UiPath, Inc. — Form 10-Q Summary
Reporting period: Quarter and nine months ended October 31, 2021. This is the third quarter of fiscal 2022; comparisons are with the corresponding 2020 periods. Amounts below are in U.S. dollars unless noted.
Business context and growth
UiPath sells an automation platform, primarily through software licenses, subscription services (including maintenance, support and SaaS), and professional services. It reported more than 9,600 customers as of October 31, 2021. Management emphasized continued investment in sales, research and development, and international expansion rather than near-term profitability.
Annualized renewal run-rate (ARR), a company-defined operating metric rather than GAAP revenue or a revenue forecast, was $818.4 million, up 58% year over year. Management attributed approximately 25% of ARR growth to new customers and 75% to existing customers. Revenue growth also came primarily from existing customers.
Key financial metrics
| Metric | Three months ended October 31 | Nine months ended October 31 |
|---|---|---|
| Revenue | $220.8 million, up 50% from $147.3 million | $602.6 million, up 51% from $399.8 million |
| Gross profit / margin | $177.7 million / 80%, versus $129.9 million / 88% | $474.9 million / 79%, versus $354.0 million / 89% |
| Operating loss | $116.2 million, versus $63.0 million | $450.1 million, versus $124.9 million |
| Net loss | $122.8 million, versus $70.8 million | $462.5 million, versus $118.6 million |
| Net loss per share | $0.23, versus $0.41 | $1.08, versus $0.72 |
License revenue increased 42% in the quarter and 39% over nine months; subscription services revenue increased 59% and 70%, respectively. Professional services and other revenue grew 56% in the quarter and 37% over nine months.
For the nine-month period, operating cash flow was negative $48.9 million, compared with positive $11.0 million a year earlier. Investing cash flow was negative $29.1 million; financing cash flow was positive $1.472 billion, primarily reflecting the IPO and preferred-stock financing. Cash, cash equivalents and marketable securities totaled $1.892 billion at October 31, 2021. Total assets were $2.468 billion and total liabilities were $584.3 million; accumulated deficit was $1.433 billion.
There was no debt outstanding under the $200 million senior secured revolving credit facility, which matures October 30, 2023. The facility is secured by substantially all assets other than intellectual property. Current assets were $2.207 billion and current liabilities $467.3 million.
Changes, outlook and material items
- Higher costs and losses: Nine-month stock-based compensation expense was $438.6 million, versus $65.8 million a year earlier. The increase included expense recognized after IPO-related performance conditions for restricted stock units were met. Management identified stock compensation, increased headcount, and higher professional-services and hosting costs as major contributors to lower gross margins and higher expenses.
- Liquidity from equity financing: The April 2021 IPO generated $687.9 million in net proceeds for the company. A February 2021 Series F preferred-stock financing generated $749.8 million net. The preferred shares converted into Class A common stock upon the IPO.
- Acquisition: UiPath acquired Cloud Elements in March 2021 for approximately $36.1 million, including cash and stock. The acquisition added API integration technology; preliminary goodwill recognized was $27.7 million.
- Outlook: The filing provides no specific numerical revenue or earnings guidance. Management expects continued investment and says expenses for subscription services, professional services, sales and marketing, research and development, and public-company operations are likely to rise in absolute dollars. It believes available liquidity and borrowing capacity are sufficient for anticipated needs over the next 12 months, while noting future capital needs depend on growth, investment, and other factors.
- Other notable items: The company signed a lease for its new One Vanderbilt headquarters, with an initial term through March 2038 and annual rent of approximately $4.0 million beginning in March 2023. It reported $0.6 million of third-quarter expense for business use of an aircraft owned by the CEO through a related-party entity. Management said it was not party to litigation believed likely to have a material adverse effect.
- Principal risks and governance: Risks include customer renewals and concentration, channel-partner reliance, intense competition, continued losses, cybersecurity and privacy compliance, foreign-exchange exposure, and execution of growth and product plans. Class B shares carry 35 votes per share; the CEO and controlled entities held approximately 88% of voting power as of October 31, 2021. Management stated disclosure controls were effective at a reasonable assurance level; the filing also describes a previously identified revenue-recognition control weakness as remediated.
Investor verification priorities
- Assess whether ARR growth and customer expansion translate into GAAP revenue, cash generation, and sustainable margins; ARR is not a forecast.
- Track stock-based compensation, IPO-related award expense, dilution, and the substantial outstanding unrecognized compensation expense.
- Examine why operating cash flow turned negative despite strong revenue growth, including commission payments and deferred contract acquisition costs.
- Monitor customer and channel-partner concentration, renewal trends, competitive pressure, and the pace of SaaS adoption.
- Review foreign-exchange sensitivity, privacy and cybersecurity exposure, the long-term headquarters lease, and the terms and use of the secured credit facility.
- Consider the CEO’s voting control and the aircraft arrangement when evaluating governance and related-party oversight.