UiPath Inc. (PATH) shares rocketed higher Thursday after the automation software company delivered third-quarter results that suggest its two-year growth drought might finally be over. The stock surged 23.92% to $18.41, trading near its 52-week high of $18.73.
The company posted revenues of $411 million and non-GAAP operating income of $88 million, crushing guidance by $19 million and $18 million respectively. But the real story was in the annual recurring revenue numbers, which is what Wall Street really cares about for software companies.
The Growth Turning Point
ARR grew 11% year-over-year to $1.782 billion, with net-new ARR hitting $59 million for the quarter. That might not sound earth-shattering, but here's why it matters: this marks the first quarter in two years that net-new ARR actually increased on a year-over-year basis.
Canaccord Genuity analyst Kingsley Crane, who reiterated a Buy rating and raised his price target from $15 to $19, called this "a significant milestone that gives credence to the company's strategy leaning into agentic automation and orchestration in a dynamic enterprise software market."
Management clearly feels good about the momentum too. They raised fiscal 2026 revenue guidance by $20 million to a midpoint of $1.594 billion, which now implies 11.5% growth versus the previous 10.1% forecast.
Breaking Down the Numbers
Needham analyst Scott Berg, who maintained a Hold rating, noted that UiPath delivered non-GAAP earnings of 16 cents per share on 16% total revenue growth. Subscription revenue grew 19.6% while license revenue increased 9.4%.
Berg pointed out that while the 10.9% year-over-year ARR growth represents a slight deceleration from the previous quarter's 11.1% and last year's 16.6%, the return to positive net-new ARR growth after two years is the key development. The improved revenue guidance came despite a small incremental foreign exchange headwind, making it even more impressive.
For a company that's been struggling to reignite growth in an increasingly competitive automation market, these results suggest the bet on agentic AI and orchestration might actually be working.
