Item 1. Business
Item 1. Business
Overview
First established in a Bucharest, Romania apartment in 2005, UiPath was incorporated in Delaware in 2015 as a company principally focused on building and managing automations and developing computer vision technology, which remains the foundation of our platform today. Since that time, we have evolved from our beginnings in RPA into an end-to-end A I -powered automation platform through development and acquisitions, launched new products, and expanded our operations across the globe. Our vision is to enable automation across all knowledge work to accelerate human achievement.
The UiPath Business Automation Platform is The Foundation of Innovation™ because it can be used everywhere, by everyone, for everything, to benefit every business. We provide our customers with a robust set of capabilities that allow them to discover opportunities for automation, automate using a digital workforce that seamlessly collaborates with humans, and operate a mission critical automation program at scale. Our platform enables employees to quickly build automations for both existing and new processes and to utilize software robots to perform a vast array of actions including, but not limited to, logging into applications, extracting information from documents, moving folders, filling in forms, and updating information fields and databases. The ability of our software robots to replicate steps performed by humans in executing business processes drives operational efficiencies and enables companies to deliver on key digital initiatives with greater speed, agility, and accuracy.
Enterprise automation is here, and its momentum is growing as organizations around the world begin to understand the power of automation to drive efficiency and business outcomes. We aspire to be the defining company, advancing the evolution of automation as not just a tool, but as a way of operating and innovating.
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Trends Shaping Our Industry
A fragmented application landscape complicates business processes and hinders digital transformation. Businesses worldwide have spent billions of dollars on software in an attempt to drive efficiency and competitive advantages. A proliferation of applications has resulted in a shift from traditional software suites to specialized point solutions. Enterprises have transitioned from managing a handful of multi-purpose, largely on-premises applications to managing hundreds or thousands of point solutions deployed across on-premises, cloud, and hybrid environments. These applications, which were generally not designed for interoperability, run in tandem with legacy technologies, relying on humans to act as the connective tissue in the performance of business processes. As a result, employees lose valuable time navigating a fragmented application landscape and attention is diverted away from more cognitive activities that could directly improve business outcomes.
Automation of personal workflows can lead to a democratization of automation.
Employees must navigate an ever-increasing number of systems and applications and execute many manual and repetitive tasks in the performance of their day-to-day work, leading to frustration and lost productivity. While traditional automation solutions have attempted to address this friction, they frequently fall short of expectations because they have been designed for use by developers and engineers, rather than the employees who are directly involved in and familiar with the work being automated. By contrast, low-code solutions require little technical expertise and empower employees to use their firsthand knowledge of business processes to easily automate their personal workflows, resulting in personal and organizational benefits.
Resource constraints require organizations to maximize workforce productivity.
Enterprises are under pressure to maximize the productivity of their employees. This is even more critical in the current macroeconomic climate. Inflationary tensions have caused resource constraints for organizations, driving them to become more cost-conscious and seek new opportunities for efficiency and savings. Investment in automation allows organizations to devote human capital resources to the highest value tasks that humans do best, such as abstract thinking, innovation, relationship building, and dealing with ambiguity.
Recent advancements in AI are enabling automation of sophisticated business processes and broader use cases. While RPA can easily capture data and manipulate applications like a person would, automation of certain more complex and cognitive tasks has historically been out of reach. The evolution of AI , which refers to decision-making capabilities demonstrated by computer programs, has now enabled the automation of processes with characteristics—such as high variability, inherent uncertainty, and unstructured data—that would have been impossible to automate with RPA alone. AI expands capabilities by enabling software robots to learn how to read, write, listen, recognize patterns, and make complex decisions, bringing automation to a new level by opening a world of new opportunities for business growth, cost reduction, and improved productivity.
Competition
The market for automation is one of the fastest growing enterprise software markets and is increasingly competitive. We believe our competitors primarily fall into the following three categories:
• Enterprise platform vendors that are acquiring, building, or investing in automation functionality or partnering with automation providers.
• RPA software providers that offer RPA platforms, but lack end-to-end automation capabilities.
• Adjacent automation and integration platform companies, such as low-code, iBPMS , iPaaS , process mining, IDP , and test automation vendors, that provide additional features that can be useful for automations.
We have alliances and integrations with key vendors in each of these groups, but they often develop and market automation capabilities as extensions of their core platforms.
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A number of technology companies have attempted to address the automation needs of organizations through the application of business process management, application development platform offerings, RPA tools, and AI point offerings, as well as other horizontal software applications. However, these existing offerings are challenged by a number of inherent limitations, including:
• lack of an end-to-end platform;
• immature UI automation capabilities;
• challenges in linking AI capabilities to real-world execution;
• need for changes to an enterprise's underlying infrastructure;
• unsuitability for organization-wide use;
• lack of governance capabilities at scale; and
• lack of an engaged user community.
What We Offer
Our platform is purpose-built to be responsive to these challenges and to advance the next generation of automation with several key strengths:
• Our platform’s embedded AI, ML , and NLP capabilities improve decisioning and information processing by adapting to constantly changing variables.
• Our software robots’ ability to emulate human behavior allows organizations to address a myriad of use cases, from simple to complex, across levels and departments.
• Our platform allows users to seamlessly design and combine UI automations, API integrations, and AI-based document understanding in a single workflow.
• Our multi-tenant platform is built for enterprise deployment, with security and governance at its core, and can be deployed on-premises, in a public or private cloud, or in a hybrid environment. In addition, we offer a managed, multi-tenant SaaS version called Automation Cloud, which enables our customers to begin automating without the need to provision infrastructure, install applications, or perform additional configurations.
• Our intuitive interface and low-code, drag-and-drop functionality is easy for employees to learn regardless of their technical acumen; built-in, customizable, and shareable components serve as building blocks for users to quickly and easily build and deploy automations.
• Our platform tracks, measures, and forecasts the performance of automations, enabling customers to gain powerful insights and generate key performance indicators with actionable metrics.
• Our technology democratizes automation, empowering employees and resulting in greater professional fulfillment and job satisfaction.
• Our platform was designed to enable people and software robots to work together in harmony, with each focusing on the processes they execute best, to improve business outcomes.
The UiPath Business Automation Platform
Our platform is built to span the full automation spectrum. We recently updated its name to reflect our belief that our platform, the UiPath Business Automation Platform, is now at the center of the way our customers run their businesses—sitting between their application landscape, their processes, and their people—allowing their processes and people to move forward at the rate that they need to, by delivering resilient and robust automations and applications.
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Discover
Continuously uncovers opportunities for process and task improvements, helping to identify the highest-ROI areas
Process Mining enables complete transparency into business processes and transforms them with automation and improvements that drive continuous operational efficiency.
Task Mining provides an objective, data-driven picture of desktop processes quicker and with fewer resources required, allowing organizations to act on gained insight through automation.
Communications Mining lets users mine, monitor, and automate service conversations to scale operations efficiently and improve the experience of their customers.
Idea Capture & Management enables organizations to centrally capture and manage automation ideas and process improvements, prioritized by impact and ROI.
Automate
Gets more done with a digital workforce that seamlessly collaborates with people and automates work via UI and API, powered with native-integrated AI
Low-code development empowers employees to build business apps and automations rapidly with low-code, visual tools.
UI and API automation are combined for maximum scale and speed across the broadest range of systems.
Process orchestration enables users to create smarter decision-making and collaboration between people and software robots.
Intelligent Document Processing removes the work from paperwork with semantic understanding of a wide range of documents—accurately and quickly.
Integrated NLP and AI/ML makes software robots smarter to seamlessly automate more sophisticated work.
Operate
An enterprise-grade foundation to run and optimize a mission critical automation program at high scale
Analytics provides the operational and business insight organizations need for their automation programs.
Continuous testing guarantees reliability by continuously testing and monitoring automations and the applications they rely on.
Unified management and governance allows the organization to monitor the integrated platform and their automation program centrally at the lowest cost of ownership.
Flexible deployment allows organizations to use the complete cloud-native platform SaaS or self-hosted for maximum flexibility.
Our Growth Strategies
Customer Acquisition and Expansion— We have simplified our go-to-market approach to drive a level of alignment that we believe will result in refined market segmentation, higher sales productivity, and better customer experience. We sell automation not merely as a tool, but as a way of operating and innovating, and emphasize the ability of our platform to deliver meaningful business outcomes for our customers.
We sell our platform through a direct sales team, supported by a team of pre-sales engineers and our professional services organization, who offer technical expertise to help customers accelerate adoption and time-to-value. We also sell through channel partnerships and are focused on maintaining and growing a high-quality ecosystem of partners that build, train, and certify skills on our technology as well as those that deploy our technology on behalf of their customers.
We sell to organizations of all sizes across a broad range of industries and geographies, with a focus on enterprise customers. In certain geographies, we maintain specialized teams that concentrate on specific verticals such as financial services, healthcare, manufacturing, and public sector. We've designed our go-to-market engine to segment our customer base according to propensity to invest in automation, and align our coverage model accordingly:
• Enterprise— We dedicate a higher density of resources and coverage to the largest companies with the highest propensity to invest in and potential to adopt automation at scale. We believe these accounts represent our largest growth opportunity. Here we focus on selling positive business outcomes that resonate with C-level executives and leverage our largest partners for enablement. Dense coverage ratios and industry alignment of sales teams allow us to accelerate both new customer acquisition and usage expansion.
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• Corporate and Mid-Market— We focus our more efficient and cost-effective resources on companies in the earlier stages of their automation journey, with a one-to-many coverage ratio. Our customers frequently see rapid time-to-value with our products, and we are able to quickly expand sales within organizations as customers add features, expand use cases, and increase the number of software robots beyond their initial deployment. The broad applicability of our platform enables us to sell across all levels and departments of an organization, affording opportunity for eventual graduation to the enterprise level.
• Small and Mid-Sized Business— We seek to sell to the smallest companies primarily through our most efficient partner-led, self-service, and digital channels, focusing on new durable customer acquisition. In addition, we are developing opportunities for product-led growth which will enable us to speak to users within the product to organically nurture adoption and sell additional capabilities.
Our sales efforts are complemented by our marketing initiatives, which build brand awareness, cultivate a large and growing community, and drive demand through a combination of global and local campaigns. We employ a variety of approaches to reach prospective customers, including community evangelism, in-person and digital events, content marketing, digital advertising, search optimization, partner marketing, social media, and public relations. We host and present regularly at regional and global events, including our own Forward and Together conferences.
Platform Investment and Innovation— We intend to improve outcomes for our customers by expanding our platform. We have made and plan to continue to make significant investments in research and development to enhance our technology. For example, in May 2022, we released version 22.4 of the UiPath Business Automation Platform. This release introduced new SaaS robots hosted in the UiPath Automation Cloud™, which allow customers to deploy unattended software robots instantly without IT , resources, or infrastructure. Other improvements in 22.4 included a larger library of ready-to-go automations, upleveled security and governance, and support for macOS. In October 2022, we released version 22.10 of the UiPath Business Automation Platform. This newest version provides browser-based access to a low-code build platform, the ability to build public-facing apps, enhanced process and task mining capabilities, and platform intelligence to help software robots understand both structured and unstructured data.
Strategic Acquisitions— We have acquired businesses and technologies to drive product and market expansion. For example, in July 2022, we acquired Re:inter LTD, a provider of NLP software focused on unstructured documents and communications, laying the foundation for our Communications Mining technology, which has been a fitting complement to our existing Document Understanding capabilities. We expect to continue to evaluate acquisition opportunities that we believe are complementary to our platform.
Community Engagement— We have built an extensive ecosystem through our Community, UiPath Academy and Academic Alliance initiatives, which support and train individuals working with our platform. Additionally, we offer free access via our Community Edition and Enterprise Trial, both available online. (Community Edition is a limited version of our platform that is offered for free to small businesses, university students, and individuals, whereas Enterprise Trial provides full functionality for a limited time.) The result is a global network of automation professionals who are actively building and sharing automations and transforming the way work gets done. We believe that our highly engaged user community differentiates us from competitors and that helping individual users to build their skills will drive future adoption of our platform.
Customers
We have a large and diversified customer base across a broad range of industry sectors.
We determine our customer count by considering the number of accounts with a unique account identifier for which we have an active subscription in the period indicated, including entities to which we have sold our products either directly or through a channel partner. A single organization with multiple divisions, segments, or subsidiaries is counted as a single customer. Our customer count is subject to adjustment for acquisitions, consolidations, spin-offs, and other market activity. Non-paying partners and resellers and users of free or trial subscriptions are excluded from our customer count.
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We had approximately 10,800 and over 10,100 customers as of January 31, 2023 and 2022, respectively. The following chart illustrates the growth of our customer base over the past five years*:
Partners
We develop and maintain business and technology partnerships that help us to integrate the latest technology into our platform and to market and deliver our platform to our customers around the world.
Our business partners include regional system integrators, value-added resellers, and business consultants that enhance our market presence and drive greater sales efficiencies. In fiscal year 2023, we closed deals with a select number of partners that will offer our technology as managed services to their customers. While we have historically tiered partners based on their maintenance of competency requirements and a specified number of satisfied customers, we are in the process of transforming our partner ecosystem to increase focus on driving customer adoption, consumption, usage, and time-to-value, emphasizing quality of relationships.
Our technology partners bring specialized capabilities to our platform. They collaborate with us to develop integrations that simplify the interoperability of our platform with their technology, resulting in faster time-to-value. Examples of integrations available to our customers include integrations with offerings from Amazon Web Services Inc., Adobe Inc., Alteryx, Inc., Atlassian Corp Plc, Box, Inc., CrowdStrike, Inc., DocuSign Inc., Microsoft Corporation, Oracle Corporation, OutSystems, Qlik Technologies Inc., Salesforce.com, Inc., SAP SE, ServiceNow, Inc., Snowflake Inc., Tableau Software, LLC, and Workday, Inc.
We also drive innovation with leading AI technology partners that specialize in OCR , NLP, and custom ML and AI algorithms that are additive to our platform and can enhance the long-term business outcomes of our customers’ automations. Additionally, we maintain partnerships with leading cloud vendors, such as Amazon Web Services Inc., Google Inc., and Microsoft Corporation, to both simplify the deployment of our platform and to extend our platform to offer customers the benefits of cloud-based AI capabilities.
Intellectual Property
Intellectual property rights are important to the success of our business. We rely on a combination of patent, copyright, trademark, and trade secret laws in the U.S. and other jurisdictions, as well as license agreements, confidentiality procedures, non-disclosure agreements with third parties, and other contractual protections, to protect our intellectual property rights, including our proprietary technology, software, know-how, and brand.
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As of January 31, 2023, we held 114 issued patents which are scheduled to expire between October 2039 and February 2043, across several jurisdictions:
As of January 31, 2023, we also had 171 pending patent applications in the U.S., including 5 allowed U.S. patent applications, 124 pending Patent Cooperation Treaty applications, and 410 pending and 10 allowed patent applications in other jurisdictions. We held 10 registered U.S. trademarks, 11 pending U.S. trademark applications, and more than 500 active foreign trademark filings. We also held over 45 internet domain names.
We continually review our development efforts to assess and identify the existence and patentability of new intellectual property.
The terms of individual patents extend for varying periods of time, depending upon the date of filing of the patent application, the date of patent issuance, and the legal term of patents in the countries in which they are obtained. Generally, patents issued for applications filed in the U.S. are effective for 20 years from the earliest effective filing date of a non-provisional patent application. The duration of patents outside of the U.S. varies in accordance with provisions of applicable local law, but is typically also 20 years from the earliest effective filing date. However, the actual protection afforded by a patent varies from country to country and depends upon many factors, including the type of patent, the scope of its coverage, the availability of legal remedies in a particular country, and the validity and enforceability of the patent.
Although we rely on intellectual property rights, including patents, copyrights, trademarks, and trade secrets, as well as contractual protections to establish and protect our proprietary rights, we believe that factors such as the technological and creative skills of our personnel, development of new services, features, and functionality, and frequent enhancements to our platform are equally essential to establishing and maintaining our technology leadership position.
We restrict access to and use of our proprietary technology and other confidential information through the use of internal and external controls, including contractual protections with employees, contractors, customers, and partners. We require our employees, consultants, and certain other third parties to enter into confidentiality and proprietary rights agreements, and we control and monitor access to our software, documentation, and other confidential information. Our policy is to require all employees and independent contractors to sign agreements assigning to us any inventions, trade secrets, works of authorship, developments, processes, and other intellectual property generated by them on our behalf and under which they agree to protect our confidential information. In addition, we generally enter into confidentiality agreements with our customers and partners. See the section titled
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“ Risk Factors —Risks Related to Our Intellectual Property ,” included in Item 1A of this Annual Report on Form 10-K, for a description of risks related to our intellectual property.
Government Regulation
Our business is and will continue to be subject to extensive U.S. federal and state and foreign laws and regulations, including laws and regulations involving privacy, data protection, security, intellectual property, competition, taxation, anti-corruption, anti-bribery, anti-money laundering, and other similar laws. Many of these laws and regulations are still evolving and are likely to remain uncertain for the foreseeable future, and these laws and regulations can vary significantly from jurisdiction to jurisdiction. The costs of complying with these laws and regulations are high and are likely to increase in the future. Further, the impact of these laws and regulations may disproportionately affect our business in comparison to our competitors that have greater resources.
In the U.S., we are subject to data security and privacy rules and regulations promulgated under the authority of the Federal Trade Commission, the Electronic Communications Privacy Act, the Computer Fraud and Abuse Act, the CCPA , and other state and federal laws relating to privacy and data security. The CCPA requires covered businesses to provide new disclosures to California residents and to provide them new ways to opt out of the sale of personal information, and provides a private right of action and statutory damages for data breaches. Other jurisdictions in the U.S. are beginning to propose laws similar to the CCPA.
As a result of our international operations, we must comply with many data security and privacy laws that may vary significantly from jurisdiction to jurisdiction. Virtually every jurisdiction in which we operate has established or is in the process of establishing data security and privacy legal frameworks with which we or our customers must comply. Our failure to comply with the laws of each jurisdiction may subject us to significant penalties. For example, the data protection landscape in Europe, including with respect to cross-border data transfers, is currently unstable and other countries outside of Europe have enacted or are considering enacting cross-border data transfer restrictions and laws requiring local data residency.
We must also comply with sanctions that are issued by countries in which we do business. In response to Russia’s military operations in Ukraine, the U.S., the EU , the U.K. , Australia, Japan and other countries have imposed sanctions on Russia. Russia has also imposed sanctions. While Russia, Belarus, and Ukraine represent an immaterial percentage of our business, this is a complex and evolving area.
For a discussion of the various risks we face from regulation and compliance matters, see the sections titled “ Risk Factors —Risks Related to Data Privacy and Cybersecurity ” and “ Risk Factors —Risks Related to Regulatory Compliance and Governmental Matters ” included in Item 1A of this Annual Report on Form 10-K.
Human Capital
Workforce
Human capital is our most important asset. We were recognized as one of Inc.’s Best Workplaces for 2022 and won eight Best Company awards from Comparably in 2022, including awards for Global Culture, Happiness, Perks and Benefits, Leadership, and Best Places to Work in New York. We have been able to attract and motivate exceptionally talented, educated, and experienced employees, and believe that our ability to continue to do so is critical to our success. The principal purposes of our equity and other incentive plans are to attract, retain, and motivate selected employees, consultants, and directors through the granting of stock-based compensation awards and cash-based performance bonus awards.
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As of January 31, 2023, we had a total of 3,833 full-time employees, geographically distributed as follows:
The following chart presents our full-time employees by financial statement line as of January 31, 2023:
We are subject to local labor law requirements in all countries in which we operate. We consider our employee relations to be good and have not experienced any work stoppages.
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Culture and Values
We believe that our culture and values are critical to our success and help us to deliver tangible financial and operational benefits to our customers, employee s, and stockholders. Our core values are:
Humble
Listen. Learn. Help Others.
Bold
Challenge. Experiment. Explore.
Immersed
Consider. Reflect. Imagine.
Fast
Take Action. Preempt. Transform.
Diversity, Equity, and Belonging
We believe that diversity, equity, and belonging is a business priority and a moral imperative, driving value for our employees, communities, and customers. We are strong because we welcome diverse perspectives, experiences, and approaches. We have added dedicated diversity, equity, and belonging roles to our human resources organization and seek to create an environment where employees are valued, respected, and empowered. We are committed to challenging and seeking to address inequities internally and in our communities and we invest in education to create equity. We increase job candidate pipeline diversity through external organizations such as Jobwel, NPower, and Inroad, as well as outreach to Historically Black Colleges, Black Girls Who Code, and Women Impact Tech, and have increased focus on recruiting women into leadership roles and to our Board of Directors.
Social Responsibility and Community Initiatives
We aspire to make work more meaningful for the global community as we help accelerate human achievement. This is reflected in our desire to improve our communities by bringing our technology to underserved areas. Through our global Automation for Good initiatives, we worked with governments during the COVID-19 pandemic to deploy our technology to assist government entities, hospitals, and non-profit organizations to improve citizen response, free health care workers to spend more time with patients, and accelerate mission objectives. As part of our commitment to make automation a force for good in the world, we have invested in research, collaborations, and partnerships to develop automation solutions to help solve global challenges and explore how to increase the positive impact of this technology for the benefit of people and our planet. Furthermore, we have supported initiatives and opportunities dedicated to improving automation skills and technology access and creating social good with ou r free online learning platform, UiPath Academy. Workin g with
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our partners to develop accessible paths toward fulfilling careers and foster meaningful employment opportunities remains a key priority for UiPath, and we have expanded our network of partner organizations to equip students and workers with automation skills as part of our UiPath Academic Alliance program. We also founded the UiPath Foundation, an independent non-governmental, non-profit, non-political, and non-religious global organization, headquartered in Romania, which aims to provide children living in poverty with the skills and tools necessary to reach their potential. In April 2021, we joined the Pledge 1% movement; as of January 31, 2023, we have donated 0.3 million shares of our Class A common stock to fund projects related to our environmental, social, and governance initiatives, with an additional 2.5 million shares of our Class A common stock reserved for distribution by April 2031.
Corporate and Available Information
We were first established in Bucharest, Romania in 2005 and incorporated in Delaware on June 9, 2015. Our principal executive offices are located at One Vanderbilt Avenue, 60th Floor, New York, New York 10017, and our telephone number is (844) 432-0455.
The UiPath logo, “UiPath,” “Automation Cloud,” "The Foundation of Innovation," and our other registered and common law trade names, trademarks, and service marks are the property of UiPath, Inc. or our subsidiaries. Any other trade names, trademarks and service marks used in this Annual Report on Form 10-K are the property of their respective owners.
Our website address is www.uipath.com. Information found on, or accessible through, our website is not a part of, and is not incorporated into, this Annual Report on Form 10-K. We file electronically with the SEC our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act . We make available on our website at www.uipath.com, free of charge, copies of these reports and other information as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. The SEC maintains an internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC at www.sec.gov.
We may use our website as a distribution channel for material company information. Financial and other important information regarding UiPath is routinely posted on and accessible through our website at www.uipath.com. We therefore encourage investors and others interested in UiPath to review the information that we make available on our website, in addition to following our filings with the SEC, webcasts, press releases, and conference calls. In addition, you may automatically receive email alerts and other information about UiPath when you enroll your email address by visiting “Resources” under the "Investor Relations" section at www.uipath.com.
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