UiPath (PATH): Is Agentic Automation the Key to Becoming the Enterprise Software "Gorilla"?

The upcoming earnings report for UiPath (PATH) on May 29, 2025, will be a pivotal moment for investors assessing whether the company's shift to agentic automation can transform it into a dominant player in enterprise software—despite near-term revenue headwinds. While UiPath's Q1 2026 guidance fell short of expectations, its strategic pivot toward AI-driven solutions like Agentic Orchestration and Autopilot signals a bold repositioning. For investors prioritizing transformative automation plays, UiPath's long-term potential is undeniable. Here's why now could be the time to buy.

The Near-Term Reality: Slowing Revenue, But Hidden Strengths

UiPath's Q1 2026 revenue guidance of $330M–335M (vs. $367.3M analyst estimates) and full-year forecast of $1.525B–1.530B (below the $1.585B consensus) have spooked short-term traders. Yet beneath the surface, critical metrics tell a different story:
- Cloud ARR Growth: Surged over 50% YoY to $975M, now representing ~59% of total ARR ($1.666B).
- Margin Discipline: Achieved GAAP profitability for two straight years, with a non-GAAP operating margin of 32% in fiscal 2025.
- Customer Commitment: Net retention rate remains 113%, with 2,235 customers generating over $100K in ARR.

The revenue slowdown stems partly from strategic shifts. UiPath is transitioning to a SaaS-heavy model, which reduces upfront revenue recognition but boosts recurring streams. CEO Daniel Dines acknowledged a 2% revenue headwind from this shift, but the long-term benefit—higher predictability and customer stickiness—is clear.

Agentic Automation: The $1.5 Trillion Opportunity

UiPath's vision of agentic automation—where AI agents autonomously execute tasks alongside humans—is its moonshot. The recent launch of Agentic Orchestration and Autopilot (AI-guided development tools) aim to democratize automation, enabling even non-coders to build workflows. These products are part of a broader push to:
1. Unify AI and Human Workflows: Agentic Orchestration allows businesses to deploy “digital workers” that adapt to real-time data.
2. Reduce Technical Barriers: Autopilot's public preview saw record adoption, cutting automation development time by 50%.
3. Expand Beyond RPA: The acquisition of Peak AI extends UiPath's reach into inventory optimization and pricing—markets worth an estimated $1.5T by 2030 (Everest Group).

This shift isn't just theoretical. Clients like Marks & Spencer and Swiss retail giants are already using UiPath's tools to cut costs and scale processes. The Scottish Government, meanwhile, has doubled its automation spend, leveraging UiPath's AI to process 2.5M+ transactions annually.

Strategic Partnerships: Building a Moat in Enterprise Software

UiPath's ecosystem of partners—Microsoft, SAP, Deloitte—acts as a multiplier for its growth. Key wins include:
- Microsoft Azure Integration: Joint wins with a British multinational highlight UiPath's cloud scalability.
- SAP Migration Plays: A Swiss retail leader migrated from a competitor to UiPath for end-to-end SAP automation.
- Deloitte Co-Innovation: Their “Smart Finance” package for SMEs has been adopted by TD Bank, identifying 200+ automation opportunities.

These partnerships not only drive sales but also embed UiPath deeper into enterprise workflows. As Dines put it: “Agentic automation isn't just a product—it's a platform that redefines how businesses operate.”

The Risks: Public Sector Stumbles and Macro Uncertainties

No investment is without risks. UiPath faces:
1. Public Sector Delays: Geopolitical tensions and budget cycles in sectors like DoD and healthcare have stalled some deals.
2. Currency Headwinds: A 2% drag from foreign exchange fluctuations in Q4 2024.
3. Competitor Scrutiny: Rivals like Blue Prism and Automation Anywhere are doubling down on AI.

However, these are manageable in the long run. UiPath's $1.7B cash pile and zero debt provide a cushion, while its 98% gross retention rate suggests enterprise customers are committed for the long haul.

Why Buy UiPath Now?

The case for UiPath hinges on three factors:
1. ARR Growth: Even at $1.8B by fiscal 2026, UiPath is still in the early innings of its SaaS transition.
2. Margin Expansion: The non-GAAP operating margin is projected to hit 32% in fiscal 2026, up from 27% in 2025.
3. AI as a Defining Moat: With over 70 industry-specific AI models, UiPath is building a defensible lead in document processing and process mining.

While the stock has dipped 18% post-earnings, the valuation is compelling. At a $4.2B market cap, UiPath trades at just 2.3x its ARR, far below peers like Snowflake or Datadog. GuruFocus's $22.69 “fair value” estimate suggests 80% upside from current levels.

Final Call: Buy UiPath for the AI Automation Future

UiPath isn't a “growth at any cost” story. It's a company systematically transforming itself into a leader in agentic automation—a category that could redefine enterprise software. Yes, near-term revenue growth is sluggish, and macro risks linger. But the $1.5T AI-driven automation market won't be won by incremental improvements. UiPath's AI-first strategy, ecosystem strength, and margin discipline position it to dominate.

Investors should buy the dip ahead of the May 29 earnings report. If UiPath delivers on its ARR targets and accelerates cloud adoption, it could prove to be the “Gorilla” of the next decade in enterprise tech.

Rating: Buy
Price Target: $22.69 (80% upside)

Disclosure: This analysis is for informational purposes only. Consult a financial advisor before making investment decisions.