What Happened?

Shares of automation software company UiPath (NYSE:PATH) jumped 5.2% in the afternoon session as equities soared (Nasdaq +1.2%, S&P 500 +0.9%) after The Bureau of Labor Statistics reported nonfarm payrolls for September 2024, which exceeded expectations. Notably, nonfarm payrolls increased by 254,000, significantly surpassing the consensus estimate of 150,000. In addition, the unemployment rate clocked in at 4.1%, slightly below analysts' expectations of 4.2%.

Overall, the report supports the Fed's favored "soft landing" narrative, suggesting that inflation can be controlled without significantly harming the economy.

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What The Market Is Telling Us

UiPath’s shares are very volatile and have had 20 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 28 days ago when the stock dropped 5.9% on the news that the company reported second-quarter earnings results. A big-picture challenge was that net new ARR (annual recurring revenue) continued to decline and fiscal 2025 ARR guidance implied that this problem might persist.

During the earnings call, management also struck a cautious tone and highlighted macro challenges, which are more pronounced in the lower-end market.

On the other hand, it was good to see UiPath beat analysts' revenue and adjusted operating profit expectations.

Looking ahead, the company raised its full-year ARR, revenue, and adjusted operating guidance. Big picture, a 'beat and raise' quarter typically results in a move up in the stock. This reaction signals that there is some skittishness about the health of business amid recent management changes and amid automation and AI technology that is fast-evolving.

UiPath is down 47.5% since the beginning of the year, and at $12.50 per share, it is trading 53.5% below its 52-week high of $26.88 from February 2024. Investors who bought $1,000 worth of UiPath’s shares at the IPO in April 2021 would now be looking at an investment worth $181.16.

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