Daniel Dines, CEO, UiPath at the company’s listing on the New York Stock Exchange, April 21, 2021.
Sky stocks rose on Thursday, with more than a dozen sellers achieving a 10% or more rise as investors spent an optimistic day on Wall Street picking up shares in companies that have been most down in this year̵[ads1]7;s sales.
UiPath, a provider of office task automation software, led the charge, rising 17%. Late Wednesday, the company reported a smaller-than-expected loss for the first quarter, while revenues topped estimates. UiPath raised its revenue guidance for the full year, and also exceeded analysts’ expectations.
Daniel Dines, UiPath’s CEO, started the company’s earnings call by acknowledging the tough economic conditions that have dragged down the valuation in 2022.
“Chopped macro environments usually reveal areas that can be improved,” Dines said. “To that end, the team is focused on simplifying our go-to-market approach, starting with an adjustment that will result in better market segmentation, higher sales productivity and best-in-class customer experience and results.”
Even after Thursday’s pop, UiPath has lost more than half of its value this year. The WisdomTree Cloud Computing Fund, a basket of 76 cloud stocks, jumped 6.5% on Thursday for its fourth best day of the year, but is still down 38% in 2022.
At a time when markets are particularly volatile due to uncertainty over interest rates, inflation and the war in Ukraine, companies with high growth rates, but little or no profit, are at the mercy of investors, who are looking for the safest assets. The story has completely changed from the last two years, when oversized growth was celebrated even at the expense of earnings.
Because cloud stocks have sold so dramatically this year, technology bulls are looking for every opportunity to call the bottom and come in with a discount. Forward income multiples for the cloud stock curve have fallen to around 8 on average from around 15 in September, according to Bessemer Venture Partners, whose cloud index forms the basis of the WisdomTree fund.
The return on Thursday came despite Microsoft’s announcement that they cut quarterly guidance due to an adverse impact from exchange rates.
In addition to UiPath, the top performers included the Elastic cloud group, which helps companies enter searches into their apps, and the analytics company DataDog, which climbs 19% and 13%, respectively. Asana, Veeva and GitLab all rose by at least 14%. Other notable double-digit percentages were Okta, Monday.com and Shopify. These companies are still down for the year between 25% (Veeva) and 71% (Shopify).
Elastic on Wednesday reported quarterly revenues that exceeded analysts’ estimates, but demanded a larger loss than expected for the new financial year. CEO Ashutosh Kulkarni told analysts that “the strength of the demand environment continued.” It was the stock’s best day since the listing in 2018.
Veeva, which sells software to hospitals and drug manufacturers, was strengthened on Thursday by a results report that was better than expected.
“We do not see the macro effects in any particular segment,” CEO Peter Gassner said during the conversation.
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