UIPath

UIPath leverages CV and AI to empower software robots to emulate human behavior to execute specific business processes

Product

UIPath Platform

  • AI Computer Vision
  • Studio: Low-code tool for designing automation
  • Document Understanding: Extract, interpret process data from models
  • Orchestrator: Manage digital robots
  • Robots:
    • Unattedned: Background tasks
    • Attended Robots: run via UIPath assistant (desktop)
  • Integrations: AWS, Adobe, Alteryx, Box, Microsoft, Oracle, Salesforce, SAP, ServiceNow, Workday etc

Automation Cloud

  • Cloud hosting of UIPath platform
  • 2850 customers

Business Models

  • Pricing based on number of robots and users
  • Subscription model billing annually
  • Primarily 1 year contracts
  • Revenue comes from sales of licenses, maintenance and support of licenses and right to access certain products
    • Maintenance and support: Recurring
    • Non-recurring professional services: Training, use case development and deployment, solution architecting, implementation consulting
  • Major parterns help build, train, certify skills, and deploy for customers
    • Accenture, Capgemini, CGI, Cognizant, Deloitte, EY, IBM, PwC

Core Metrics

  • Revenue F22: 876-881M  (+50% YoY)
    • Q3: 195MM (+65% YoY)
      • Licenses: 95M (48% of revenue, down from 57% last year)
      • Maintenance and support: 90M (46%, up from 37% last year)
    • Cost of revenue: 35M
      • Licenses: 2.4M
      • Maintenance and support: 12M
      • Services and other: 20M
    • Gross profit: $160M
    • Gross margin: 82%
    • 40% of new revenue from new customers
  • NDR: 144%
  • Customers: 9100+
    • Customers >100k: 1247 (75% of revenue)
    • Customers >1M: 118 (35% of revenue)

Analysis

UIPath is the clear leader as the RPA solution for enterprise and they have built a great product that is helping automate a lot of repetitive work. Users are clearly getting lots of value from the product and UIPath can help automate many mission critical workflows. Having integrations at the interface layers means the product can be application agnostic and customizable to any use case. UIPath will become as important infrastructure as ServiceNow within an enterprise and I believe they will be able to charge more for it as well.

UIPath currently has 118 customers paying >1M and with the high net dollar retention and expansive product, they should be able to upsell many of their other customers to >1M as well.

However, even though UIPath claims that their platform is low code and requires little technical skill, their revenue operations say otherwise. 46% of their revenue comes from lower margin non-recurring maintenance and support fees which means they also have to spend a lot of money training their customers on usage of the platform. End users are widespread from hedge fund managers to customer support agents who may not be tech savvy enough to adapt the product and design automation flows. There is still substantial skill required to design well engineered automations with fail cases (esp for mission critical cases) and this is where UIPath will need to step in with forward deployment engineers. UIPath recognizes this and is investing heavily in product education with 975k+ UIPath Academy users and 40% growth in Robotics Engineer job titles on Linkedin.

At current valuation, UIPath is trading at 30x revenue which is quite cheap similar to peers with similar fundamentals such as DataDog (48x). In 3 years with their current growth rate and if they can lower their maintenance, support and adaption costs, UIPath should be able to hit 2.5B in revenue at a 80-100B valuation (3-4x upside).

tech investing