Chart of the Week: UiPath Marks First Earnings Report Since IPO

June 11, 2021

RPA stock buy

When it comes to robots, a lot of us think of the physical type – perhaps delivering food in a restaurant or taking care of an elderly person. Yet in an increasingly digital world, robots can also be deployed within workflows.

That’s exactly what leading robotic process automation (RPA) specialist firm UiPath Inc (NYSE: PATH) has accomplished. In its mission statement, the company proclaims that:

“We envision a world with a robot for every person. Delivering the leading #RPA platform to accelerate human achievement”.

Essentially, what UiPath does is build software so that enterprises can deploy it to handle mundane manual work, such as data entry. It aims to free up workers’ time so they can spend it on more productive tasks.

UiPath pegs the total addressable market of RPA business processes at US$60 billion and it’s also integrating machine learning and AI to further improve its product offering.

Scaling up but competition is fierce

UiPath continues to attract customers at a fast clip. Earlier this week the company came out with its first earnings report since going public in late April. It saw impressive revenue growth of 65% year-on-year to US$186.2 million.

Meanwhile, the firm’s annualised revenue run-rate (ARR), which it says is a better measure of growth given it focuses on both new customers and expansion from existing customers, saw a 64% year-on-year jump to US$653 million.

More impressively, over the past eight quarters, UiPath’s ARR has grown at a compound annual growth rate (CAGR) of 79% (see below).

Founded in 2005 in Romania by Daniel Dines and Marius Tirca, UiPath has broken the mold by being a relatively large technology firm that’s come out of Europe.

With a market cap just shy of US$40 billion, UiPath is already priced at a lofty price-to-sales (PS) valuation of 60x trailing 12-month revenue.

Although UiPath has nearly a third of the automation market, it has its work cut out for it as tech giants such as Microsoft Corporation (NASDAQ: MSFT) start to delve into the world of process automation.

With a large and satisfied customer base, along with an expanding total market, UiPath could yet fend off the competition but only time will tell.

UiPath ARR (in US$ millions)

Source: UiPath Q1 FY 2022 earnings presentation

Disclaimer: ProsperUs Head of Content Tim Phillips owns shares of Microsoft Corporation.

Tim Phillips

Tim, based in Singapore but from Hong Kong, caught the investing bug as a teenager and is a passionate advocate of responsible long-term investing as a great way to build wealth.

He has worked in various content roles at Schroders and the Motley Fool, with a focus on Asian stocks, but believes in buying great businesses – wherever they may be. He is also a certified SGX Academy Trainer.

In his spare time, Tim enjoys running after his two young sons, playing football and practicing yoga.

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