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Water Tower Research

Research from Water Tower Research

Water Tower Research is a leading equity research firm that provides research on micro, small and mid cap companies.

Water Tower Research was founded by Wall Street veterans after witnessing a fundamental shift in the investment research industry with the result being a declining knowledge base among investors, a lack of awareness and a shrinking pool of fundamental research being conducted on companies across the small-cap and micro-cap spectrum. The same issues are now increasingly occurring in the mid-cap space. This sea change within the investment community is impacting not only the companies themselves but also current shareholders and potential investors. With significantly less active sell-side sponsorship by Wall Street, a substantial information gap has developed between companies and various constituents in the financial community. The net result is fewer channels for insight and information to flow between companies and investors.

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Equity Bottom-Up

<ul><li>The Token Tax Haven; AI Still a “Show Me” Story. 2QFY27 delivered a beat on revenue, operating income, and net new ARR, and management raised full-year revenue and operating income guidance again.</li><li>However, the FY27 ARR guide implies 2H net new ARR that is roughly flat Y/Y, with modest growth on a constant currency basis.</li><li>Founder, Executive Chairman, and CEO Daniel Dines made a credible case for deterministic, “tokenless” automation alongside probabilistic AI, but we view PATH as increasingly a “show me” story on AI monetization.</li></ul>

The Token Tax Haven; AI Still a “Show Me” Story. 2QFY27 delivered a beat on revenue, operating income, and net new ARR, and management raised full-year revenue and operating income guidance again.However, the FY27 ARR guide implies 2H net new ARR that is roughly flat Y/Y, with modest growth on a constant currency basis.Founder, Executive Chairman, and CEO Daniel Dines made a credible case for deterministic, “tokenless” automation alongside probabilistic AI, but we view PATH as increasingly a “show me” story on AI monetization.

PATH: 2QFY27 Results; The Token Tax Haven; AI Still A "Show Me" Story

<ul><li>1QFY27 results delivered a beat on revenue, operating income, and net new ARR, with management raising full-year guidance for both revenue and operating income. </li><li>Agentic and orchestration products that hit GA last May are moving from pilot to production and DevCon’s UiPath for Coding Agents broadens the story to “build, orchestrate, and self-heal.” </li><li>The wrinkle in an otherwise strong print: billings and long-term deferred revenue missed Street estimates by wide margins, which management framed as ASC 606 timing and deal mix rather than a demand signal.</li></ul>

1QFY27 results delivered a beat on revenue, operating income, and net new ARR, with management raising full-year guidance for both revenue and operating income. Agentic and orchestration products that hit GA last May are moving from pilot to production and DevCon’s UiPath for Coding Agents broadens the story to “build, orchestrate, and self-heal.” The wrinkle in an otherwise strong print: billings and long-term deferred revenue missed Street estimates by wide margins, which management framed as ASC 606 timing and deal mix rather than a demand signal.

PATH: 1QFY27 Results; Strong Revenue and Net New ARR; Can Billings and Deferred Self-Heal?

Thematic (Sector/Industry)

<ul><li>Software rebounded in August, outperforming Semiconductors. </li><li>The WTR AI Index rose 7.3% M/M, ahead of the S&amp;P 500 (up 2.6%), the Russell 2000 (up 0.9%), and the Nasdaq (up 4.2%).</li><li> Software (24% of the index) gained 11.0% while Semiconductors (18% of the index) slipped 1.2%, reversing the Semis-led pattern that has dominated most of 2026. </li></ul>

Software rebounded in August, outperforming Semiconductors. The WTR AI Index rose 7.3% M/M, ahead of the S&amp;P 500 (up 2.6%), the Russell 2000 (up 0.9%), and the Nasdaq (up 4.2%). Software (24% of the index) gained 11.0% while Semiconductors (18% of the index) slipped 1.2%, reversing the Semis-led pattern that has dominated most of 2026. 

AI Flow Index : Sailing a Sea of Companies in AI - 8 September 2026

<ul><li>UiPath acquires WorkFusion, a specialist in AI agents for financial crime compliance. </li><li>On February 6, UiPath announced the acquisition of WorkFusion, which offers a pre-built library of purpose-built AI agents that automate labor-intensive aspects of compliance operations for banks and financial institutions, spanning anti-money laundering (AML), know your customer (KYC), sanctions screening, adverse media monitoring, and transaction monitoring investigations.</li><li>The company’s solutions are currently deployed at major global banks and financial institutions. </li></ul>

UiPath acquires WorkFusion, a specialist in AI agents for financial crime compliance. On February 6, UiPath announced the acquisition of WorkFusion, which offers a pre-built library of purpose-built AI agents that automate labor-intensive aspects of compliance operations for banks and financial institutions, spanning anti-money laundering (AML), know your customer (KYC), sanctions screening, adverse media monitoring, and transaction monitoring investigations.The company’s solutions are currently deployed at major global banks and financial institutions. 

PATH: WorkFusion Acquisition Advances Strategic Focus on Agentic AI

<ul><li>Leader in robotic process automation (RPA) market. UiPath commands ~35% of the RPA market, which is 3-4x its nearest competitors, and was named a Leader in the Gartner Magic Quadrant for RPA for seven consecutive years. </li><li>RPA uses software “robots” that mimic human actions (clicking buttons, copying data, navigating between applications) to automate repetitive, rules-based tasks across enterprise systems.</li><li>The company serves more than 10,000 customers across 115+ countries.</li></ul>

Leader in robotic process automation (RPA) market. UiPath commands ~35% of the RPA market, which is 3-4x its nearest competitors, and was named a Leader in the Gartner Magic Quadrant for RPA for seven consecutive years. RPA uses software “robots” that mimic human actions (clicking buttons, copying data, navigating between applications) to automate repetitive, rules-based tasks across enterprise systems.The company serves more than 10,000 customers across 115+ countries.

PATH: The RPA Leader Meets Agentic AI; UiPath's Next Chapter

United States

UiPath, Inc. provides software solutions. The Company designs and develops robotic process automation software to build, manage, run, engage, measure, and govern automations across departments within an organization. UiPath serves customers worldwide.

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UiPath Inc (PATH US)

PATH: 2QFY27 Results; The Token Tax Haven; AI Still A "Show Me" Story

2QFY27 delivered a beat on revenue, operating income, and net new ARR, and management raised full-year revenue and operating income guidance again.

Water Tower Research

PATH: 1QFY27 Results; Strong Revenue and Net New ARR; Can Billings and Deferred Self-Heal?

1QFY27 results delivered a beat on revenue, operating income, and net new ARR, with management raising full-year guidance for both revenue and...

Water Tower Research

AI Flow Index : Sailing a Sea of Companies in AI - 8 September 2026

The move mirrors better-than-expected 2Q results across the software group and some easing of near-term fears about AI disruption to application...

Water Tower Research

PATH: WorkFusion Acquisition Advances Strategic Focus on Agentic AI

On February 6, UiPath announced the acquisition of WorkFusion, which offers a pre-built library of purpose-built AI agents that automate labor...

Water Tower Research

PATH: The RPA Leader Meets Agentic AI; UiPath's Next Chapter

Leader in robotic process automation (RPA) market. UiPath commands ~35% of the RPA market, which is 3-4x its nearest competitors, and was named a...

Water Tower Research

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