Co-founder and Chief Innovation Officer Daniel Dines will become UiPath’s new CEO as Rob Enslin says in a LinkedIn post that he has ‘made the difficult decision to resign as CEO of UiPath for personal reasons.’

A returning CEO and investing in its partner ecosystem are part of UiPath’s go-forward strategy after the automation software vendor delivered what one investment firm called a “disappointing” first fiscal quarter earnings report.

Co-founder and Chief Innovation Officer Daniel Dines (pictured) will become UiPath’s new effective CEO June 1, as current CEO Rob Enslin has resigned. Outgoing CEO Enslin took the top job in February after sharing a co-CEO title with Dines beginning in April 2022. Dines took on the chief innovation officer and executive chairman role on Jan. 31.

In a post on LinkedIn, Enslin said, “After much reflection, I’ve made the difficult decision to resign as CEO of UiPath for personal reasons.”

“I have complete confidence that under Daniel’s inspirational leadership and customer-obsessed mindset, UiPath will enter a new phase of profitable growth and industry-defining innovation,” Enslin wrote.

CRN has reached out to UiPath for comment but had not heard back by press time.

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According to a transcript of Wednesday’s earnings call, which covered the quarter ended April 30, Dines took the lead and Enslin did not participate. Dines said Enslin left “for personal reasons” and that the two are on “good terms.”

Enslin came to UiPath after three years with Google Cloud, where he served as president of cloud sales, according to his LinkedIn account. He also worked at SAP for more than 26 years, leaving in 2019 as president of the Cloud Business Group and executive board member.

UiPath’s stock traded at about $12 Thursday afternoon, down about 34 percent from market close Thursday.

On the call, Dines highlighted UiPath’s work with partners, especially global systems integrators, according to the transcript.

“Partners continue to be a core pillar of our go-to-market strategy, and GSIs are building long-term differentiated businesses with us,” Dines said. He highlighted the company’s work with Accenture, No. 1 on CRN’s 2024 Solution Provider 500, expanding UiPath’s role with an energy company and EY’s work in a digital transformation plan with an Ireland-based private health insurer.

“We have a lot to do in the partnership side of the business,” Dines said during the call, according to a transcript.

Investment Firms Weigh In

At least two investment firms downgraded UiPath based on the first fiscal quarter performance and CEO transition.

In a report Thursday, Bank of America called UiPath’s first fiscal quarter results “disappointing” due in part to the New York-based company’s revised expectations for full-year revenue, annual recurring revenue and operating income coming in “meaningfully lower than our/Street estimates.”

Bank of America downgraded the stock from “buy” to “neutral,” according to the report.

The firm called the CEO transition “abrupt” and said it raised “further questions about the growth trajectory of the business.”

“While some part of the slowdown in multiyear license deals was triggered by a change to the sales incentive structure in Q1 that is already being addressed, we think a further overhaul could be likely,” according to Bank of America. “With leadership changes and sale execution challenges, it is likely to be several quarters before the business stabilizes.”

In its own Thursday report on UiPath, investment firm William Blair said that the first fiscal quarter results “underwhelmed expectations with the company missing on ARR and cutting its full-year revenue guidance by $150 million and operating income by $150 million.”

“It now expects revenue in fiscal 2025 to grow 7.6%, down from its prior expectation of 19.1% growth, and operating margin of 10.3%, down from its prior expectation of 18.9% margin,” according to William Blair.

William Blair said in its report that UiPath could need a year to return to normal “given the execution issues and limited visibility that the company has into large deal renewals.” The firm downgraded UiPath to “market perform.”

The firm did praise Dines’ promotion, calling him “well-positioned to retake the CEO position given his long tenure with the company.”

Both firms pointed to a long-term opportunity for the vendor. Bank of America noted the “promising” introduction of UiPath’s family of large language models (LLMs)—DocPATH and CommPATH—the June-slated debut for UiPath Autopilot products for developers and testers and new Federal Risk and Authorization Management Program (FedRAMP) certification for doing business with the federal government.

The William Blair report said it still believes there is a solid market opportunity ahead and that UiPath is well positioned to capture it over time,” but the firm needs to see “steady execution, consistent guidance beats, and time for the team to implement the necessary operational changes to position UiPath for durable growth and margin expansion.”

Part of UiPath’s issue was an incentive for sales representatives to sell longer-duration contracts. The contracts became a problem “when the macro[economy] worsened and sales cycles for large deals elongated and saw heightened scrutiny,” according to William Blair.

“UiPath plans to no longer incentivize reps for signing these longer-duration contracts,” according to William Blair. “The company also plans to readjust its recent investments to accelerate growth as they have weighed on margins and caused the company’s go-to-market motion to be less agile.”

First Quarter In Detail, Guidance

On the company’s first fiscal quarter performance, Dines said that “while our top-line results were generally in line with our guidance range, we are not satisfied with our performance,” explaining that after a healthy start, pace slowed in March and April.

“This was primarily due to the impact of a challenging macroeconomic environment that we see persisting with midmarket customers, as well as a change in customer behavior, particularly with large multiyear deals,” he said, according to a transcript.

Some large expansion opportunities closed at smaller sizes or were pushed to a later quarter, he said. UiPath is also improving “predictability on large multiyear deals,” among other efforts to better performance.

UiPath added 38 customers with over $100,000 in annual recurring revenue during the quarter, bringing the total number of customers in this segment to 2,092, marking 13 percent growth year over year.

Customers with more than $1 million in annual recurring revenue were flat sequentially, coming in at 288. UiPath saw a record number of customers with $5 million-plus in annual recurring revenue.

Revenue for the first quarter came in at $335 million, beating consensus estimates for $333 million, which was 16 percent growth year over year, according to William Blair. Annual recurring revenue of $15 billion slightly missed consensus estimates and achieved 21 percent growth year over year. Operating income of $50 million missed consensus estimates for $55 million.

UiPath expects full fiscal year revenue growth of 7.6 percent at the midpoint, missing consensus estimates for 19.1 percent, according to William Blair.

Annual recurring revenue is expected to be $1.66 billion at the midpoint, representing 13.6 percent growth but lower than consensus estimates for 18 percent growth, according to the firm. The company said to expect second fiscal quarter revenue of $303 million at the midpoint. That represents 5.3 percent growth year over year compared with Wall Street expectations for 19 percent.

UiPath expects full fiscal year operating income of $145 million at the midpoint. That would be a 10.3 percent margin, lower than Wall Street’s expected 18.9 percent.