UiPath shares plummeted nearly 30% in after-hours trading Wednesday after the robotic process automation software company announced the surprise resignation of CEO Robert Enslin and provided disappointing guidance, overshadowing better-than-expected first-quarter earnings results.
The New York-based company said Enslin will step down as CEO and board member effective June 1, 2024, after just two years in the role. the company said co-founder and former CEO Daniel Dines, who currently serves as Executive Chairman and Chief Innovation Officer, will retake the reins as CEO. Enslin will remain as an advisor during the transition.
For the first quarter ended April 30, UiPath reported adjusted earnings per share of $0.13, beating the consensus estimate of $0.12. Revenue grew 16% year-over-year to $335 million, also surpassing the $333.04 million analysts expected. Annualised renewal run-rate (ARR), a key metric, increased 21% to $1.508 billion.
However, UiPath’s outlook fell short of expectations. For Q2, the company guided revenue of $300-305 million, well below the $342.07 million consensus. It lowered its full-year fiscal 2025 revenue forecast to $1.405-1.41 billion, down from its prior outlook of $1.55-1.56 billion and missing the $1.56 billion analysts anticipated.
On the earnings call, Dines acknowledged challenges with sales execution and elongating sales cycles for larger deals. He said some investments have made UiPath less agile but expressed optimism in the company’s long-term prospects, especially around generative AI, which he sees as a “secular trend” benefiting the business. Under his renewed leadership, Dines plans to refocus on product innovation.
Analysts said the abrupt CEO change indicates Enslin’s failure to drive faster growth, and weak guidance suggests deeper issues at UiPath. Once valued at nearly $36 billion after its April 2021 IPO, the company has seen its stock struggle, down over 50% from the IPO price even before Wednesday’s after-hours plunge.
“Given the increase in spend during the quarter, I guess there must have been some late surprises in a quarter of larger deals not coming through,” said Holger Mueller of Constellation Research. “The odd thing is that the board didn’t want to have Dines leading the company two years ago, but it has now put him back in place. Potentially, the board might be looking for a new CEO, or else it’s going to focus its efforts on building a next-generation product for the generative AI era under Dine’s leadership.”
Founded in 2005, UiPath makes software that helps companies automate repetitive business tasks. Its platform is powered by AI models that learn how employees perform common tasks in business applications. While its tools have been hailed as a game-changer, the company faces increasing competition from tech giants and generative AI upstarts that could steal business.
“In the long run, AI will be a tailwind for companies that can apply machine intelligence to end-to-end automation,” said Dave Vellante, Chief Analyst at TheCUBE Research. “In the near term customers may feel it’s easier to do full automation with gen AI, but I think they’ll find they need deeper relationships and tech to actually realise significant value. In the meantime, firms like UiPath have to educate customers on how gen AI combined with end-to-end automation can be achieved.”
