Business context and reporting period
UiPath, Inc. provides an automation platform combining robotic process automation, AI and related software and services. This unaudited Form 10-Q covers the three months ended April 30, 2022, the first quarter of fiscal 2023; comparisons are with the three months ended April 30, 2021.
Key financial metrics
| Metric | Q1 FY2023 | Q1 FY2022 |
|---|---|---|
| Revenue | $245.1 million | $186.2 million |
| Gross profit / gross margin | $200.1 million / 82% | $137.2 million / 74% |
| Operating loss | $116.0 million | $236.0 million |
| Net loss | $122.6 million | $239.7 million |
| Net loss per share, basic and diluted | $0.23 | $1.11 |
| Net cash used in operating activities | $52.9 million | $17.5 million |
Revenue mix: licenses $117.0 million (+17% year over year), subscription services $115.5 million (+49%), and professional services and other $12.6 million (+50%). Revenue increased 32%; management attributed approximately 31% of growth to new customers and the remainder to existing customers.
At April 30, 2022, cash and cash equivalents were $1.679 billion and marketable securities totaled $122.1 million, or approximately $1.801 billion combined. Total liabilities were $544.5 million. There were no borrowings under the $200 million revolving credit facility. The company reported an accumulated deficit of $1.619 billion.
Material changes and operating indicators
- ARR was $977.1 million, up 50% year over year; 78% of ARR growth came from existing customers and 22% from new customers. Dollar-based net retention was 138%, down from 145%.
- Customers with ARR above $1 million increased to 168 from 104; customers above $100,000 increased to 1,574 from 1,105.
- Remaining performance obligations were $675.6 million; the company expected to recognize 63% as revenue within 12 months.
- Gross margin improved eight percentage points. Operating expenses fell to $316.0 million from $373.2 million, while operating loss narrowed. Management said lower stock-based compensation (SBC), particularly IPO-related RSU expense in the prior-year quarter, was a major driver of these comparisons. Q1 FY2023 SBC remained substantial at $101.5 million.
- Operating cash use increased to $52.9 million. Cash and cash equivalents declined $89.5 million during the quarter, including investing and financing outflows.
Outlook, risks and unusual items
Management provided no specific quarterly or annual revenue or earnings guidance in the supplied filing text. It expects existing cash, securities, customer payments and borrowing capacity to fund anticipated needs for the next 12 months and the long term, while noting future capital needs depend on growth, hiring, product development, international expansion and other factors. Management expects continued investment in sales and marketing and research and development; it also expects cloud deployment growth to affect hosting costs and operating margins.
Highlighted risks include economic weakness and reduced IT spending, inflation and interest-rate changes, foreign-exchange exposure, and disruption or sanctions related to the war in Ukraine. The filing estimates that a hypothetical 10% foreign-exchange move would have a $21.7 million translation impact for the quarter; approximately 55% of revenue and 34% of expenses were denominated in non-U.S. currencies. Management also identified risks involving retention of key personnel and execution of management transitions. Robert Enslin became Co-CEO on May 16, 2022; related grants included 1.6 million RSUs and 1.6 million stock options.
Other items to note: non-cancelable purchase obligations were $70.6 million, including commitments for cloud infrastructure; letters of credit totaled $5.2 million. The company reported no litigation it believed would have a material adverse effect and no material loss considered probable or reasonably possible. It incurred $0.8 million for business use of an aircraft owned by Co-CEO Daniel Dines through a related-party entity. Disclosure controls were assessed as effective at a reasonable assurance level.
Important facts for investors to verify
- Whether ARR growth and the 138% net retention rate translate into sustained GAAP revenue growth and customer renewals; ARR is a company-defined operating metric, not a revenue forecast.
- How much of the improved margins and narrower loss reflects durable operating progress versus lower prior-year SBC, and the ongoing impact of SBC and dilution.
- Whether operating cash use improves, given the quarter’s $52.9 million outflow and the company’s growth-investment plans.
- The timing, conversion and concentration of the $675.6 million in remaining performance obligations, including billed versus unbilled amounts.
- Exposure to Ukraine-related disruption, currency movements, weaker IT spending, and the incoming Co-CEO transition.