UiPath's Q3 2026: Contradictions Emerge in Agentic Solutions, U.S. Federal Business, and ARR Growth Drivers

Date of Call: December 3, 2025

Financials Results

• Revenue: $411 million, up 16% YOY (14% growth ex‑FX $5M tailwind)
• Gross Margin: Overall gross margin 85%; software gross margin 91% (no YOY provided)
• Operating Margin: Non-GAAP operating income $88M (21% margin), up >700 bps YOY; GAAP operating income $13M (first GAAP profitable quarter)

Guidance:

• Q4 FY2026 revenue expected $462M–$467M (incurs an ~ $3M FX headwind since prior guide)
• Q4 ARR expected $1.844B–$1.849B (incurs an ~ $3M FX headwind)
• Q4 non-GAAP operating income ~ $140M and basic share count ~536M
• FY2026 non-GAAP adjusted free cash flow ~ $370M and non-GAAP gross margin ~ 85%

Business Commentary:

* Revenue and ARR Growth: - UiPath reported revenue of $411 million for Q3 2026, an increase of 16%, and ARR of $1.782 billion, up 11% year-over-year. - The growth was driven by disciplined operational execution, improved customer engagement, and strategic investments in AI automation.

• Profitability and Financial Performance:
• UiPath achieved its first GAAP profitable third quarter, with a GAAP operating income of $13 million, reflecting a significant improvement from the prior year’s GAAP operating loss of $43 million.

• This profitability was attributed to operational efficiency, strategic cost management, and a focus on recurring revenue.

• Agentic Automation Adoption:

• Over 950 companies are now developing agents, with more than 365,000 processes orchestrated using Maestro, reflecting 260 automations for a single client.

• The adoption of agentic automation is driven by its ability to deliver measurable ROI and integrate with existing enterprise systems, demonstrating an increase in customer assurance and operational efficiency.

• Government and Public Sector Performance:

• UiPath's federal sector experienced positive performance, with notable expansions like the U.S. Coast Guard and Department of Veterans Affairs, contributing to significant RPO growth.

• This growth is attributed to the strategic positioning of UiPath's solutions amid government efficiency mandates and the need for automated processes.

• Partnership and Integration Expansion:

• UiPath announced collaborations with technology leaders like OpenAI, Microsoft, and NVIDIA, expanding its platform's integrations and capabilities.
• These partnerships enhance solution offerings, support customer demand, and reflect UiPath's continued investment in R&D to stay competitive in the market.
  

  Sentiment Analysis:

  Overall Tone: Positive

  • Management beat the high end of guidance; Q3 ARR $1.782B (+11% YOY); revenue $411M (+16% YOY, +14% ex‑FX); first GAAP profitable quarter; non‑GAAP operating income $88M (21% margin, +700bps YOY); raised Q4 guidance despite FX headwinds.

Q&A:

• Question from Bryan Bergin (TD Cowen): Is the 950+ clients figure comparable to the ~450 last quarter using Agent Builder, or is that a broader view across agentic solutions? And for cases scaling past POC, is that driven by client capabilities or specific use cases?
  Response: Agentic traction is broadening with clear movement from POCs to pilots to some production; ROI is highly customer‑specific rather than one uniform use case.

• Question from Bryan Bergin (TD Cowen): Was there any impact from the government shutdown in October/November on federal projects?
  Response: No material impact; many federal projects are funded and deemed critical, so operations continued.

• Question from Jacob Roberge (William Blair): Q4 guide implies net new ARR could resume growth on a constant currency basis — what is driving that and is it sustainable?
  Response: Improved sales execution (notably in Americas), product launches and overall business stabilization are driving sustainable net new ARR improvement, not a single tactic.

• Question from Jacob Roberge (William Blair): On monetization, once agentic go‑lives occur, are you seeing pricing uplift or another form of monetization?
  Response: Monetization is coming via platform pull‑through and increased stickiness/upsells (IXP, robots, orchestration), rather than direct pricing uplift for agentic alone.

• Question from Austin Williams (Wells Fargo) on behalf of Michael Turrin): How did U.S. Federal results in Q3 compare to expectations at the start of the year, and any comments on the OpenAI collaboration?
  Response: Federal showed pockets of strength and a return toward a new normal with long‑term strategic deals; OpenAI (GPT‑5) is integrated across the platform (notably ScreenPlay) to enable LLM‑driven UI automation.

• Question from Austin Williams (Wells Fargo) on behalf of Michael Turrin): What could the OpenAI collaboration specifically drive for UiPath?
  Response: Integration with GPT‑5 enables ScreenPlay and other agentic capabilities that combine UI automation reliability with LLM adaptability, positioning UiPath uniquely for autonomous UI tasks.

• Question from Michael Steven Richards (RBC Capital Markets): Beyond OpenAI, are partnerships driving joint go‑to‑market activity or pipeline build?
  Response: Partnerships are primarily technology‑enabling to meet customer needs (data, LLMs, security); GTM/pipeline benefits are expected but today the partnerships focus on integration and enterprise reliability.

• Question from Michael Steven Richards (RBC Capital Markets): Are you seeing a shift to third‑party agents or mostly orchestrating UiPath‑built agents?
  Response: Customers use a mix of platform‑hosted low‑code agents and coded agents (partners like LangChain); fully external agent management is still early.

• Question from Unknown Analyst (Morgan Stanley) on behalf of Sanjit: How much incremental pipeline is now partner‑sourced vs. a year ago and how will partners drive AI product deployments?
  Response: Partner‑sourced pipeline has grown in quality (not just quantity), enabling involvement in larger transformations (e.g., S/4HANA) and helping pull through AI product deployments.

• Question from Unknown Analyst (Morgan Stanley) on behalf of Sanjit: Any detail on OpEx investment plans next year to support AI rollouts and monetization?
  Response: OpEx will remain disciplined; selective reinvestment in engineering, sales capacity and customer‑facing roles (FDEs) while driving efficiency across other cost areas.

• Question from Scott Berg (Needham): With many pilots/POCs in AI, what drivers or levers have helped convert some into production?
  Response: Conversions are industry‑ and use‑case specific (not universal); early momentum is seen in healthcare and financial services but replicable, broad use cases are still emerging.

• Question from Scott Berg (Needham): The Q4 implied ARR suggests net new ARR improvement — is that due to improved execution or slipped deals moving in?
  Response: It's due to improved execution, FX normalization and momentum/stability after restructuring — not material timing shifts or slipped deals.

• Question from Arsenije Matovic (Wolfe Research) on behalf of Alex Zukin): What drove the downtick in NRR — lower‑end weakness or other factors? Any Q4 implications?
  Response: NRR pressure was concentrated at the lower end; mid‑market ($100k–$1M) still showed net dollar expansion (~113%), and stabilization of net new ARR should normalize metrics.

• Question from Arsenije Matovic (Wolfe Research) on behalf of Alex Zukin): You doubled customers developing agents and Maestro instances — what uplift have you seen and will that sustain NRR?
  Response: Agent adoption delivers indirect pull‑through and stickiness that supports NRR over time; direct revenue from agentic remains immaterial near‑term.

• Question from William Kingsley Crane (Canaccord): Have perceptions shifted recently around model provider competition and how is heterogeneity of integrations trending?
  Response: No major perception shift yet; UiPath evaluates and uses a best‑of‑breed mix of frontier LLMs (e.g., GPT‑5, Gemini) tailored to specific product needs.

• Question from William Kingsley Crane (Canaccord): You said you're co‑developing solutions earlier — did that translate into Q3 results and is it predictive for next year?
  Response: Co‑development is a leading indicator that improves ROI and customer pull‑through; it's producing indirect benefits now and is expected to predict future success, though agentic revenue was not material in Q3.

• Question from Chirag Ved (Evercore): Which verticals are adopting prebuilt agentic solutions fastest and are you moving more aggressively into industry‑specific packaged automation?
  Response: Adoption is strongest in healthcare (revenue cycle management) and financial services (financial‑crimes/KYC/AML); UiPath is increasingly verticalizing product and engineering to deliver packaged solutions.

• Question from Chirag Ved (Evercore): Thoughts on the balance between deterministic automation and agentic/LLM‑based automation — will it shift materially soon?
  Response: They are complementary: deterministic for well‑defined tasks, LLMs for complex/document‑heavy or conversational work; orchestration is critical to unite both for enterprise reliability.

• Question from Dominique Manansala (Truist): Early deployments raise spend predictability concerns for agentic consumption pricing — have you seen patterns to help customers forecast and what else are you doing?
  Response: Industry consumption patterns are early; UiPath remains flexible (component‑ or outcome‑based pricing) and is monitoring trends to evolve pricing and predictability approaches.

• Question from Dominique Manansala (Truist): Has POC‑to‑production cycle time for agentic shortened and what is accelerating that compression?
  Response: Yes — solution accelerators and prepackaged solutions are shortening time to value; management expects this trend to accelerate next year.

Contradiction Point 1

Agentic Solutions and Platform Pull-Through

This contradiction involves differing perspectives on the impact and adoption of agentic solutions, affecting the company's product strategy and customer engagement.

How is AI impacting production and pricing? - Jacob Roberge (William Blair)

2026Q3: Agentic doesn't pull through as an isolated solution. It's part of the broader platform offering increased stickiness. Pricing uplift isn't a focus; increasing platform adoption is. - Ashim Gupta(CFO)

How is UiPath integrating generative AI into its products, and how does it apply to autonomous agents? - Frederick Havemeyer (Macquarie)

2024Q3: Our focus is on enhancing automation capabilities using AI. Customers are recognizing the value of AI-powered automation, and our platform is well-positioned to leverage generative AI for enterprise-grade automation. - Daniel Dines(CEO)

Contradiction Point 2

Agentic Solutions Traction

This contradiction highlights differing perspectives on the traction of agentic solutions and the drivers behind scaling past proof of concepts, impacting strategic decision-making and investor expectations.

What are the key metrics for agentic solutions, and what factors enable scaling beyond PoCs? - Bryan Bergin(TD Cowen)

2026Q3: There's good momentum across agentic offerings, driving platform pull-through. Patterns emerge from POCs to pilots and production. High ROI use cases are customer-specific. Consistent movement from pilots to production is encouraging. - Daniel Dines(CEO)

How is client demand for agentic solutions progressing, particularly the transition from POCs/pilots to production? How do these accounts compare in terms of client agent development? - Bryan Bergin(TD Cowen)

2026Q2: The Agentic product has made encouraging progress since its launch in May. 450 customers are actively working with the technology. Most deals uncover new automation opportunities, and we've seen some significant deals driven by Agentic combined with automation. - Daniel Dines(CEO)

Contradiction Point 3

U.S. Federal Business Performance

This contradiction involves differing assessments of the U.S. federal business performance, influencing strategic focus and resource allocation.

How did the Federal business perform relative to expectations? - Austin Williams(Wells Fargo Securities)

2026Q3: Business is dynamic, but returning to a new normal. Recent deals are solid with focus on strategic projects. - Daniel Dines(CEO)

Can you comment on your U.S. federal business and how you're managing the uncertainty? - Austin Williams(Wells Fargo Securities)

2026Q2: Our public sector has experienced a good quarter with momentum in selling Agentic solutions. We see signs of stabilization, and we are well-positioned for the second half, with recent wins including Veterans Affairs and the Coast Guard. - Ashim Gupta(COO)

Contradiction Point 4

Net New ARR Growth Drivers

This contradiction highlights differing perspectives on the drivers of net new ARR growth, crucial for financial forecasting and strategic planning.

What drives Q4 net new ARR growth, and is it sustainable? - Jacob Roberge(William Blair)

2026Q3: Business is positive, with improved execution across teams, especially in Americas. - Daniel Dines(CEO)

Can you discuss the stability of the go-to-market organization and its potential to turn net new ARR growth positive? - Sanjit Singh(Morgan Stanley)

2026Q2: We're seeing improved field execution and reduced bureaucracy, which enhances customer integration. The guidance reflects confidence in go-to-market stability and ongoing macroeconomic stabilization. - Ashim Gupta(COO)

Contradiction Point 5

Agentic Solutions Impact on Renewals

This contradiction reflects differing perspectives on the impact of agentic solutions on renewals, which affects customer retention and revenue projections.

How is AI affecting ARR renewal rates and customer retention? - Austin Williams(Wells Fargo Securities)

2026Q3: Agentic is proving to be a very important component of our renewal story, as customers are seeing ROI. - Ashim Gupta(CFO)

Can you elaborate on retention trends and expectations for the remainder of the year? - Unidentified Analyst(Morgan Stanley)

2026Q2: Agentic is showing good traction and is becoming an integral part of our product suite. It is also a key driver of renewal rates, which are trending above the 90% level. - Ashim Gupta(CFO)