Yahoo Finance

Daniel Dines

Thank you, Allise. Good afternoon, everyone. Thanks for joining us. I'd like to thank the UiPath team and our partners for their hard work and focus throughout the year as well as our customers for placing their trust in us. We delivered revenue of $424 million. Excluding the $2 million FX headwind, revenue would have totaled $426 million.
We ended the year with ARR of $1.666 billion, an increase of 14% year over year. These results included an impact from the ongoing geopolitical climate. While we remain confident in our public sector business, the transition in the government that began in January impacted the timing of deal closures and as a result, we came in slightly below our expectations for ARR in the fourth quarter. We continue to work closely with our federal customers, and their feedback is consistent.
Our Agentic platform drives tangible efficiencies and is a part of their go-forward roadmap. At the same time, we acknowledge that in the short term, the government is working through administration priorities, which we will work to support, and we have factored this into our linearity and our overall guidance for the year. There has also been a significant increase in volatility in the overall macroeconomic environment, particularly in the last two weeks.
In recent discussions with customers, the external environment has created uncertainty around their budgets. Foreign exchange rates have also significantly fluctuated over the last week. Given these trends, we are taking a measured approach for fiscal 2026 adding additional prudence to our overall guidance, given the volatile environment.
We are confident that we are appropriately factoring in the macro trends as we see them today. Looking beyond these near-term headwinds, we have done a lot of work to strengthen the company. We have built a strong foundation where we are seeing uncertainty in the market, we are focused on positioning the company for long-term success and believe we are in a strong position to weather the current environment.
As we look ahead for fiscal 2026, we remain focused on three key strategic priorities: accelerating innovation across our Agentic roadmap, increasing adoption across our customer base, and continuing to drive operational rigor and efficiencies across the organization. I continue to spend the majority of my time traveling and engaging with customers, partners, and our team.
Our product and engineering teams are innovating faster than ever delivering cutting-edge solutions to our customers and our innovation roadmap is driving deeper and more meaningful relationships with customers and strategic partners. We have also made strong progress executing against the priorities we laid out last year and are on track to complete our go-to-market changes and restructuring. Our sales leaders continue to drive alignment across their teams while enhancing our focus on customer centricity.
The team is energized and we are fully aligned on our strategy to drive success for our customers in fiscal 2026 and beyond. Over the last six months, we completed in-depth reviews of our top customers to understand their respective health and created programmatic executive sponsor plans to accelerate adoption and innovation and maximize ROI.
These initiatives are already generating strong customer engagement and momentum. While there is always more work to do, our innovation engine is running at full speed. Our Agentic Automation products continue to gain traction in the market, and we have substantial opportunities to execute on.
Fiscal 2025 was UiPath's most innovative year delivering groundbreaking products and capabilities like autopilot, Agent Builder, Agentic orchestration, hearing agent, intelligent extraction processing, Agentic testing, the AI trust layer context grounding and expanded GI connectors, and we are just getting stuffed. Agentic automation is transforming the way businesses operate.
And we continue to redefine what's possible with what we believe is the most advanced and comprehensive Agentic automation platform in the industry. Customers already view us as the platform for delivering results, not just promises. After testing competitive Agenetic vendors, a leading provider of scientific instruments and supplies has chosen our platform because of our unique ability to use agents that work across applications. They are now in the process of building and deploying Agentic use cases with UiPath Agent Builder for customer relations, customer due diligence and equipment warranty data.
Another great example is one of the largest global semiconductor companies who signed a seven-figure deal in the quarter, purchasing our Agentic products to elevate their employee experience and drive competitive differentiation. Agent Builder, which launched into private preview in December, is our most successful preview in company history. Hundreds of customers are testing use cases that span evolving, resolving vendor disputes, processing claims, streamlining sales operations, fraud detection and compliance customer complaints, coordination of benefits, optimizing revenue cycle management, and improving logistics operations.
Enthusiasm among both partners and customers has been very strong, and we are seeing incredible engagement across the board with approximately 3,000 agents creating and mission-critical processes. For example, Allegis Global Solutions is piloting adding agents in their workflows for invoice reconciliation by implementing UiPath agents, AGS gains the flexibility to resolve previously unseen variations of documents, delivering nearly a 30% improvement in their accuracy rate and driving increased scalability of their automation program through a 50% reduction in development time. Building high-quality agent is valuable, but what truly delivers transformative outcomes is orchestrating agents, robots, and people together to optimize end-to-end enterprise business processes.
That's where our new Agentic orchestration product comes into play. Launching to public review this week, Agentic orchestration provides real differentiation for our platform for its unique ability to orchestrate teams of specialized agents that are focused on executing their gold-based staff while working in tandem with robots to execute deterministic paths and collaborating with people as needed.
I can't emphasize enough the power of robots and agents working together to control the level of autonomy that an agent provides ensuring that when money is changing hands, patient records are being updated, what claims are being paid, our platform delivers accurate and dependable business outcomes. And we are not only doing this within the UiPath ecosystem, but genetic orchestration will be able to orchestrate agents across an enterprise's entire application ecosystem including APIs, models and now agents. Moreover, we plan to add support to host, manage and orchestrate agents built with leading open-source Agentic frameworks.
We believe that orchestrating these agents together makes our platform unique as the most integrated and comprehensive way for our customers to tackle complex end-to-end processes while avoiding vendor lock-in.
Customers are already leveraging Agentic orchestration to drive efficiencies. An example is a multinational food and beverage corporation. They plan to leverage the solution to streamline and optimize their supply chain planning process, orchestrating robots, agents and people across applications to reduce many of the interventions and drive a more streamlined approach. Launching to general availability today, Agentic testing is a good example of specialized Agentic solution that is disrupting the legacy application testing market by augmented testers with AI agents for greater productivity.
Our out-of-the-box agent, autopilot for testers speeds up the entire testing life cycle by enabling Agentic testing design, test automation and test management while Agent Builder empowers our customers to build their own custom agents tailored to their specific testing needs. We continue to see healthy adoption of our application testing products, including an expansion deal with the global animal health company in the quarter.
In a competitive win, they expanded the test program to support automated application testing for the ERP migration. They plan to have 90% of their application testing automating with an overall cost saving of approximately $5 million.
We are also focused on building verticalized solutions, and we are happy to announce the acquisition of Peak AI, a vertical specialized agent for price and inventory use cases across a wide range of industries, including manufacturing, retail and consumer packaged goods. This acquisition is a natural extension of our path to a genetic automation, strengthening our vertical specialized agents, and we will work to integrate Peak's agents into our orchestration framework.
Turning to autopilot for everyone. It is of use and enhanced user experience continues to drive adoption, including a sequential increase of over 300% in unique customers in the quarter, including a financial technology and services company who recently implemented Autopilot to streamline their merchant category validation process. Autopilot now troubleshoots these workflows by identifying errors and optimizing performance, enabling the company to operationalize AI safety and effectively. The innovation of our product roadmap has also reenergized our partner ecosystem, and we continue to drive new avenues of growth through strategic partnerships.
We are excited to strengthen our partnership with Deloitte by jointly launching Agentic ERP solution to integrate UiPath Agentic automation with industry-leading ERP platforms. This solution will empower organizations to autonomously orchestrate end-to-end business process workflows, leveraging generative outputs executing tasks without constant human intervention, and continuously improving through feedback loops.
Ultimately, this collaboration is not just about cost savings. It's about operating at unprecedented levels of efficiency and intelligence that will unlock dynamic decisions making a competitive advantage. With our advancements in Agentic Automation, our relationship with Microsoft continues to deepen and to quote Jason Greive, CVP, ISD and digital native team at Microsoft.
We share a common vision for a Agentic automation, and we are excited to partner with to bring the best of Asure, MicroSolv 65 and copilot to customers with IPF agents. This collaboration highlights our commitment to innovation, driving value for our customers and setting new standards in the industry that leverage the combined agenting capabilities of Microsoft and UiPath. Our strong vision and continuous investments in product innovation and capability expansion continues to earnest industry analyst recognition.
During the quarter, we were positioned the highest in the leader category in the inaugural Everest Group Intelligent Automation Platforms PEAK Matrix assessment 2024, a testament to our relentless focus on innovation and the power of our holistic automation platform delivers for our customers.
Finally, we invite you to join our Annual Agentic AI Summit where we will showcase how Agentic Automation is transforming businesses. The event will be live streamed on our website on March 25. Please reach out to our Investor Relations team for additional details.
With that, I'll turn the call over to Ashim.

Ashim Gupta

Thank you, Daniel, and good afternoon, everyone. I'd also like to extend a thank you to the team for their hard work and dedication. Your efforts drive our success, and we appreciate everything you do to serve our customers, innovate across our platform and execute against our strategic initiatives.
Before turning to the financials, I would like to share an update on our key operating priorities. Starting with our partner ecosystem, we have made significant progress over the last nine months, driving alignment across our organization. This has resulted in a more connected team with an improved overall incentive structure that is better aligned to performance and rewards higher-performing partners.
We have also more closely integrated our partners with our go-to-market teams and have been proactively focusing on enabling them to drive adoption of our Agentic solutions, along with our professional services team. In addition, I'm encouraged with the progress we are making in driving greater and more proactive visibility and discipline in our pipeline and customer health.
Overall, our operational rigor is improving, thanks to the effective and cross-functional collaboration of our teams. I'm pleased by the progress we have made in fiscal 2025 and believe our highly differentiated Agentic platform transforms -- automation platform positions us well for long-term growth and profitability.
As we move forward, as Daniel has said, innovation is our number one priority, and we will continue to invest in driving AI and Agentic while delivering margin expansion through more disciplined expense management.
Turning to the quarter. Unless otherwise indicated, I will be discussing results on a non-GAAP basis, and all growth rates are year over year I also want to note that since we price and sell in local currency, fluctuations in FX impacts results. Fourth quarter revenue grew to $424 million, an increase of 5% year over year. Excluding an FX headwind of $2 million, revenue would have totaled $426 million.
Total revenue for fiscal year 2025 was $1.43 billion, an increase of 9% year over year. ARR totaled $1.666 billion, an increase of 14% and driven by net new ARR of $60 million. Excluding the FX headwind, net new ARR would have totaled $61 million. As we have discussed, our AI products and our overall platform are key differentiators driving both growth and customer retention. Over the last several years, we have introduced products like document understanding and communications mining.
Our sales team has done a great job integrating them into customer solutions and driving adoption, which has resulted in an AI product attach rate of approximately 20% of our total customers. More importantly, for our customers with greater than $1 million in ARR, our attach rate is over 85%. A great example of the tangible ROI our customers achieve with our AI solutions is a European security company. They expanded to the full UiPath platform to leverage AI for far more advanced automation use cases to automate e-mail routing of unstructured data and document attachments, aiming to achieve net annual savings of $30 million by 2030. In order to fully take advantage of our AI products, our customers are accelerating their move to the cloud.
We ended the year with over $975 million in cloud ARR, up over 50% year over year. including both hybrid and SaaS offerings. An example of this is one of our largest customers, a leading US financial services firm who expanded in the quarter as they migrate their extensive automation program, spending thousands of processes across multiple divisions to the cloud. With this transition, they plan to accelerate their adoption of Autopilot, communications mining and while enabling a faster integration of our Agentic capabilities to drive efficiency and innovation.
We ended the quarter with approximately 10,750 customers. Normalizing for customer hierarchy changes, our customer count was flat year over year. We continue to be successful in signing valuable new enterprise logos that align with our strategy for targeting long-term customers with a propensity to invest, including new logos like Nutanix, Lake Michigan Credit Union, Southern Illinois Hospital Services, ACS Industries and living spaces. As with prior quarters, the vast majority of customer attrition continues to be at the lower end.
To provide a bit more color, when we take a closer look into our total logo count, customers that spend over $30,000 in ARR increased 7% year over year. This is also reinforced by our continued growth in customers with $100,000 or more in ARR, which increased to 2,292 and customers with $1 million or more in ARR, which increased to 317. Our largest customers are continuing to expand on our platform and during fiscal year 2025, customers with $5 million or more in ARR, grew 30%.
Moving on, dollar-based gross retention of 98% continues to be best in class, and our dollar-based net retention rate as of the fourth quarter was 110%. Remaining performance obligations increased to $1.243 billion, up 7%. Current RPO increased to $806 million, up 14%.
Turning to expenses. Fourth quarter overall gross margin was 87%, and software gross margin was 91%. Fourth-quarter operating expenses were $236 million. We ended the year with 3,868 total employees.
In the fourth quarter, we achieved GAAP profitability for the second year in a row and delivered GAAP operating income of $34 million. This included $88 million of stock-based compensation expense. Full-year GAAP operating loss was $163 million, including $358 million of stock-based compensation.
Non-GAAP operating income in the fourth quarter was $134 million, resulting in a record non-GAAP operating margin of 32%, an improvement of over 400 basis points year over year and a reflection of our continued efforts to streamline the business. Full-year non-GAAP operating income was $241 million, and full-year non-GAAP operating margin was 17%.
I am pleased with our non-GAAP adjusted free cash flow generation for the fourth quarter and full year of $145 million, $328 million, respectively. We ended the year with a healthy balance sheet of $1.7 billion in cash, cash equivalents and marketable securities and no debt.
During the fourth quarter, we continued to return capital to shareholders, repurchasing 744,000 shares of our Class A common stock at an average price of $12.57. For the full fiscal year, we returned approximately $390 million to shareholders through share repurchases, repurchasing 31.8 million shares of our common stock at an average price of $12.30 per share. Since January 31, under our 10b5-1 plan, we repurchased an additional 1.4 million shares at an average price of $12.19 through March 11, 2025.
Now turning to guidance. Our guidance philosophy remains unchanged, and we continue to guide to what we see in front of us, while factoring in relevant trends, opportunities and potential constraints. We are actively monitoring the many moving parts in the macroeconomic landscape, including the US public sector and global economic conditions.
Our guidance takes into account the following. First, as Daniel mentioned, while we remain optimistic about the long-term opportunity in the US public sector, the ongoing transition has created short-term uncertainty for deal closures and we have factored this into our guidance for fiscal 2026 with a more pronounced impact in the first half of the year. Second, we have seen an increase in volatility in the overall macroeconomic environment, particularly in the last two weeks. And as a result, we have made prudent assumptions to our guidance.
Third, we are pleased with the progress our customers are making to move more of their workloads to the cloud, particularly as customers continue to adopt our AI product, and plan their Agentic roadmaps. While this is an overall positive, we expect growth in our SaaS offerings to be a 2% headwind to full year revenue growth this year.
Turning to the specifics of our guide. For the first fiscal quarter 2026, we expect revenue in the range of $330 million to $335 million; ARR in the range of $1.686 billion to $1.691 billion; non-GAAP operating income of approximately $45 million. And we expect first-quarter basic share count to be approximately 553 million shares. For the fiscal full year 2026, we expect revenue in the range of $1.525 billion to $1.530 billion; ARR in the range of $1.816 billion to $1.821 billion; non-GAAP operating income of approximately $270 million.
Before I close, I want to leave you with a few final modeling points, including the following: first half revenue to be approximately $665 million. First-half net new ARR to be approximately $48 million and second half net new ARR and revenue to reflect similar seasonality as fiscal year 2025. While we have substantially completed our go-to-market transition, we expect the final stages to create a more pronounced seasonal pattern in fiscal '26 with the second half of the year being stronger than the first.
Fiscal year non-GAAP gross margin to be approximately 85% as we scale our cloud offerings. Non-GAAP operating income to reflect similar seasonality to our top line metrics. Fiscal year 2026 non-GAAP adjusted free cash flow of approximately $370 million also to follow normal seasonal patterns.
Lastly, we are committed to managing stock-based compensation and for fiscal year 2026, we expect dilution to be between 2% to 3% year over year.
Thank you for joining us today, and we look forward to speaking with many of you during the quarter. With that, I will now turn the call over to the operator. Operator, please poll for questions.

Question and Answer Session

Operator

(Operator Instructions) Jake Roberge, William Blair.

Jake Roberge

Just wanted to follow up on the headwinds that you've seen over the past few weeks. I understand the public sector dynamic in January, but could you flesh out those comments about the significant volatility over the past two weeks and just what you're starting to see and hear from customers on that front?

Daniel Dines

Well, I would say that everybody is seeing the volatility. It's not only us. And we are in constant contact with customers.
And look, some of the deals are being delayed. For instance, we were talking this week on Monday with Canadian bank. And they told us that all approval in the last 90 days are now being reviewed. And look, we have to pay the appropriate prudence for the year, given what we are seeing right now.

Jake Roberge

Okay. That's helpful. And then great to hear about the 3,000 agents that have already been created on the platform. Can you talk a little bit more about the early areas or use cases that you're gaining traction with agents? And then maybe just comparing interest, how agents are being monetized versus your existing RPA deployments.

Daniel Dines

Yes. Look, we focus on delivering agents that work in the context of end-to-end enterprise business processes. So I think many agents that we were seeing so far were more like chat-based agents like chatting, chat-outs, type of agents. We are delivering agents that basically are triggered by enterprise workflow, they receive data. They process data and they make action recommendations.
And after a few months review, the recommendation are carried on by robots. So we are seeing in many industries. We are actually collecting quite a set of use cases, especially across financial services, in healthcare, I can give you top of my mind examples like in general ledger coding or healthcare, prior authorization, denials and insurance claims processing. So all across the spectrum of processes, there are pockets where we can apply agents. And it really works into our strength because we -- as our initial deployment strategy is to go after all the processes where we already have robots in place.
And we look -- what is the human input in conjunction with the robots. And then let's bring some agents that help the people in their job. And this is also how we come with this concept of Agentic orchestration because as we take more and more of the tasks that humans used to do, we have more and more the need to orchestrate between agents, robots, and humans.

Operator

Bryan Bergin, TD Cowen.

Bryan Bergin

First on the public sector pressure. Is there any way you can help frame the scale of this and maybe the mix of business, that is for you, particularly the US federal within public sector? And just maybe how you see that part of the portfolio performing just so we can segment that out from the broader commercial portfolio.

Daniel Dines

Yes. Generally, we are not breaking it forward, but Federal has been one of our best-performing verticals. And we have confidence with our federal customers. But government is going through a transition. And we are staying close to our customers. We saw the disruption starting in January. In the conversations with customers, the disruption has continued, and we expect it to continue for the near future.

Ashim Gupta

So Brian, what I would add, if you go back to our investor conference, it's our third largest vertical across the company.
And just to add a little bit more flavor. In some of the cases, there are moratoriums on procurement for new contracts. So while something may be funded, they're working through reconciliation bills, overall things and they are just working through the transition, and that is really changing some of the procurement processes.
Again, we're in constant touch with them are our customers there. Everybody feels good about the value. Actually, they see us as a real avenue to meet a lot of DOGE goals. But we have to give the appropriate space to let them work through the transition and continue to demonstrate our partnership and value.

Bryan Bergin

Okay. Understood. As we think about the shape of '26 as you see it now, any finer points on how and maybe some of the net new ARR comments you had assumed based on your current plan, give us a sense of where you see that stabilization or trough potentially of net new ARR as you move through the year?

Ashim Gupta

Yes. I think when you look at the guidance that we provided, both in terms of the modeling points for the first half and the second half, you can clearly see that first quarter and first half is going to be under pressure just given the macroeconomic environment, getting the public sector space and time to kind of stabilize themselves.
From our team's perspective, frankly, like we feel really good about the stabilization and progress on a number of areas. Health care, financial services certain geographies, they're really performing well. We feel really good about the progress that they've made there. And you can see that in the second half, while our overall -- while we've baked improvements for overall during the year, we can see more pronounced seasonality in the first half.

Operator

Mark Murphy, JPMorgan.

Arti Vula

This is Ari on for Mark Murphy. As you're seeing this increase in -- certainty in the market out there kind of probably putting a damper customer willingness to invest in new technologies and one could extrapolate that to AI. But do you think this incremental uncertainty is kind of going to make customers a little bit less reluctant to invest in new technologies? Or do you think you're going to see it as maybe the way out of what's going on in the lever for more efficiency and cost savings.

Daniel Dines

No, I don't think this is related in any way with investing in new technologies or not. I think the uncertainty is it applies to all sorts of investments. On the contrary, in our discussions with our customers, we are seeing quite a good pull towards genic.
Agentic really opens up many doors and informally, we were talking with the CIO of a major bank here in New York. So he saw the demo of our product. And basically, that guys, you are onto something really, really cool that it's quite differentiated in the market, and we are interested in it. So the full exists there, but the reluctance, it's really related to uncertainty.

Ashim Gupta

Yes. I would just add to it. I think just in the CFO position, a few -- and I've talked to a few of the CFOs over the last two weeks. I think everybody is feeling the uncertainty. And so the general reaction is to make sure that your budgets are kind of -- and controls are put in place to make sure that you are measured as more clarity comes about in a macroeconomic standpoint.
So while we see that in the deal closure and while we see that in budgets tightening. We really don't see that in the short term in terms of the activity of POCs and the interest around Agentic. In SAP, we are shipping more and more of our teams to cope with the demand of getting to under Agentic, running the pilots and running the POCs, and that continues to be a positive sign for us. So that's just from my perspective as well.

Arti Vula

And just as a quick follow-up. If we're kind of looking at the commercial side of things, do you see any difference in the impact of these stresses to the US versus Europe kind of in the other international markets? Or is it pretty evenly distributed?

Ashim Gupta

I think it's a general statement. I think the entire globe is feeling the environmental pressures. I will say, as we've stayed closer to our Canadian customers, like, of course, with kind of the current events that are there, there's definitely more pronounced sensitivity around just as Daniel gave you some of those examples. But we see that really broad spread, whether it's around healthcare, financial services or different geographies. I think everybody is feeling the uncertainty of the current environment.

Operator

Raimo Lenschow, Barclays.

Sheldon McMeans

This is Sheldon McMeans on for Raimo. So UiPath has worked with federal government agencies like the IRS to increase automation and efficiency. And I think the ROI is clearly there, but when there's a widespread efficiency initiative like we're seeing, there could be screens at show shelf ware that's not indicative of value, particularly for the IRS that sees more activity around this time of the year.
My question is, is there an opportunity to shift to more of a consumption-based model to help more tangibly align monetization to value? Or could you give us any more color on what proactive approaches you're taking here?

Daniel Dines

Yes. Look, IRS is a big customer for our document understanding solution, which is, in fact, monetized based on consumption. And yes, of course, we believe that our platform is very aligned with the new administration goals of government efficiency. And we are looking forward to really help achieving these goals. At the same time, you mentioned Iris, I think they are one of the agencies that are under moratorium for 30 days.
We still work closely with many of our agencies. The interest is there, but it's prudent, I think, to not assume very much for the time being.

Sheldon McMeans

Understood. And a few quarters ago, you called out some hesitation and decision making due to the rapidly evolving AI landscape. And I was wondering, is that part of the change that you're seeing maybe customers waiting for more maturity around Agentic AI before putting new automation use cases into production?

Daniel Dines

Yes. In a way, if I can say, there is a continued wave of like confusion and clarity around AI. I would say we initially, everybody thought the new AI would do basically everything will replace everything. I think now customers are taking a much more moderate stands to AI. This is why Agentic is getting a lot of interest because Agentic is pragmatic.
And it promises real value game because I think we all -- even if we take our experience with robots, which are -- it's suspicious of AI that imitates people. So I think we have a lot of experience in delivering tangible values to our customers. So the real value is when you can shift work from people, then you can deliver autonomously. This is the real, real value, and that was true for our platform, where our unattended robots deliver more revenue and more value for our customers than the attended robot. Not to say we attended are not valuable, but the ratio dramatically shifts into autonomously use cases.

Operator

Sanjit Singh, Morgan Stanley.

Sanjit Singh

Dan, I was wondering if we could get an update and then sort of followed on the previous question about monetization with respect to some of the government use cases. But broadly, can you walk us through your pricing and monetization strategy for your agent portfolio?

Daniel Dines

Yeah. So we are going to monetize our agents and the Agentic orchestration via a consumption-based model. We are going to announce pretty soon our monetization strategy as we plan to enter in GA and towards the end of April, beginning of May.

Sanjit Singh

Understood. So we'll definitely look up for that. Ashim, going back to federal, I guess, sort of two related questions. Do you have confidence that federal will be a long-term customer of UiPath. And if that's the case, this year is just going to be a headwind because of those, is there any way you can sort of frame out the underlying growth of the business ex federal, how that shaped up either in Q4 or what you think that looks like for the balance of the year?

Ashim Gupta

Yes. As we talked about, we're not breaking it out specifically. Like we said, it's one of our highest performing verticals. And we do have tremendous confidence in our connections with our federal customers. So this is very much of a short-term disruption or uncertainty that we're facing.
And as we go forward, I think we are like in every conversation, and we're constantly in touch with our federal customers, they reinforced actually the impact we are having on productivity which is very commensurate with the goals of DOGE. So we look at this something more as a short-term impact as kind of the transition happens with the government.

Operator

Michael Turrin, Wells Fargo.

Michael Turrin

I guess on last quarter -- and I appreciate there's a lot going on. Last quarter, the commentary was more around stable net new ARR. Is it fair for us to sign -- it sounds like it maybe is the case. The delta between that and what we're seeing today just to the increasing uncertainty you're calling out. And just is there anything you can comment on just what you're able to do to ensure you're at least in the federal conversation appreciating this is something that's somewhat outside of your control?
And then as kind of the third part to the follow-up on the AI products, how should we think about those as a potential offset? And maybe just speak overall to how you're embedding any newer products into initial forecast.

Ashim Gupta

Yes. Let me break down the questions for it. So one is, yes, the majority of the impact we're talking about is around the macro environment inclusive of the public sector. So from a stabilization standpoint, we honestly are very encouraged by the progress we've made on execution. The changes in go-to-market, the stabilization of our teams.
So we feel good about the stabilization of it. Really, since January, the public sector changes began or the administration transition began. And we're seeing that continue with -- I think everybody has been looking at the news and kind of talking to customers and seeing different companies react to the latest developments in the geopolitical climate. So we feel good about the stabilization. The headwind that we are breaking it into our guidance is really around those two factors for ARR.
We obviously are excited also about Agentic and AI. We see both of those products is continuing to gain traction. We disclosed the attach rate of 20% for AI-based products. And as Daniel commented, really the momentum on Agentic, and response from our customers has been positive. And that, of course, we baked in a two-point headwind for SaaS headwind, which explains some of the revenue decrease as well from current consensus or current models.
In terms of staying close to our customers, I'll let Daniel also comment on that. But we have very good executive sponsorship. We frequent Washington quite often, both between our go-to-market leadership as well as our executive leadership. And we are connected to very good levels within the agencies and stay connected throughout.
Lastly, just overall on the AI and Agentic, we are incredibly excited about our customer momentum that we're seeing there and the metrics that we're seeing from our private preview. We're still in the early innings of that. We're focused on getting that successful with our customers. And while we expect momentum to build throughout the year, we don't expect it to be a material contributor to revenue in fiscal year 2026.

Operator

Alex Zukin, Wolfe Research.

This is [Stephen] here for Alex. First of all, on the acquisition that you announced, like, can you share a little bit more about the strategic rationale? And also to what extent can we see the contribution of the acquisition in 2026. And then I have a quick follow-up.

Daniel Dines

Yes. We are pretty excited about at peak. We are welcoming here a team of great talent. And we now plan to enter into more verticalized Agentic space. This is going to be a team that will help us build around them.
We are starting with these two use cases around the price and inventory. And they also have really a good team of practitioners data scientists that can help also from what our overall Agentic push. They are based in U.K. where we already have a very strong AI team, and we are building a lot of products. So from a consolidation perspective, it was really good.
I'll let Ashim comment more on the ARR implications.

Ashim Gupta

Yes. I think it's really immaterial to our overall year. As with previous acquisitions, we really view this as tuck-in acquisitions. So we don't -- they're not at a disclosable level and they're not material from an overall impact for our company, so we don't disclose it.

Got it. And then really quickly on the go-to-market changes. So I know you guys went through a lot of changes last year, and you talked about it a little bit in this call as well. So we assume that like the go-to-market changes are sort of behind it and that we are in the steady state now.

Daniel Dines

Yes. As we mentioned in the script, our go-to-market changes are largely complete. Yes. Think about it. We've been only three quarters into really a big change for the company.
I am pleased with the level of change. I think the energy levels in our company is getting to healthy levels. People believe in our Agentic second deck. We are going to execute with stability towards our strategy and our plans.

Operator

Kirk Materne, Evercore ISI.

Chirag Ved

This is Chirag on for Kirk. There's been a lot of energy and optimism in the Agentic space, especially at initial POC stages, and on the call, you've highlighted your attach rates, the innovation and some customer deals. So just at a high level, how would you characterize iPads competitive advantage and right to win in this category when looking out over the next year or next two years? Thank you.

Daniel Dines

Yeah. Look, our strategy on Agentic is quite simple. We are starting around our existing deployments, and we are giving our community, Agent Builder, which is a low-code tool, that helps our technical business users to create agents. So in this way, it's a very easy win. So we can have our -- in our existing deployments, we can enhance the capabilities of our robots with agents.
And on the top of it, we bring more capabilities for end-to-end process automation with our Agentic orchestration capability. This is a clear path for us. And it's I would say it's a mast have win and the traction and the response from our customers, it's spot on, on this one.
Second, we have realized that our Agent Builder cannot cover all possible use cases. And it's more catered to the long tail of use cases and for technical business users. This is why we know that there is a lot of interest in open-source frameworks like Crew AI, LangChain, and another few of those.
We plan to support integration with agents, creating with these frameworks. And by integration, I mean, actually hosting, deploying managing, orchestrating, integrating with our robots for actions, part of our orchestration platform. So we deliver a very comprehensive Agentic platform by taking this open approach.
I think if I -- I don't remember any other company right now that has a similar strategy. It helps avoiding vendor lock-in. It helps internal data science teams that build agents to actually manage them, host them, work with them in a more efficient way. And that will help us to extend into other white spaces within our customers and within new logos.
And third, it's our verticalized strategy. We have started with an acquisition. And around it, we plan to be more specialized agents, particularly in healthcare and financial services. This type of agents can help with faster sales cycle, easier sales conversation because our platform has been always a horizontal platform. And we need a degree of specialization in order to help our go-to-market teams have more meaningful conversations with our customers.

Operator

Scott Berg, Needham & Company.

Scott Berg

I guess I got two probably quick ones here. Ashim, your cloud ARR has showed nice growth. I think you said over 50% for the year to $975 million. Within that growth, how much of that is coming from customers that are moving their workloads from behind the firewall to your cloud solutions? Or is the majority of it from net new business?

Ashim Gupta

Actually, it's both. I think our sales team has done a great job on new logos going directly to the cloud. Our cloud platform and what our product and engineering teams have done has been actually quite remarkable in terms of the capabilities and the cloud-first mentality that GenAI was driven across the teams has really done just that.
But we are seeing, as I noted, the financial services firm, moving a lot of their -- moving more and more of their workloads and their footprint to the cloud. And one of the reasons is because our pace of innovation has also increased and people want to take advantage of the AI products, and they can do that faster and more efficiently by being on our cloud platform. So it's honestly broad-based, and that's why you see the growth rates that you're seeing there from both cloud as well as hybrid.
And the last thing to note is I think Agentic only furthers this and the customers are realizing that value. And that is another reason why we see continued cloud growth and SaaS growth in our business.

Scott Berg

Got it. Helpful. And then my follow-up is on agents. 3,000 agents is a big number, but you have nearly 11,000 customers today. Are you seeing customers kind of start small with say, pilots when they're thinking about an Agentic strategy with 1Zs, 2Zs, just kind of starting that to get a feel for it.
Are you seeing any customers kind of jump all in right away and deploy maybe tens or dozens of these agents in a single instance?

Daniel Dines

Well, we are seeing both. The vast majority of customers are indeed doing small type of PCs. They need to understand the technology better. But we have a few customers that have already jumped into large deployments. We mentioned one in the third quarter.
There is another one in the fourth quarter with significantly large deals. And we already have three customers in our -- it's a very limited GA. So we've built the -- because they are so excited to push agents into production. So we created a limited GA, who gives them all the support they needed. So the excitement is there, but indeed, it's still into the early innings of POCs and piloting.

Operator

There are no further questions at this time. I'd like to pass it back over to management for any closing remarks.

Daniel Dines

Thank you so much for your questions, and we are looking forward to meeting many of you during the quarter. Thank you.

Operator

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.