0001734722-25-000050
SEC filingUiPath's Q3 FY26 revenue grew 16% YoY to $411.1M, driven by subscription services, with gross margin expanding to 83%.
For the three months ended October 31, 2025, UiPath reported total revenue of $411.1 million, a 16% increase compared to $354.7 million in the same period last year. The growth was primarily driven by a 20% increase in subscription services revenue to $247.6 million, which now represents 60% of total revenue, up from 58% in the prior year. Licenses revenue grew 9% to $150.0 million, while professional services and other revenue increased 28% to $13.5 million. Gross margin improved to 83% from 82%, reflecting higher subscription services revenue and improved margin in that segment. Operating income swung to a positive $13.1 million from an operating loss of $43.4 million in Q3 FY25, driven by a 4% reduction in sales and marketing expenses and a 6% increase in general and administrative expenses. Net income was $198.8 million, compared to a net loss of $10.7 million in the prior year, largely due to a $174.2 million income tax benefit from the release of valuation allowances on U.S. federal and New York City and State deferred tax assets.
Subscription services revenue grew 20% YoY to $247.6 million, driven by both prior period sales and new current period sales, as revenue is recognized ratably over the subscription term. Licenses revenue increased 9% YoY to $150.0 million, reflecting point-in-time recognition upon delivery or renewal commencement. Professional services and other revenue grew 28% YoY to $13.5 million, primarily due to increased use of third-party subcontractors. The shift toward subscription services continues to improve revenue predictability and gross margins, as subscription services carry higher margins than licenses or professional services.
Management highlighted that ARR grew 11% YoY to $1.78 billion, with 72% of growth from existing customers and a dollar-based net retention rate of 107%. The company expects sales and marketing expenses to decrease as a percentage of revenue over the longer term, while research and development expenses are expected to increase in absolute dollars as the company invests in AI and platform innovation. The Fiscal Year 2025 Workforce Restructuring was completed during the second quarter of fiscal year 2026, and no further restructuring expenses were recognized in Q3 FY26. Management believes existing cash, cash equivalents, marketable securities, and customer payments will be sufficient to fund anticipated cash requirements for the next 12 months and the long term.
Operating cash flow (CFO) of $188.9M exceeded net income of $177.9M, indicating strong cash generation. The primary non-cash adjustments were stock-based compensation ($225.8M) and deferred income tax benefits ($187.3M), which largely offset each other. Working capital was a net use of cash, driven by a $92.0M decrease in deferred revenue and a $65.6M increase in deferred contract acquisition costs. Accounts receivable improved by $93.5M, providing a boost. Capital expenditures doubled to $16.0M, but remained modest relative to CFO. Share repurchases consumed $329.1M, well above CFO, leading to a net cash decrease of $135.5M. Investing activities provided $20.2M due to net maturities of marketable securities. Overall, cash flow quality is reasonable, but high share repurchases necessitate reliance on existing cash reserves.