Business automation software company UiPath Inc. reported a strong earnings and revenue beat only to see its shares get creamed in extended trading after it issued a tepid forecast for the current quarter.

The soft revenue forecast for the second quarter prompted a big selloff of its stock, which dropped more than 8%.

The company reported a net loss for its first fiscal quarter of $31.9 million, compared with a net loss of $122.6 million one year earlier. Earnings before certain costs such as stock compensation came to 11 cents per share, with revenue rising 18%, to $290 million. The results beat expectations, with Wall Street modeling earnings of just two cents per share on sales of $271 million.

UiPath is considered a leader in the robotic process automation market. Its software helps companies reduce costs and operational errors by automating many repetitive work-related tasks such as data entry.

The platform is powered by artificial intelligence models that learn how employees perform common tasks in their business applications. Those models then build software “robots” that can replicate those workflows, meaning they no longer need to be done manually.

UiPath co-Chief Executive Rob Enslin said the first-quarter results reflect the company’s focus on driving growth at scale and increasing its profitability. “The teams are executing well in the current operating environment and we are committed to helping customers realize the transformative power of automation through an efficient go-to-market model that places customer success at the heart of everything we do,” he said.

The company also reported annual recurring revenue of $1.249 billion, up 28% from a year ago. ARR is a key metric for software-as-a-service firms like UiPath, since it reveals its sales expectations based on subscriptions. The company added net new ARR of $45 million in the quarter, executives said.

Unfortunately for UiPath, shareholders were more focused on what lay in store for the company going forward. They didn’t like its second-quarter revenue forecast of between $279 million and $248 million, which came in at the low end of Wall Street’s $284 million estimate.

Holger Mueller of Constellation Research Inc. said he saw a few positives from UiPath’s latest quarter, the most notable being that it managed to reduce its overall loss to just over $30 million.

“UiPath achieved this despite only making some small cuts in its budget,” Mueller explained. “Importantly though, it managed to keep its R&D budget intact so as not to hamper innovation. That shows on the product side, as UiPath has been able to future-proof its portfolio and take play a part in the AI transformation of the future of work.”

Mueller was referring to the new generative AI capabilities UiPath added to its platform recently via a partnership with a startup called Amelia US LLC. The company said at the time it’s partnering with Amelia to create a fully-integrated digital agent for workflow automation that enables users to make support requests via chat, messaging or voice. Amelia’s conversational digital agent will process requests and natively integrate with UiPath’s software robots to resolve them through workflow automation.

In a statement, UiPath’s other co-CEO Daniel Dines (pictured) said he believes the company has an important role to play in the emergence of generative AI technologies.

“For years, UiPath has invested in ML models and domain-specific AI for understanding interfaces, mining tasks, and processing documents and communications,” he explained. “Combining this foundation with the recent advancements in generative AI further strengthens our platform, unlocking a new wave of opportunities to democratize automation, increasing the number of use cases and driving faster time to value and overall ROI.”

Prior to today’s stock move, UiPath’s shares were up 28% for the year, compared with an increase of just 7% in the broader S&P 500 index.

Photo: SiliconANGLE