By Adam Clark

UiPath was tumbling early on Thursday. The automation-software company might be a victim of the Trump administration's drive to cut federal spending.

UiPath shares were down 18% at $9.65 in premarket trading after it issued a disappointing revenue forecast, citing uncertainty over U.S. government spending.

The company said in its earnings on Wednesday after the market close that it expected sales of $330 million to $335 million for its current fiscal quarter, well short of analyst expectations of $367.5 million according to FactSet.

"Over the last several weeks, we have seen increasing global macroeconomic uncertainty, particularly in the U.S. public sector, and this uncertainty is reflected both in our fiscal first quarter and full-year 2026 financial outlook," Ashim Gupta, the company's chief operating and financial officer, said in a statement.

The company looks to be being affected by President Donald Trump's aim of slashing government expenditure. Elon Musk's Department of Government Efficiency, or DOGE, claims to have saved $115 billion in federal spending, according to its website on Thursday, although a Wall Street Journal analysis previously found many of its claimed savings were overstated.

"They [U.S. government officials] see us as a real avenue to meet a lot of DOGE's goals. But we have to give the appropriate space to let them work through the transition and continue to demonstrate our partnership and value," Gupta told analysts on an earnings call.

The statement makes UiPath one of the first companies in the software sector to single out weakness in U.S. federal exposure, according to KeyBanc analyst Jason Celino, who kept a Sector Weight rating on the stock with no target price.

"Though concerning and with potential negative implications for broader software, we do wonder if it is more company/sub-segment specific," Celino wrote in a research note.

UiPath is aiming to dispel concerns that the growth of artificial intelligence will undermine the sales case for its "robotic process automation" technology, designed to automate repetitive information tasks, and has launched its own suite of AI products.

UiPath reported $424 million in sales for the fiscal fourth quarter ended Jan.31, up 5% year over year but below analyst forecasts for $425.1 million. The company reported adjusted earnings of 26 cents a share, above estimates for 20 cents a share.

In a separate announcement on Wednesday, UiPath said it had acquired U.K.-based AI company Peak for an undisclosed price.

Write to Adam Clark at adam.clark@barrons.com

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March 13, 2025 07:14 ET (11:14 GMT)

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