I’d like to bring a company to this board that recently confirmed its upcoming IPO within the next couple of months – UIPath (PATH).
Description: UiPath provides robotic process automation (RPA) software. RPA is a way to configure software to complete actions with minimal input from the user (think of an Excel macro that can execute actions across your apps – not just within Excel). The simplified value proposition’s is that implementing RPA allows humans to spend more time doing valuable tasks, while reducing costs.
Market & Competition: The RPA market was estimated to be ~$5B in 2019, and is expected to top $12B by 2023 (expanding at 24% CAGR) according to Forrester[1]. While the market is very saturated (200+ RPA companies), the largest 3 players (UiPath, BluePrism, and Automation Anywhere) control ~30% of the market. On Forrester’s latest assessment, UiPath was named the leader, with the strongest current offering and the strongest strategy[2]. UiPath was also named the leader in its ability to execute by Gartner, although its completeness of vision was slightly lagging a few players[3]. Similar results were found by Everest Group[4].
Leadership: UiPath is lead by founder CEO Daniel Dines. Born in Romania (where UiPath launched), Daniel self-taught himself coding until he received an offer from Microsoft which led him to relocate to the US. After a few years, he relocated to Romania to launch his first company (DeskOver) which eventually pivoted to become UiPath[5]. After reaching $500k in revenue in 2014, he raised $1.6M from European VCs and began scaling UiPath to the multinational leader that is now. They’ve recently recruited a strong addition of board directors with enterprise SaaS public market experience, including Dan Springer (Docusign CEO) and Jennifer Tejada (PagerDuty CEO).
Business Metrics:
-7,968 customers including Amazon, Bank of America, Uber, and 63% of Fortune 5000
-1,002 customers with ARR > $100k ARR (up from 597 last year)
-89 customers with ARR > $1M (up from 43 last year)
Financial Metrics:
-$608M revenue for their last fiscal year (+81% YoY, down from +126% growth the previous year)
-$580M FY21’Q4 ARR (+65% YoY)
-89% gross margins (up from 81% last year)
-145% dollar net retention rate (97% dollar gross retention rate)
-$26M in free cash flow (up from -$380M loss last year)
-$92M in net loss (down from $520M loss last year). Operating expense decreased all across the board, although S&M was the most notable decline
Valuation:
-The company recently raised $750M at a $35B valuation. Using their latest figures, it seems like they were valued at ~58 P/S (LTM). Assuming they grow at ~70% over the next year, that translates to ~34 P/S (NTM). That being said, we obviously don’t know how the market we react, or what the official offering price will be.
Conclusion: UiPath meets the criteria of many of the top companies discussed on this board. It continues to grow at hyper-scale, and has recently shown operating leverage. Questions remain regarding its public market valuation and quarterly growth rates (they’ll be revealed in an amended S-1 soon), but the purpose of this post is to initiate a discussion so that we can be prepared once it makes its public debut.
Sources:
[1] https://www.forrester.com/report/The+RPA+Services+Market+Wil…
[2] https://www.uipath.com/resources/automation-analyst-reports/…
[3] https://www.uipath.com/resources/automation-analyst-reports/…
[4] https://www.uipath.com/resources/automation-analyst-reports/…
[5] https://www.forbes.com/sites/alexkonrad/2019/09/11/from-comm…
S-1: https://www.sec.gov/Archives/edgar/data/1734722/000119312521…
-RMTZP
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