Shares in the business automation firm UiPath Inc. tanked by almost 19% in after-hours trading today after the company issued a lower revenue outlook for the next quarter and fiscal year.

The disappointing guidance failed to make up for the robotic process automation leader beating expectations in its fiscal fourth-quarter results.

The company reported a net loss for the quarter of $63.1 million, wider than the $26.3 million loss it reported in the same period one year before. Its earnings before certain costs such as stock compensation came to five cents per share, with revenue rising to $289.7 million, up 39% from a year ago. The performance was better than expected, with Wall Street modeling UiPath to deliver earnings of three cents per share on revenue of $283.5 million.

UiPath also reported revenue of $892.3 million for the full year, up 47% from the year prior.

UiPath co-founder and Chief Executive Daniel Dines (pictured) hailed his team’s “strong finish” to fiscal 2022, noting that it delivered record net new annualized recurring revenue of $107 million, up 72% from a year ago.

“We believe this is a testament to our highly differentiated end-to-end platform,” Dines said. “Our customers understand that automation is at the forefront of digital transformation and fundamental to driving efficiency, employee satisfaction, and strengthening customer relationships, all necessary to successfully navigate today’s complex operating environment and establish a sustainable competitive advantage.”

UiPath is a leading player in the robotic process automation market. It sells an RPA platform that helps companies to reduce costs and operational errors by automating repetitive work. It relies on artificial intelligence models that learn how employees perform common tasks in business applications. Then, it creates software robots that can replicate those workflows, thereby reducing the need to perform many of those tasks manually.

Its platform is in big demand and is creating a healthy business for UiPath, which reported that its ARR rose to $925.3 million at the end of the quarter, up 59% from a year ago. ARR is an important metric as far as investors are concerned because it shows how much revenue the company expects to repeat, meaning it serves as a measure of progress and also as a prediction of future growth.

UiPath’s growth was visible in its dollar-based net retention rate of 145% too. Net retention rate is a metric used by software-as-a-service providers to show fluctuation within their existing revenue base. It describes changes to recurring revenue over time according to upgrades, downgrades and churn. A score over 100 shows the company is squeezing more revenue from its existing customer base.

“UIPath is growing nicely, helping enterprises to create and operate proceses across silos, and almost 40% growth is a strong testament for the demand of UI path products, said Constellation Research Inc. analyst Holger Mueller.

In separate news today, UiPath announced it has hired Chris Weber as its new chief business officer. Weber is a former Microsoft Corp. executive with more than 25 years of experience in enterprise software markets. He’ll be tasked with leading UiPath’s global go-to-market strategy and execution, guiding worldwide sales, services and other go-to-market operations.

Weber will likely have his work cut out in the weeks ahead. For all the optimism around UiPath’s growing business, it seems the company is unable to generate additional revenue fast enough to satisfy investors. In a statement, Dines told analysts that UiPath’s exposure to European markets meant it was forced to offer a more cautious outlook for the coming quarter and full year.

“We are saddened by the war and humanitarian crisis that is unfolding in Ukraine,” Dines said. “Looking ahead, we feel confident in our market-leading position in automation and prospects for future growth at scale but believe it is prudent at this time to factor both our European exposure and go-to-market leadership transition into the financial outlook we are providing this afternoon.”

UiPath said it expects fiscal first-quarter revenue of between $223 million and $225 million, some way off the $243.14 million estimate from Wall Street analysts. For fiscal 2023, UiPath said it expects revenue of $1.075 billion to $1.085 billion, below the $1.16 billion consensus.

Mueller said investors were likely concerned by both the lower guidance and UiPath’s ongoing losses.

“With revenues up by $280 million and costs up by $430 million, UiPath’s management needs to change strategy,” Mueller added. “The prediction of slightly over $1 billion in revenue for the new full year appears to be achievable, so a black zero would require UIPath to reduce its costs by more than $200 million.Its a tough ask but we will watch and see if the management can achieve it.”

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