market.

Earnings Pressure and Slower Growth Signal Near-Term Caution

The Zacks Consensus Estimate suggests a softer near-term outlook for PATH, with fourth-quarter fiscal 2026 earnings expected to decline nearly 4% year over year. The projected dip in profitability indicates that margin pressure may persist as the company continues to invest in product development, partnerships and sales execution. While revenues are still expected to grow at a near 10% pace, the slowdown from prior growth rates raises questions about demand normalization and the pace of large enterprise deal closures. For PATH, the near-term narrative appears more about balancing growth ambitions with cost discipline rather than delivering accelerating earnings momentum.

                                                                      Image Source: Zacks Investment Research

Wait-and-Watch Stance Appears Prudent at Current Levels

Given the recent sharp pullback, UiPath presents a mixed near-term setup that supports a Hold stance. The company continues to execute well operationally, with strong platform adoption, improving profitability, and a solid financial foundation that limits balance-sheet risk. However, near-term earnings pressure and moderating growth momentum suggest that upside may remain capped until clearer signs of margin stabilization and demand acceleration emerge. With investments still weighing on profitability and market sentiment remaining cautious, investors may prefer to wait for improved visibility or a more favorable entry point before increasing exposure.

PATH currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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

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