UiPath(PATH) - 2025 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) This section presents UiPath's unaudited condensed consolidated financial statements, including balance sheets, statements of operations, comprehensive loss, stockholders' equity, and cash flows, along with detailed notes explaining accounting policies, revenue recognition, marketable securities, and other financial components for the period ended April 30, 2024 Condensed Consolidated Balance Sheets The condensed consolidated balance sheets show UiPath's financial position as of April 30, 2024, and January 31, 2024, highlighting changes in assets, liabilities, and stockholders' equity. Total assets decreased, primarily due to a reduction in marketable securities and accounts receivable, while total liabilities also decreased Summary Balance Sheet Metrics | Metric | As of April 30, 2024 (in thousands) | As of January 31, 2024 (in thousands) | Change (in thousands) | | :-------------------------------- | :---------------------------------- | :------------------------------------ | :-------------------- | | Total assets | $2,844,976 | $2,954,758 | $(109,782) | | Total liabilities | $817,972 | $938,644 | $(120,672) | | Total stockholders' equity | $2,027,004 | $2,016,114 | $10,890 | Key Balance Sheet Changes | Key Balance Sheet Changes | As of April 30, 2024 (in thousands) | As of January 31, 2024 (in thousands) | Change (in thousands) | | :-------------------------------- | :---------------------------------- | :------------------------------------ | :-------------------- | | Cash and cash equivalents | $1,146,618 | $1,061,678 | $84,940 | | Marketable securities (current) | $788,920 | $818,145 | $(29,225) | | Accounts receivable, net | $270,621 | $436,296 | $(165,675) | | Total current assets | $2,469,198 | $2,580,412 | $(111,214) | | Total current liabilities | $597,536 | $711,691 | $(114,155) | | Deferred revenue (current) | $465,216 | $486,805 | $(21,589) | | Accrued compensation and employee benefits | $40,663 | $137,442 | $(96,779) | Condensed Consolidated Statements of Operations For the three months ended April 30, 2024, UiPath reported a net loss of $28.7 million, an improvement from the $31.9 million net loss in the prior year period. Total revenue increased by 16% year-over-year, driven primarily by subscription services Consolidated Statements of Operations Summary | Category | Three Months Ended April 30, 2024 (in thousands) | Three Months Ended April 30, 2023 (in thousands) | Change (YoY, in thousands) | Change % (YoY) | | :---------------------- | :--------------------------------------------- | :--------------------------------------------- | :------------------------- | :------------- | | Licenses | $140,128 | $134,039 | $6,089 | 5% | | Subscription services | $185,131 | $146,352 | $38,779 | 26% | | Professional services and other | $9,853 | $9,197 | $656 | 7% | | Total revenue | $335,112 | $289,588 | $45,524 | 16% | | Cost of revenue | $55,325 | $43,667 | $11,658 | 27% | | Gross profit | $279,787 | $245,921 | $33,866 | 13.8% | | Operating expenses | $329,252 | $292,332 | $36,920 | 12.6% | | Operating loss | $(49,465) | $(46,411) | $(3,054) | 6.6% | | Net loss | $(28,736) | $(31,901) | $3,165 | -10% | | Net loss per share, basic and diluted | $(0.05) | $(0.06) | $0.01 | -16.7% | Condensed Consolidated Statements of Comprehensive Loss UiPath reported a comprehensive loss of $32.8 million for the three months ended April 30, 2024, an increase from $29.4 million in the prior year, primarily due to unrealized losses on marketable securities and negative foreign currency translation adjustments Consolidated Statements of Comprehensive Loss Summary | Metric | Three Months Ended April 30, 2024 (in thousands) | Three Months Ended April 30, 2023 (in thousands) | Change (YoY, in thousands) | | :---------------------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :------------------------- | | Net loss | $(28,736) | $(31,901) | $3,165 | | Unrealized (loss) gain on available-for-sale marketable securities, net | $(511) | $143 | $(654) | | Foreign currency translation adjustments | $(3,574) | $2,319 | $(5,893) | | Other comprehensive (loss) income, net | $(4,085) | $2,462 | $(6,547) | | Comprehensive loss | $(32,821) | $(29,439) | $(3,382) | Condensed Consolidated Statements of Stockholders' Equity UiPath's total stockholders' equity increased to $2,027.0 million as of April 30, 2024, from $2,016.1 million at January 31, 2024. This increase was primarily driven by stock-based compensation and issuance of common stock, partially offset by net loss and share repurchases - Total stockholders' equity increased from $2,016,114 thousand as of January 31, 2024, to $2,027,004 thousand as of April 30, 2024[24] - Key drivers of change in stockholders' equity for the three months ended April 30, 2024, include $88,785 thousand in stock-based compensation, $(22,005) thousand from repurchase of Class A Common Stock, and a net loss of $(28,736) thousand[24] Condensed Consolidated Statements of Cash Flows UiPath generated $100.0 million in net cash from operating activities for the three months ended April 30, 2024, a significant increase from $67.3 million in the prior year. Investing activities provided $35.8 million, while financing activities used $45.7 million, primarily due to share repurchases and tax withholdings on equity awards Consolidated Statements of Cash Flows Summary | Cash Flow Activity | Three Months Ended April 30, 2024 (in thousands) | Three Months Ended April 30, 2023 (in thousands) | Change (YoY, in thousands) | | :-------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :------------------------- | | Net cash provided by operating activities | $100,037 | $67,341 | $32,696 | | Net cash provided by (used in) investing activities | $35,766 | $(135,552) | $171,318 | | Net cash used in financing activities | $(45,736) | $(20,630) | $(25,106) | | Net increase (decrease) in cash, cash equivalents, and restricted cash | $84,940 | $(90,543) | $175,483 | | Cash, cash equivalents, and restricted cash - end of period | $1,147,056 | $1,311,576 | $(164,520) | Notes to Condensed Consolidated Financial Statements This section provides detailed disclosures and explanations for the condensed consolidated financial statements, covering the company's business, accounting policies, revenue recognition, marketable securities, fair value measurements, intangible assets, operating leases, balance sheet components, commitments, contingencies, stockholders' equity, equity incentive plans, income taxes, net loss per share, and subsequent events 1. Organization and Description of Business UiPath, incorporated in Delaware in 2015, provides an AI-powered Business Automation Platform that helps customers discover automation opportunities, automate with a digital workforce, and scale automation programs - UiPath's core offering is an AI-powered UiPath Business Automation Platform[30] - The platform enables customers to discover opportunities for automation, automate using a digital workforce, and operate a mission-critical automation program at scale[30] 2. Summary of Significant Accounting Policies This section outlines UiPath's significant accounting policies, noting no significant changes during the three months ended April 30, 2024. It covers the basis of presentation, fiscal year, use of estimates, foreign currency translation, concentration of risks, and recently issued accounting pronouncements - No significant changes to accounting policies occurred during the three months ended April 30, 2024[31] - The company recognized foreign currency transaction gains of $2.8 million for the three months ended April 30, 2024, compared to losses of $(0.8) million in the prior year[38] - UiPath is evaluating the impact of recently issued FASB ASUs No. 2023-07 (Segment Reporting) and No. 2023-09 (Income Taxes), effective for annual periods beginning after December 15, 2024[43][44] 3. Revenue Recognition UiPath disaggregates revenue by geographical region, with the Americas being the largest contributor. The company recognized $182.3 million in revenue from prior deferred revenue balances. Remaining performance obligations totaled $1,100.6 million, with 62% expected to be recognized in the next 12 months Revenue by Geographical Region | Region | Three Months Ended April 30, 2024 (Amount in thousands) | Three Months Ended April 30, 2024 (Percentage of Revenue) | Three Months Ended April 30, 2023 (Amount in thousands) | Three Months Ended April 30, 2023 (Percentage of Revenue) | | :---------------------------- | :---------------------------------------------------- | :---------------------------------------------------- | :---------------------------------------------------- | :---------------------------------------------------- | | Americas | $153,111 | 46% | $123,452 | 43% | | Europe, Middle East, and Africa | $104,627 | 31% | $96,931 | 33% | | Asia-Pacific | $77,374 | 23% | $69,205 | 24% | | Total revenue | $335,112 | 100% | $289,588 | 100% | - Revenue from the U.S. represented 42% of total revenues for the three months ended April 30, 2024, up from 38% in the prior year[46] - As of April 30, 2024, remaining performance obligations totaled $1,100.6 million, with $616.2 million billed and $484.4 million unbilled. 62% is expected to be recognized as revenue over the next 12 months[49] 4. Marketable Securities UiPath's marketable securities portfolio totaled $789.9 million as of April 30, 2024, primarily consisting of treasury bills and U.S. government securities. The portfolio experienced gross unrealized losses of $606 thousand, attributed to market conditions rather than credit-related factors Marketable Securities Portfolio | Type | Amortized Cost (in thousands) | Gross Unrealized Gains (in thousands) | Gross Unrealized Losses (in thousands) | Estimated Fair Value (in thousands) | | :-------------------------------- | :---------------------------- | :------------------------------------ | :------------------------------------- | :-------------------------------- | | Commercial paper | $978 | $0 | $0 | $978 | | Treasury bills and U.S. government securities | $710,071 | $0 | $(506) | $709,565 | | Corporate bonds | $24,778 | $0 | $(60) | $24,718 | | Agency bonds | $54,661 | $0 | $(40) | $54,621 | | Total marketable securities | $790,488 | $0 | $(606) | $789,882 | - Unrealized losses are a result of changes in market conditions and are not believed to be attributable to credit-related factors[56] 5. Fair Value Measurement UiPath's financial assets measured at fair value totaled $1,315.0 million as of April 30, 2024, primarily classified within Level 1 (quoted market prices) and Level 2 (observable inputs) of the fair value hierarchy Financial Assets Measured at Fair Value | Category | Level 1 (in thousands) | Level 2 (in thousands) | Total (in thousands) | | :-------------------------------- | :--------------------- | :--------------------- | :------------------- | | Money market | $499,276 | $0 | $499,276 | | Treasury bills | $19,765 | $0 | $19,765 | | Corporate bonds (cash equivalents) | $0 | $6,065 | $6,065 | | Total cash equivalents | $519,041 | $6,065 | $525,106 | | Commercial paper | $0 | $978 | $978 | | Treasury bills and U.S. government securities | $709,565 | $0 | $709,565 | | Corporate bonds (marketable securities) | $0 | $24,718 | $24,718 | | Agency bonds | $54,621 | $0 | $54,621 | | Total marketable securities | $764,186 | $25,696 | $789,882 | | Total | $1,283,227 | $31,761 | $1,314,988 | - Money market funds, treasury bills, U.S. government securities, and agency bonds are classified within Level 1. Commercial paper and corporate bonds are classified as Level 2[59] - No financial instruments were classified in the Level 3 category as of April 30, 2024, or January 31, 2024[59] 6. Intangible Assets and Goodwill UiPath's net intangible assets decreased to $12.6 million as of April 30, 2024, from $14.7 million at January 31, 2024, primarily due to amortization. Goodwill also slightly decreased to $88.4 million due to foreign currency translation effects Intangible Assets, Net | Intangible Assets, Net (in thousands) | As of April 30, 2024 | As of January 31, 2024 | | :------------------------------------ | :------------------- | :--------------------- | | Developed technology | $10,406 | $11,926 | | Customer relationships | $1,399 | $1,960 | | Trade names and trademarks | $0 | $6 | | Other intangibles | $772 | $812 | | Total | $12,577 | $14,704 | - Amortization of acquired intangible assets was $2.0 million for the three months ended April 30, 2024, compared to $2.1 million in 2023[60] - Goodwill decreased from $89,026 thousand as of January 31, 2024, to $88,384 thousand as of April 30, 2024, primarily due to the effect of foreign currency translation[63] 7. Operating Leases UiPath's operating lease costs totaled $5.1 million for the three months ended April 30, 2024, an increase from $4.5 million in the prior year. The weighted-average remaining lease term is 10.5 years, with total operating lease liabilities of $71.0 million Lease Costs | Lease Cost Type | Three Months Ended April 30, 2024 (in thousands) | Three Months Ended April 30, 2023 (in thousands) | | :-------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Operating lease cost | $3,476 | $3,071 | | Short-term lease cost | $1,123 | $1,300 | | Variable lease cost | $523 | $621 | | Sublease income | $0 | $(532) | | Total | $5,122 | $4,460 | - As of April 30, 2024, the weighted-average remaining lease term was 10.5 years, and the weighted-average discount rate was 7.2%[66] - Total operating lease liabilities were $70,996 thousand as of April 30, 2024, with non-cancellable commitments for uncommenced leases totaling $26.3 million[66][68] 8. Condensed Consolidated Balance Sheet Components This section provides detailed breakdowns of prepaid expenses and other current assets, property and equipment, and accrued expenses and other current liabilities. Prepaid expenses decreased, while accrued expenses saw minor changes, including an increase in employee stock purchase plan withholdings Prepaid Expenses and Other Current Assets | Prepaid Expenses and Other Current Assets (in thousands) | As of April 30, 2024 | As of January 31, 2024 | | :---------------------------------------------------- | :------------------- | :--------------------- | | Prepaid expenses and service credits | $76,695 | $87,781 | | Other current assets | $21,451 | $17,199 | | Total | $98,146 | $104,980 | Property and Equipment, Net | Property and Equipment, Net (in thousands) | As of April 30, 2024 | As of January 31, 2024 | | :----------------------------------------- | :------------------- | :--------------------- | | Property and equipment, gross | $58,072 | $57,355 | | Less: accumulated depreciation | $(35,331) | $(33,373) | | Property and equipment, net | $22,741 | $23,982 | Accrued Expenses and Other Current Liabilities | Accrued Expenses and Other Current Liabilities (in thousands) | As of April 30, 2024 | As of January 31, 2024 | | :------------------------------------------------------------ | :------------------- | :--------------------- | | Accrued expenses | $22,256 | $18,458 | | Employee stock purchase plan withholdings | $8,483 | $3,618 | | Operating lease liabilities, current | $8,224 | $8,357 | | Loan note related to fiscal year 2023 acquisition of Re:Infer LTD | $5,570 | $5,570 | | Total | $84,793 | $83,997 | 9. Commitments and Contingencies UiPath has $2.8 million in outstanding letters of credit and provides indemnification in the ordinary course of business, for which no liability has been accrued. The company contributed $6.2 million to defined contribution plans. UiPath is involved in securities and derivative litigation, but believes a loss is neither probable nor estimable. Non-cancelable purchase obligations total $168.1 million - Outstanding letters of credit totaled $2.8 million as of April 30, 2024[74] - Total matching contributions to defined contribution plans were $6.2 million for the three months ended April 30, 2024, up from $5.6 million in 2023[77] - UiPath is a party to securities class action and shareholder derivative lawsuits, but has not recorded any accrual as a loss is deemed neither probable nor estimable[81][82][83] - Non-cancelable purchase obligations totaled $168.1 million as of April 30, 2024, mainly for hosting services and software[88] 10. Stockholders' Equity UiPath repurchased 0.9 million shares of Class A common stock for $22.0 million under its $500.0 million stock repurchase program. The company also made charitable donations of Class A common stock valued at $6.6 million. Accumulated other comprehensive income decreased due to foreign currency translation adjustments and unrealized losses on marketable securities - The board of directors authorized a stock repurchase program of up to $500.0 million of Class A common stock, expiring March 1, 2025[89] - During the three months ended April 30, 2024, UiPath repurchased 0.9 million shares of Class A common stock at an average price of $23.46 per share, totaling $22.0 million[90] - Charitable donations of Class A common stock amounted to $6.6 million for the three months ended April 30, 2024, compared to $4.2 million in 2023[91] Accumulated Other Comprehensive Income | Component | Balance as of January 31, 2024 (in thousands) | Other comprehensive loss, net (in thousands) | Balance as of April 30, 2024 (in thousands) | | :-------------------------------- | :------------------------------------------ | :------------------------------------------- | :------------------------------------------ | | Foreign Currency Translation Adjustments | $8,925 | $(3,574) | $5,351 | | Unrealized Loss on Marketable Securities | $(100) | $(511) | $(611) | | Accumulated Other Comprehensive Income | $8,825 | $(4,085) | $4,740 | 11. Equity Incentive Plans and Stock-Based Compensation UiPath's 2021 Stock Plan and ESPP authorize the issuance of Class A common stock for equity awards. Unrecognized compensation expense for stock options and RSUs totals $122.5 million and $661.6 million, respectively. Total stock-based compensation expense for the quarter was $88.7 million, an increase from $85.0 million in the prior year - As of April 30, 2024, 202.2 million shares of Class A common stock were reserved for issuance under the 2021 Plan, and 27.2 million shares under the ESPP[94][95] - Unrecognized compensation expense for unvested stock options was approximately $122.5 million, to be recognized over a weighted-average remaining period of 2.2 years[98] - Unrecognized compensation expense related to unvested RSUs was approximately $661.6 million, to be recognized over a weighted-average remaining period of 2.4 years[100] Stock-Based Compensation Expense | Stock-Based Compensation Expense (in thousands) | Three Months Ended April 30, 2024 | Three Months Ended April 30, 2023 | Change (YoY) | Change % (YoY) | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :----------- | :------------- | | Cost of subscription services revenue | $4,276 | $3,178 | $1,098 | 34.6% | | Cost of professional services and other revenue | $2,470 | $2,699 | $(229) | -8.5% | | Sales and marketing | $36,216 | $33,123 | $3,093 | 9.3% | | Research and development | $29,142 | $24,773 | $4,369 | 17.6% | | General and administrative | $16,623 | $21,275 | $(4,652) | -21.9% | | Total | $88,727 | $85,048 | $3,679 | 4.3% | 12. Income Taxes UiPath reported an income tax provision of $3.8 million for the three months ended April 30, 2024, with an effective tax rate of (15.1)%. The company maintains a full valuation allowance against U.S., Romania, and U.K. deferred tax assets due to uncertainty of realization. An ongoing audit in Romania resulted in a proposed reduction of net operating loss carryforwards - Provision for income taxes was $3.8 million (effective tax rate of -15.1%) for Q1 2024, compared to $3.6 million (effective tax rate of -12.8%) for Q1 2023[107] - A full valuation allowance is maintained against U.S., Romania, and U.K. deferred tax assets due to uncertainty of realization[108] - A corporate income tax audit in Romania resulted in a proposed $66.7 million reduction of net operating loss carryforwards, which is currently under appeal[109] 13. Net Loss Per Share UiPath reported a basic and diluted net loss per share of $(0.05) for the three months ended April 30, 2024, an improvement from $(0.06) in the prior year. Anti-dilutive common stock equivalents, including unvested RSUs and outstanding stock options, were excluded from the diluted EPS calculation Net Loss Per Share Data | Metric | Three Months Ended April 30, 2024 | Three Months Ended April 30, 2023 | | :---------------------------------------------------------- | :-------------------------------- | :-------------------------------- | | Net loss per share, basic and diluted | $(0.05) | $(0.06) | | Weighted-average shares used in computing net loss per share, basic and diluted (in thousands) | 569,925 | 557,878 | - Anti-dilutive common stock equivalents excluded from diluted net loss per share computation for Q1 2024 included 32,230 thousand unvested RSUs and 10,946 thousand outstanding stock options[113] 14. Subsequent Events On May 3, 2024, UiPath agreed to invest approximately $35.2 million in H.AI, a France-based global foundation model and agentic AI company, through a mix of cash for equity and convertible bonds - On May 3, 2024, UiPath agreed to invest approximately $35.2 million in H.AI, a France-based global foundation model and agentic artificial intelligence (AI) company[114] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on UiPath's financial condition and results of operations for the three months ended April 30, 2024, including an overview of the business, key performance metrics, detailed analysis of revenue and expenses, liquidity, and capital resources Overview UiPath, founded in 2005 and incorporated in Delaware in 2015, has evolved from robotic process automation (RPA) to an end-to-end AI-powered Business Automation Platform. The company's vision is to enable automation across all knowledge work, integrating AI to drive efficiency and business outcomes - UiPath has evolved from robotic process automation (RPA) into an end-to-end AI-powered Business Automation Platform[116] - The platform enables customers to discover opportunities for automation, automate using a digital workforce, and operate a mission-critical automation program at scale, integrating AI with automation[117] - UiPath's vision is to enable automation across all knowledge work to accelerate human achievement[116] Business Highlights for the Three Months Ended April 30, 2024 UiPath achieved 16% year-over-year revenue growth to $335.1 million and 21% ARR growth to $1,507.7 million for the three months ended April 30, 2024. Cash flow from operations significantly increased to $100.0 million, and cash, cash equivalents, and marketable securities grew to $1,936.9 million Business Highlights Summary | Metric | Value (Three Months Ended April 30, 2024) | YoY Change | | :------------------------------------------------ | :---------------------------------------- | :--------- | | Revenue | $335.1 million | +16% | | ARR | $1,507.7 million | +21% | | Gross margin | 83% | -2% pts | | Cash flow from operations | $100.0 million | +$32.7 million | | Cash and cash equivalents, restricted cash, and marketable securities | $1,936.9 million | +$56.6 million (from Jan 31, 2024) | Macroeconomic Environment UiPath operates globally and is exposed to macroeconomic risks such as geopolitical changes, inflation, interest rate fluctuations, and foreign currency volatility, which can impact demand, financial results, and comparability to prior periods. The company monitors these impacts on its business and the global economy - UiPath is subject to risks and uncertainties from macroeconomic impacts, including geopolitical changes, rising inflation and interest rates, monetary policy changes, and foreign currency fluctuations[122] - Heightened volatility in global markets exposes the company to foreign currency fluctuations, impacting demand, near-term results, and comparability[123] - Volatility in the interest rate environment may impact interest and other income due to significant holdings of cash, cash equivalents, and marketable securities[124] Key Performance Metric (ARR) UiPath uses Annualized Renewal Run-rate (ARR) as a key performance metric, which grew 21% year-over-year to $1,507.7 million as of April 30, 2024. This growth was primarily driven by existing customers (84%), with a dollar-based net retention rate of 118% Annualized Renewal Run-rate (ARR) Performance | Metric | At April 30, 2024 (in thousands) | At April 30, 2023 (in thousands) | Change (YoY, in thousands) | Change % (YoY) | | :-------------------------------- | :------------------------------- | :------------------------------- | :------------------------- | :------------- | | ARR | $1,507,730 | $1,248,883 | $258,847 | 21% | | Incremental ARR (12 months ended) | $258,847 | $271,816 | $(12,969) | -4.8% | | Customers with ARR ≥ $1 million | 288 | 240 | 48 | 20% | | Customers with ARR ≥ $100 thousand | 2,092 | 1,858 | 234 | 12.6% | | Dollar-based net retention rate | 118% | 122% | -4% pts | | - Approximately 16% of ARR growth was due to new customers and 84% to existing customers[127] Components of Results of Operations This section details how UiPath derives its revenue from licenses, subscription services (maintenance, support, SaaS), and professional services. It also explains the components of cost of revenue and operating expenses (sales & marketing, R&D, G&A), interest income, other income, and provision for income taxes Revenue UiPath generates revenue from the sale of software licenses, the right to access hosted software products (SaaS), and professional services. The company offers 'Flex Offerings' that allow customers to choose between on-premise and cloud deployment options - Revenue is derived from software licenses, the right to access hosted software products (SaaS), and professional services[131] - Flex Offerings provide a unified commercial offering with both on-premise and cloud deployment options, comprising term license, maintenance and support, and SaaS[132] - Licenses revenue is recognized at the point in time when the customer can use and benefit from the software, while subscription services revenue is recognized ratably over the term[133][134] Cost of Revenue Cost of revenue includes direct costs for licenses, personnel-related expenses for customer and technical support, hosting costs for SaaS products, and amortization of acquired developed technology. The cost of subscription services is expected to increase in absolute dollars as the SaaS business grows - Cost of licenses revenue includes direct delivery costs, amortization of software development costs, and amortization of acquired developed technology[136] - Cost of subscription services revenue primarily consists of personnel-related expenses, third-party consulting, hosting costs for SaaS, and amortization of acquired developed technology[137] - Cost of subscription services revenue is expected to increase in absolute dollars for the foreseeable future due to SaaS business growth and further expansion of cloud-based deployments[137] Operating Expenses Operating expenses primarily consist of personnel-related costs (salaries, bonuses, stock-based compensation) for sales & marketing, R&D, and G&A teams, along with allocated overhead. Sales & marketing and G&A expenses are expected to decrease as a percentage of revenue long-term, while R&D expenses are expected to increase in absolute dollars due to continued investment - Personnel-related expenses are the most significant component of operating expenses, including salaries, bonuses, stock-based compensation, and employee benefits[139] - Sales and marketing expenses are expected to decrease as a percentage of revenue over the longer term, though fluctuations may occur[140] - Research and development expenses are expected to increase in absolute dollars for the foreseeable future as the company invests in new technology and platform enhancements[141] Interest Income Interest income consists of interest earned on UiPath's cash, cash equivalents, and marketable securities - Interest income is derived from interest earned on cash and cash equivalents and marketable securities[144] Other Income, Net Other income, net, primarily consists of foreign exchange gains and losses, as well as amortization of discounts and premiums on marketable securities - Other income, net, primarily consists of foreign exchange gains and losses and amortization of discounts and premiums on marketable securities[145] Provision For Income Taxes The provision for income taxes includes U.S. federal and state income taxes and income taxes in foreign jurisdictions. UiPath maintains a full valuation allowance on its U.S., Romanian, and U.K. deferred tax assets, which affects its effective tax rate - Provision for income taxes consists of U.S. federal and state income taxes and income taxes in foreign jurisdictions[146] - UiPath maintains a full valuation allowance on its U.S. federal and state, Romanian, and U.K. deferred tax assets, impacting its effective tax rate[146] Results of Operations (Comparison of the Three Months Ended April 30, 2024 and April 30, 2023) This section provides a detailed comparison of UiPath's financial performance for the three months ended April 30, 2024, versus the same period in 2023, covering revenue, cost of revenue, gross margin, and operating expenses Revenue Total revenue increased by 16% year-over-year to $335.1 million, primarily driven by a 26% increase in subscription services revenue, partly due to the transition to Flex Offerings. Growth was seen across all regions, with 73% attributable to existing customers Revenue Performance by Category | Revenue Category | Three Months Ended April 30, 2024 (in thousands) | Three Months Ended April 30, 2023 (in thousands) | Change (YoY, in thousands) | Change % (YoY) | | :---------------------- | :--------------------------------------------- | :--------------------------------------------- | :------------------------- | :------------- | | Licenses | $140,128 | $134,039 | $6,089 | 5% | | Subscription services | $185,131 | $146,352 | $38,779 | 26% | | Professional services and other | $9,853 | $9,197 | $656 | 7% | | Total revenue | $335,112 | $289,588 | $45,524 | 16% | - The $38.8 million increase in subscription services revenue was related in part to the transition to Flex Offerings[150] - Of the total revenue growth, 27% was attributable to new customers and 73% to existing customers[150] Cost of Revenue and Gross Margin Total cost of revenue increased by 27% to $55.3 million, mainly due to a 59% rise in subscription services costs driven by higher personnel expenses, hosting, and third-party vendor costs. Gross margin decreased from 85% to 83% due to a shift towards lower-margin subscription services and increased hosting costs Cost of Revenue and Gross Margin Performance | Cost of Revenue Category | Three Months Ended April 30, 2024 (in thousands) | Three Months Ended April 30, 2023 (in thousands) | Change (YoY, in thousands) | Change % (YoY) | | :---------------------------- | :--------------------------------------------- | :--------------------------------------------- | :------------------------- | :------------- | | Licenses | $2,601 | $2,547 | $54 | 2% | | Subscription services | $36,754 | $23,078 | $13,676 | 59% | | Professional services and other | $15,970 | $18,042 | $(2,072) | -11% | | Total cost of revenue | $55,325 | $43,667 | $11,658 | 27% | | Gross margin | 83% | 85% | -2% pts | | - The increase in cost of subscription services revenue was primarily driven by a $6.4 million increase in personnel-related expenses and a $4.8 million increase in hosting and software services costs[151] Operating Expenses Total operating expenses increased across sales and marketing (12%), research and development (14%), and general and administrative (12%). These increases were primarily driven by higher personnel-related expenses, sales commissions, marketing events, and software service costs, partially offset by decreases in stock-based compensation in G&A Sales and Marketing Sales and marketing expense increased by 12% to $180.1 million, mainly due to a $12.7 million rise in personnel-related expenses (salaries, bonuses, stock-based compensation) and a $5.2 million increase in sales commission expenses Sales and Marketing Expense | Metric | Three Months Ended April 30, 2024 (in thousands) | Three Months Ended April 30, 2023 (in thousands) | Change (YoY, in thousands) | Change % (YoY) | | :------------------ | :--------------------------------------------- | :--------------------------------------------- | :------------------------- | :------------- | | Sales and marketing | $180,139 | $160,406 | $19,733 | 12% | | Percentage of revenue | 53% | 55% | -2% pts | | - The increase was primarily attributable to a $12.7 million increase in personnel-related expenses and a $5.2 million increase in sales commission expenses[153] Research and Development Research and development expense increased by 14% to $85.6 million, driven by a $4.6 million increase in personnel-related expenses (stock-based compensation and salaries) and a $5.3 million increase in third-party software service and hosting costs Research and Development Expense | Metric | Three Months Ended April 30, 2024 (in thousands) | Three Months Ended April 30, 2023 (in thousands) | Change (YoY, in thousands) | Change % (YoY) | | :------------------------ | :--------------------------------------------- | :--------------------------------------------- | :------------------------- | :------------- | | Research and development | $85,603 | $75,342 | $10,261 | 14% | | Percentage of revenue | 26% | 26% | 0% pts | | - The increase was primarily attributable to a $4.6 million increase in personnel-related expenses and a $5.3 million increase in third-party software service and hosting costs[155] General and Administrative General and administrative expense increased by 12% to $63.5 million, mainly due to higher software service expenses, increased charitable donations, and a credit loss recovery in the prior year. This was partially offset by a decrease in personnel-related expenses, specifically stock-based compensation General and Administrative Expense | Metric | Three Months Ended April 30, 2024 (in thousands) | Three Months Ended April 30, 2023 (in thousands) | Change (YoY, in thousands) | Change % (YoY) | | :-------------------------- | :--------------------------------------------- | :--------------------------------------------- | :------------------------- | :------------- | | General and administrative | $63,510 | $56,584 | $6,926 | 12% | | Percentage of revenue | 19% | 20% | -1% pts | | - The increase was primarily attributable to a $4.6 million increase in software service expenses, a $2.3 million increase in charitable donations, and a $2.0 million impact from a prior-year credit loss recovery[156] - Partially offset by a $3.1 million decrease in personnel-related expenses, including a $4.7 million decrease in stock-based compensation expense[156] Interest Income Interest income remained relatively constant at $13.8 million for the three months ended April 30, 2024, compared to the prior year Interest Income Performance | Metric | Three Months Ended April 30, 2024 (in thousands) | Three Months Ended April 30, 2023 (in thousands) | Change (YoY, in thousands) | Change % (YoY) | | :------------- | :--------------------------------------------- | :--------------------------------------------- | :------------------------- | :------------- | | Interest income | $13,830 | $13,848 | $(18) | 0% | | Percentage of revenue | 4% | 5% | -1% pts | | Other Income, Net Other income, net, significantly increased by $6.4 million to $10.7 million, primarily driven by a $5.2 million increase in amortization on marketable securities and a $3.6 million increase in foreign currency transaction gains Other Income, Net Performance | Metric | Three Months Ended April 30, 2024 (in thousands) | Three Months Ended April 30, 2023 (in thousands) | Change (YoY, in thousands) | Change % (YoY) | | :-------------- | :--------------------------------------------- | :--------------------------------------------- | :------------------------- | :------------- | | Other income, net | $10,679 | $4,294 | $6,385 | 149% | | Percentage of revenue | 3% | 1% | +2% pts | | - The increase was primarily due to a $5.2 million increase in amortization on marketable securities and a $3.6 million increase in gains from foreign currency transactions, partially offset by $1.4 million of legal expense[158] Provision For Income Taxes The provision for income taxes remained relatively constant at $3.8 million for the three months ended April 30, 2024, compared to $3.6 million in the prior year Provision for Income Taxes Performance | Metric | Three Months Ended April 30, 2024 (in thousands) | Three Months Ended April 30, 2023 (in thousands) | Change (YoY, in thousands) | Change % (YoY) | | :-------------------------- | :--------------------------------------------- | :--------------------------------------------- | :------------------------- | :------------- | | Provision for income taxes | $3,780 | $3,632 | $148 | 4% | | Percentage of revenue | 1% | 1% | 0% pts | | Liquidity and Capital Resources UiPath's liquidity is strong, with $1,936.5 million in cash, cash equivalents, and marketable securities as of April 30, 2024. The company generated $100.0 million in operating cash flow for the quarter and believes existing resources are sufficient for the next twelve months and long term. The $200.0 million credit facility was terminated in September 2023, and the company continues its $500.0 million stock repurchase program - As of April 30, 2024, principal sources of liquidity were cash, cash equivalents, and marketable securities totaling $1,936.5 million[160] - Net cash provided by operating activities was $100.0 million for the three months ended April 30, 2024[160] - Management believes existing cash, cash equivalents, marketable securities, and customer payments will be sufficient to fund anticipated cash requirements for the next twelve months and the long term[162] Credit Facility UiPath's $200.0 million senior secured revolving credit facility, originally set to mature in October 2023, was terminated in September 2023 without any borrowings - The $200.0 million senior secured revolving credit facility was terminated in September 2023, prior to its original maturity date[164] - UiPath did not borrow under the Credit Facility at any time[164] Stock Repurchase Program UiPath's board authorized a $500.0 million stock repurchase program on September 1, 2023, which expires on March 1, 2025 - On September 1, 2023, the board of directors authorized a stock repurchase program of up to $500.0 million of Class A common stock, expiring on March 1, 2025[165] Cash Flows UiPath's cash flows for the three months ended April 30, 2024, show strong operating cash generation of $100.0 million, positive investing cash flow of $35.8 million, and cash used in financing activities of $45.7 million, primarily for share repurchases and tax withholdings Cash Flow Summary | Cash Flow Activity | Three Months Ended April 30, 2024 (in thousands) | Three Months Ended April 30, 2023 (in thousands) | | :-------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Net cash provided by operating activities | $100,037 | $67,341 | | Net cash provided by (used in) investing activities | $35,766 | $(135,552) | | Net cash used in financing activities | $(45,736) | $(20,630) | Operating Activities Net cash provided by operating activities increased to $100.0 million for the three months ended April 30, 2024, driven by higher cash collections from customers, partially offset by operating expenditures including annual bonuses - Net cash provided by operating activities was $100.0 million for the three months ended April 30, 2024, driven by approximately 12% higher cash collections from customers compared to the prior year[168] Investing Activities Net cash provided by investing activities was $35.8 million, primarily from $360.1 million in maturities of marketable securities, partially offset by $323.1 million in new purchases. This is a significant shift from the prior year's net cash used in investing activities - Net cash provided by investing activities was $35.8 million for Q1 2024, a significant change from $135.6 million used in Q1 2023[170][171] - This was primarily driven by $360.1 million in maturities of marketable securities, partially offset by $323.1 million in purchases of marketable securities[170] Financing Activities Net cash used in financing activities was $45.7 million, mainly due to $29.0 million in tax withholdings on equity awards and $22.0 million in Class A common stock repurchases, partially offset by $4.9 million from ESPP contributions - Net cash used in financing activities was $45.7 million for Q1 2024, compared to $20.6 million used in Q1 2023[172][173] - This was primarily driven by $29.0 million in payments of tax withholdings on equity awards and $22.0 million in repurchases of Class A common stock[172] Material Cash Requirements UiPath's material cash requirements include working capital, employee compensation, tax withholdings on equity awards, operating lease payments, and non-cancelable purchase commitments. The stock repurchase program also represents a discretionary material use of cash - Material cash requirements predominantly relate to working capital, employee compensation, payment of employee tax withholdings on net settlement of equity awards, and material contractual obligations (leases and purchase commitments)[174] - Accrued compensation and benefits of $40.7 million were included in current liabilities as of April 30, 2024[175] - The stock repurchase program may also represent a material, discretionary use of cash[177] Critical Accounting Estimates There have been no material changes to UiPath's critical accounting estimates compared to those disclosed in the 2024 Form 10-K - No material changes to critical accounting estimates were reported compared to the 2024 Form 10-K[178] Recent Accounting Pronouncements This section refers to Note 2 for information on recently issued accounting pronouncements - Refer to Note 2, Summary of Significant Accounting Policies—Recently Issued Accounting Pronouncements, for more information[179] Item 3. Quantitative and Qualitative Disclosures About Market Risk UiPath is exposed to market risk from interest rate fluctuations and foreign currency exchange rates. The company manages investments to preserve capital and liquidity, and uses foreign currency forward contracts to mitigate currency risks Interest Rate Risk UiPath holds $1,146.6 million in cash and cash equivalents and $789.9 million in marketable securities, exposing it to interest rate risk. The company's investment objectives prioritize capital preservation and liquidity, and a hypothetical 10% change in interest rates would not materially impact financial statements - As of April 30, 2024, UiPath held $1,146.6 million in cash and cash equivalents and $789.9 million in marketable securities, exposing it to interest rate risk[181] - A hypothetical 10% change in interest rates would not have a material impact on the condensed consolidated financial statements for the three months ended April 30, 2024[181] Foreign Currency Exchange Risk UiPath's non-U.S. subsidiaries' financial statements are translated into U.S. dollars, leading to foreign currency exchange risk. Approximately 55% of revenues and 35% of expenses are non-U.S. dollar denominated. The company recognized $2.8 million in net foreign currency transaction gains and uses forward contracts to reduce exposure - Approximately 55% of revenues and 35% of expenses were denominated in non-U.S. dollar currencies for the three months ended April 30, 2024[182] - UiPath recognized net foreign currency transaction gains of $2.8 million for the three months ended April 30, 2024[182] - The estimated translation impact of a hypothetical 10% change in foreign currency exchange rates would amount to $28.1 million for the three months ended April 30, 2024[182] Item 4. Controls and Procedures UiPath's management, including the CEO and CFO, concluded that its disclosure controls and procedures were effective at a reasonable assurance level as of April 30, 2024. No material changes in internal control over financial reporting were identified during the quarter, though management acknowledges inherent limitations in any control system Evaluation of Disclosure Controls and Procedures UiPath's management, with CEO and CFO participation, evaluated the effectiveness of disclosure controls and procedures as of April 30, 2024, concluding they were effective at a reasonable assurance level - Management, with CEO and CFO participation, concluded that disclosure controls and procedures were effective at a reasonable assurance level as of April 30, 2024[184][185] Changes in Internal Control Over Financial Reporting No changes in internal control over financial reporting were identified during the three months ended April 30, 2024, that materially affected or are reasonably likely to materially affect the company's internal control over financial reporting - No material changes in internal control over financial reporting were identified during the three months ended April 30, 2024[186] Limitations on Effectiveness of Controls and Procedures Management acknowledges that any control system has inherent limitations, providing reasonable but not absolute assurance. Factors like resource constraints, judgment errors, and circumvention can limit effectiveness, meaning not all errors or fraud may be prevented or detected - Management believes control systems provide reasonable, not absolute, assurance of achieving their objectives[187] - Inherent limitations include resource constraints, errors in judgment, and the possibility of circumvention, meaning not all potential errors or fraud may be prevented or detected[187] PART II. OTHER INFORMATION Item 1. Legal Proceedings This section refers to Note 9, "Commitments and Contingencies—Litigation," for a description of current legal proceedings, which include securities and derivative lawsuits - Refer to Note 9, Commitments and Contingencies—Litigation, for a description of current legal proceedings[190] Item 1A. Risk Factors UiPath faces various risks, including those associated with the evolving AI market, potential investments in disruptive technologies, and the implementation of a new ERP system. The company highlights new risks related to AI capabilities, regulatory environment, and the ERP system's design and implementation - UiPath is subject to numerous risks associated with the evolving market for products with AI capabilities, including demand uncertainty, competition, and the regulatory environment[192][194][195] - Investments in early-stage global foundation model and agentic AI companies (like H.AI) or other potentially disruptive technologies may not produce expected results or may be unsuccessful[193] - Delays or difficulties associated with the design, implementation, or post-implementation use of a new enterprise resource planning (ERP) system could adversely impact business, financial condition, and results of operations[196][197] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds UiPath had no recent unregistered sales of equity securities. The planned uses of IPO proceeds remain unchanged. The company repurchased 938 thousand shares of Class A common stock for $22.0 million under its stock repurchase program during the three months ended April 30, 2024 Recent Sales of Unregistered Equity Securities There were no recent unregistered sales of equity securities - No recent sales of unregistered equity securities were reported[198] Use of Proceeds from Initial Public Offering of Class A Common Stock There has been no material change in the planned uses of proceeds from UiPath's IPO from those previously disclosed - No material change in the planned uses of proceeds from the IPO from those disclosed in the 2024 Form 10-K[199] Issuer Purchase of Equity Securities UiPath repurchased 938 thousand shares of Class A common stock for $22.0 million during the three months ended April 30, 2024, under its $500.0 million stock repurchase program Issuer Purchase of Equity Securities Summary | Period | Total Number of Shares Purchased (in thousands) | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (in thousands) | Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (in thousands) | | :---------------- | :-------------------------------------------- | :--------------------------- | :-------------------------------------------------------------------------------------------- | :---------------------------------------------------------------------------------------------------- | | February 1 - 29 | 673 | $23.54 | 673 | $381,657 | | March 1 - 31 | 265 | $23.20 | 265 | $375,515 | | April 1 - 30 | — | $— | — | $375,515 | | Total | 938 | | 938 | | - The stock repurchase program, authorized for up to $500.0 million, expires on March 1, 2025[201] Item 3. Defaults Upon Senior Securities There were no defaults upon senior securities - No defaults upon senior securities were reported[202] Item 4. Mine Safety Disclosures This item is not applicable to UiPath - This item is not applicable[202] Item 5. Other Information No other information is reported in this section - No other information was reported[203] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including an advisory agreement, CEO and CFO certifications, and XBRL taxonomy documents - Exhibits include an Advisory Agreement, CEO and CFO Certifications (31.1, 31.2, 32.1, 32.2), and XBRL Taxonomy Extension documents[204] Signatures The report is signed on behalf of UiPath, Inc. by Ashim Gupta, Chief Financial Officer, on June 3, 2024 - The report was signed by Ashim Gupta, Chief Financial Officer of UiPath, Inc., on June 3, 2024[207]