What we think about UiPath (PATH)
UiPath in Three Words: AI, Enterprise, Automation
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Background
UiPath is a global software company that specializes in "Robotic Process Automation" (RPA) software, essentially creating digital robots to automate repetitive tasks across various business applications, like data entry or customer service interactions, by mimicking human actions on a computer screen. It is considered a leader in the RPA market, using AI technology to streamline business processes and enhance efficiency. UiPath boasts a unique blend of robotics and AI; its mission is to “make software robots so people don’t have to be robots.” Put another way, UiPath says it’s “delivering the leading RPA platform to accelerate human achievement.”
So, apart from cloud infrastructure investments and the computers on which UiPath RPA solutions are used, there’s no low-margin hardware involved here. UiPath’s artificial intelligence capabilities are dedicated largely to enabling its software robots to handle “thinking” tasks — that is, increasingly complex use cases that were previously difficult or impossible to automate at scale.
In a way, UiPath’s software robots can “understand” what’s on your screen, completing keystrokes, navigating software systems, and identifying and extracting data in the process. These software robots can do things like processing unstructured documents (say, log files or even PDFs and scanned images, for example), making sense of varied user interfaces through computer vision, and dynamically communicating with customers via chatbots. As an aside, UiPath’s focus on unstructured data and varied user interfaces also serves as a key differentiator from several large competitors, whose RPA solutions often place outsized focus on their own predictable user interfaces and structured datasets.
UiPath also boasts a unique end-to-end platform that helps its customers seamlessly handle every stage of their automation journey, from discovering potential robotic automations to testing and building them, managing them within their organization at enterprise scale, and continuously engaging with the automations as needed. UiPath’s RPA platform offers solutions for professional developers and low-code developers alike. It provides flexible deployment models to meet any enterprise customer’s needs and use cases, whether they prefer on-premise, hybrid, multi-cloud, or a newer software-as-a-service (SaaS) implementation through UiPath Automation Cloud.
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Robotic process automation (RPA) leader UiPath is “delivering the leading RPA platform to accelerate human achievement.” Its AI-powered software robots can handle several cognitive tasks — such as completing keystrokes, navigating software systems, or extracting data. Its focus on unstructured data (things like log files, PDFs, and images) differentiates it from other competitors who similarly have an interest in offering RPA solutions.
UiPath is harnessing the power of AI to make you more efficient. Built upon GPT-4, its robotic process automation can automate up to 70% of tasks — such as responding to emails, scheduling meetings on calendars, or providing brief recaps of long documents. If there is indeed a large focus on employee efficiency this year, UiPath is in the right place at the right time.
UiPath now serves more than 10,000 customers, sports a 118% dollar-based net retention rate, and is growing its annual recurring revenue at 22%. “Net new ARR” only increased by $44 million in the most recent first quarter, which is a clear sign that it’s becoming very difficult to win new deals with new customers.
But UiPath is generating $100 million+ in free cash flow each quarter and is sitting on $1.9 billion of cash in the bank. Now selling at just 5x sales and 22x free cash flow, now might be an opportune time to pick up shares of this innovator.