UiPath Inc. (NYSE: PATH) experienced a sharp decline in its stock price on Wednesday, falling 11.1% to close at $10.70. The drop came after a peer in the automation sector flagged AI-related purchasing delays, casting a shadow over demand for robotic process automation solutions. Trading volume surged to 106.2 million shares, nearly double the 65-day average, indicating heightened investor attention.
The company's guidance for the current quarter suggests annual recurring revenue (ARR) will increase by approximately $30.5 million. This figure represents a 38% decline compared to the net new ARR of $49 million recorded in the first quarter, pointing to a notable deceleration in growth. While UiPath did not issue any official statements during Wednesday's trading session, the market reacted strongly to the broader industry signals.
Pegasystems Inc. (NASDAQ: PEGA) provided a cautious update, reporting that sudden shifts in the AI market have led customers to postpone purchasing decisions. Although Pegasystems' total annual contract value (ACV) rose 7% and cloud ACV increased 22%, its stock dropped 16% on Wednesday. Chief Executive Alan Trefler expressed concerns about unpredictable expenses, stating, “Letting language models do everything is risky and expensive.”
In contrast, ServiceNow Inc. (NYSE: NOW) offered a more optimistic outlook after the market closed on Wednesday. The company raised its annual subscription-revenue forecast, and current remaining performance obligations grew 21% year over year. ServiceNow’s AI products surpassed $1 billion in annual contract value. Chief Executive Bill McDermott noted that sales cycles remained stable, and the company’s stock rose nearly 4% in late trading.
UiPath’s first-quarter results showed positive operating income and cash flow. Revenue climbed 17% to $418 million, with ARR up 12%. Adjusted free cash flow stood at $130 million, and the company held $1.42 billion in liquidity. Chief Executive Daniel Dines highlighted that agentic products are “moving from pilot to production.” However, the company’s second-quarter revenue forecast of $395 million to $400 million implies a midpoint roughly 5% below first-quarter revenue.
The market capitalization loss on Wednesday was estimated at about $707 million, approximately 1.8 times the midpoint of the forecasted second-quarter revenue. Over the past five sessions, UiPath shares have fallen from $12.03 to $10.70, a decline of 11.1%. Prior to this drop, closing prices had been in a tight range of $12.03 to $12.16.
Analyst consensus remains a Hold, with 17 out of 22 ratings classified as such and a median price target of $13. The company’s fiscal second quarter ends on July 31, keeping the focus on ARR delivery in the coming days. Risks include the possibility that UiPath may surpass its projected ARR, countering the indicated deceleration, or that further purchase deferrals similar to Pegasystems could negatively impact growth and valuation.
