UiPath Inc. (NYSE: PATH) saw its shares reverse an early 3.5% gain on Friday, with the stock trading near $11.81 by 1 p.m. EDT after reaching a session high of $12.21. The stock was essentially flat on the day, while the iShares Expanded Tech-Software Sector ETF (NYSEARCA: IGV) dropped 1.4%.
The reversal brought attention to the company's share buyback program, which has been a key factor supporting the stock. According to filings, UiPath had approximately $413.8 million remaining in its current buyback authorization after purchases through May 15. That amount represents about 6.6% of the company's $6.23 billion market capitalization as of Friday, enough to repurchase roughly 35 million shares at the current price of $11.81 each, excluding later trades, fees, or new share issuance.
UiPath's share count has already declined significantly. Total Class A and Class B shares outstanding fell to 518.1 million as of May 29 from 537.0 million at January 31, a net reduction of 18.9 million shares, or 3.5%. The company reported buying 20.4 million Class A shares in the first quarter and an additional 2.4 million through May 15.
The buyback program is discretionary, and the $413.8 million figure is an estimate based on average purchase prices disclosed by the company. During the first quarter, UiPath spent $243.8 million on buybacks and paid $149.4 million net for WorkFusion, even as it generated $131.9 million from operations. The company's cash and securities dropped to $1.42 billion from $1.69 billion in the first quarter.
ServiceNow Inc. (NYSE: NOW) and Pegasystems Inc. (NASDAQ: PEGA) are not perfect comparisons, but both compete with UiPath in the enterprise automation space, offering AI-first workflow platforms. UiPath fared better in Friday's trading, but its market cap of around $5.61 billion sits near Pega's and is just a fraction of ServiceNow's $111.33 billion.
On a valuation basis, after excluding UiPath's $1.42 billion in cash and securities, the cash-adjusted equity value is near $4.81 billion. That is roughly 2.5 times first-quarter annual recurring revenue (ARR) of $1.901 billion and 2.7 times the midpoint of the company's full-year revenue outlook. Revenue for the first quarter climbed 17% to $418 million, while ARR gained 12% to $1.901 billion. For the second quarter, the midpoint of ARR guidance points to a sequential increase of $30.5 million, which is less than the $49 million in net new ARR seen in the first quarter.
CEO Daniel Dines noted that "16 of the top 20 deals included AI," and expansion deals with AI were six times larger than those without. CFO Ashim Gupta said the firm is running with an "invest-first mindset and a waste-nothing mindset."
The buyback story could go in two directions. If subscription growth slows, UiPath could see less operating cash flow to cover these spending moves. Key numbers to watch in the next results are total shares outstanding and net new ARR. If the share count continues to decline and subscription growth remains stable, the plan is increasing each investor's stake without hiding softer demand. However, if the share count holds steady or net new ARR slows further, Friday's reversal becomes harder to dismiss.
