UiPath, Inc. 10-K

Item 8. Financial Statements and Supplementary Data INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm (PCAOB ID Number 185 ) 72 R eport of Predecessor Auditor (PCAOB ID Number 248) 74 Consolidated Balance Sheets 75 Consolidated Statements of Operations 76 Consolidated Statements of Comprehensive Loss 77 Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit) 78 Consolidated Statements of Cash Flows 79 Notes to Consolidated Financial Statements 80 71 Table of Contents Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors UiPath, Inc.: Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting We have audited the accompanying consolidated balance sheet of UiPath, Inc. and subsidiaries (the Company) as of January 31, 2023, the related consolidated statements of operations, comprehensive loss, convertible preferred stock and stockholders’ equity (deficit), and cash flows for the year ended January 31, 2023, and the related notes (collectively, the consolidated financial statements). We also have audited the Company’s internal control over financial reporting as of January 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of January 31, 2023, and the results of its operations and its cash flows for the year ended January 31, 2023, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of January 31, 2023 based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Basis for Opinions The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audit of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. 72 Table of Contents Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Revenue Recognition - Assessment of Terms and Conditions in Certain Contracts As discussed in Note 2 to the consolidated financial statements, the Company derives revenue primarily from term licenses, maintenance and support services, SaaS products, and professional services. For contracts with multiple performance obligations, management allocates the transaction price of the contract to each performance obligation and recognizes revenue when, or as, a performance obligation is satisfied. Management applies judgment in identifying and evaluating any terms and conditions in contracts that may impact revenue recognition. For the year ended January 31, 2023, the Company recorded revenue of $1.06 billion. We identified the assessment of terms and conditions in certain contracts as a critical audit matter. Specifically, complex auditor judgement was required in assessing the Company’s identification and evaluation of terms and conditions in certain contracts because of the complex accounting guidance, primarily related to the sale of term licenses. The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls within the related revenue recognition process, including a control related to the identification and evaluation of terms and conditions in certain contracts that impact revenue recognition. For a selection of contracts, we assessed the terms and conditions in the contracts by examining the contracts and evaluating management’s determination of the impact of those terms and conditions on revenue recognition. For each of these contracts selected, we also assessed the recorded revenue by determining the revenue to be recorded in the current period using the terms and conditions in the underlying contract and comparing it to the Company’s recorded balances. /s/ KPMG LLP We have served as the Company’s auditor since 2022. New York, New York March 24, 2023 73 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors and Stockholders UiPath, Inc. Opinion on the financial statements We have audited the accompanying consolidated balance sheet of UiPath, Inc. (a Delaware corporation) and subsidiaries (the “Company”) as of January 31, 2022, the related consolidated statements of operations, comprehensive loss, convertible preferred stock and stockholders’ equity, and cash flows for each of the two years in the period ended January 31, 2022, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of January 31, 2022, and the results of its operations and its cash flows for each of the two years in the period ended January 31, 2022, in conformity with accounting principles generally accepted in the United States of America. Basis for opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ GRANT THORNTON LLP We served as the Company’s auditor from 2018 to 2022. New York, New York April 4, 2022 74 Table of Contents UiPath, Inc. Consolidated Balance Sheets Amounts in thousands except per share data As of January 31, 2023 2022 ASSETS Current assets Cash and cash equivalents $ 1,402,119 $ 1,768,723 Marketable securities 354,774 96,417 Accounts receivable, net of allowance for credit losses of $ 2,698 and $ 2,566 , respectively 374,217 251,988 Contract assets 69,260 74,831 Deferred contract acquisition costs 49,887 29,926 Prepaid expenses and other current assets 94,150 55,416 Total current assets 2,344,407 2,277,301 Marketable securities, non-current 2,942 19,523 Contract assets, non-current 6,523 2,730 Deferred contract acquisition costs, non-current 137,616 100,224 Property and equipment, net 29,045 17,176 Operating lease right-of-use assets 52,052 48,953 Intangible assets, net 23,010 16,817 Goodwill 88,010 53,564 Deferred tax assets 5,895 10,628 Other assets, non-current 45,706 25,534 Total assets $ 2,735,206 $ 2,572,450 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Accounts payable $ 8,891 $ 11,515 Accrued expenses and other current liabilities 76,645 87,958 Accrued compensation and employee benefits 142,582 130,673 Deferred revenue 398,334 297,355 Total current liabilities 626,452 527,501 Deferred revenue, non-current 121,697 68,665 Operating lease liabilities, non-current 56,442 49,843 Other liabilities, non-current 10,457 4,524 Total liabilities 815,048 650,533 Commitments and contingencies (Note 11) Stockholders’ equity: Preferred stock, $ 0.00001 par value per share, 20,000 shares authorized as of January 31, 2023 and 2022; 0 shares issued and outstanding as of January 31, 2023 and 2022 — — Class A common stock, $ 0.00001 par value per share, 2,000,000 shares authorized as of January 31, 2023 and 2022; 474,160 and 458,773 shares issued and outstanding as of January 31, 2023 and 2022, respectively 5 4 Class B common stock, $ 0.00001 par value per share, 115,741 shares authorized as of January 31, 2023 and 2022; 82,453 shares issued and outstanding as of January 31, 2023 and 2022 1 1 Additional paid-in capital 3,736,838 3,406,959 Accumulated other comprehensive income 7,612 10,899 Accumulated deficit ( 1,824,298 ) ( 1,495,946 ) Total stockholders’ equity 1,920,158 1,921,917 Total liabilities and stockholders’ equity $ 2,735,206 $ 2,572,450 The accompanying notes are an integral part of these consolidated financial statements. 75 Table of Contents UiPath, Inc. Consolidated Statements of Operations Amounts in thousands except per share data Year Ended January 31, 2023 2022 2021 Revenue: Licenses $ 497,836 $ 481,427 $ 346,035 Subscription services 508,823 369,867 232,542 Professional services and other 51,922 40,958 29,066 Total revenue 1,058,581 892,252 607,643 Cost of revenue: Licenses 10,421 11,888 7,054 Subscription services 87,366 60,565 24,215 Professional services and other 82,264 96,415 34,588 Total cost of revenue 180,051 168,868 65,857 Gross profit 878,530 723,384 541,786 Operating expenses: Sales and marketing 701,558 697,682 380,154 Research and development 285,750 276,657 109,920 General and administrative 239,505 249,991 162,035 Total operating expenses 1,226,813 1,224,330 652,109 Operating loss ( 348,283 ) ( 500,946 ) ( 110,323 ) Interest income 27,955 3,551 1,152 Other income (expense), net 2,767 ( 13,488 ) 14,513 Loss before income taxes ( 317,561 ) ( 510,883 ) ( 94,658 ) Provision for (benefit from) income taxes 10,791 14,703 ( 2,265 ) Net loss $ ( 328,352 ) $ ( 525,586 ) $ ( 92,393 ) Net loss per share attributable to common stockholders, basic and diluted $ ( 0.60 ) $ ( 1.16 ) $ ( 0.55 ) Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted 548,022 454,625 168,255 The accompanying notes are an integral part of these consolidated financial statements. 76 Table of Contents UiPath, Inc. Consolidated Statements of Comprehensive Loss Amounts in thousands Year Ended January 31, 2023 2022 2021 Net loss $ ( 328,352 ) $ ( 525,586 ) $ ( 92,393 ) Other comprehensive (loss) income, net of tax: Unrealized loss on available-for-sale marketable securities, net ( 284 ) ( 318 ) ( 17 ) Foreign currency translation adjustments ( 3,003 ) 23,738 ( 18,730 ) Other comprehensive (loss) income ( 3,287 ) 23,420 ( 18,747 ) Comprehensive loss $ ( 331,639 ) $ ( 502,166 ) $ ( 111,140 ) The accompanying notes are an integral part of these consolidated financial statements. 77 Table of Contents UiPath, Inc. Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit) Amounts in thousands Convertible preferred stock Common stock (Class A) Common stock (Class B) Additional paid-in capital Accumulated other comprehensive income (loss) Accumulated deficit Total stockholders’ equity (deficit) Shares Amount Shares Amount Shares Amount Amount Amount Amount Amount Balance as of January 31, 2020 282,108 $ 996,389 41,883 $ — 115,741 $ 1 $ 72,229 $ 6,226 $ ( 877,967 ) $ ( 799,511 ) Issuance of convertible preferred stock, net of issuance costs of $ 324 12,149 225,579 — — — — — — — — Issuance of common stock upon exercise of stock options and restricted stock awards — — 28,196 1 — — 20,518 — — 20,519 Issuance of common stock upon vesting of restricted stock awards — — 10 — — — 373 — — 373 Stock-based compensation expense related to common stock secondary transactions — — 5,088 — ( 5,088 ) — 4,983 — — 4,983 Stock-based compensation — — — — — — 81,072 — — 81,072 Other comprehensive loss, net of tax — — — — — — — ( 18,747 ) — ( 18,747 ) Net loss — — — — — — — — ( 92,393 ) ( 92,393 ) Balance as of January 31, 2021 294,257 $ 1,221,968 75,177 $ 1 110,653 $ 1 $ 179,175 $ ( 12,521 ) $ ( 970,360 ) $ ( 803,704 ) Issuance of convertible preferred stock, net of issuance costs 12,043 749,836 — — — — — — — — Conversion of convertible preferred stock to common stock upon initial public offering ( 306,300 ) ( 1,971,804 ) 306,300 3 — — 1,971,801 — — 1,971,804 Issuance of common stock upon initial public offering, net of underwriting discounts and commissions and other issuance costs — — 13,000 — — — 687,903 — — 687,903 Conversion of shares of Class B common stock into shares of Class A common stock — — 28,200 — ( 28,200 ) — — — — — Shares issued as consideration for business acquisition — — 543 — — — 30,467 — — 30,467 Issuance of common stock upon exercise of stock options — — 10,048 — — — 12,345 — — 12,345 Vesting of early exercised stock options — — — — — — 3,017 — — 3,017 Issuance of common stock under the employee stock purchase plan — — 411 — — — 14,462 — — 14,462 Issuance of common stock upon settlement of restricted stock units — — 25,280 — — — — — — — Tax withholdings on settlement of restricted stock units — — ( 186 ) — — — ( 10,591 ) — — ( 10,591 ) Stock-based compensation — — — — — — 518,380 — — 518,380 Other comprehensive income, net of tax — — — — — — — 23,420 — 23,420 Net loss — — — — — — — — ( 525,586 ) ( 525,586 ) Balance as of January 31, 2022 — $ — 458,773 $ 4 82,453 $ 1 $ 3,406,959 $ 10,899 $ ( 1,495,946 ) $ 1,921,917 Issuance of common stock upon exercise of stock options — — 4,770 — — — 8,245 — — 8,245 Vesting of early exercised stock options — — — — — — 1,357 — — 1,357 Issuance of common stock upon settlement of restricted stock units — — 13,644 1 — — — — — 1 Tax withholdings on settlement of restricted stock units — — ( 4,646 ) — — — ( 75,181 ) — — ( 75,181 ) Charitable donation of Class A common stock — — 300 — — — 5,499 — — 5,499 Shares issued in connection with business acquisition — — 570 — — — 2,965 — — 2,965 Issuance of common stock under the employee stock purchase plan — — 1,190 — — — 15,804 — — 15,804 Repurchase of unvested early exercised stock options — — ( 441 ) — — — — — — — Stock-based compensation — — — — — — 371,190 — — 371,190 Other comprehensive loss, net of tax — — — — — — — ( 3,287 ) — ( 3,287 ) Net loss — — — — — — — — ( 328,352 ) ( 328,352 ) Balance as of January 31, 2023 — $ — 474,160 $ 5 82,453 $ 1 $ 3,736,838 $ 7,612 $ ( 1,824,298 ) $ 1,920,158 The accompanying notes are an integral part of these consolidated financial statements. 78 Table of Contents UiPath, Inc. Consolidated Statements of Cash Flows Amounts in thousands Year Ended January 31, 2023 2022 2021 Cash flows from operating activities: Net loss $ ( 328,352 ) $ ( 525,586 ) $ ( 92,393 ) Adjustments to reconcile net loss to net cash (used in) provided by operating activities: Depreciation and amortization 18,723 14,705 12,335 Amortization of deferred contract acquisition costs 59,826 39,257 40,997 Reversal of deferred contract acquisition costs and accrued sales commissions, net — — ( 9,229 ) Net amortization on marketable securities ( 1,782 ) 1,954 263 Abandonment and impairment charges 2,881 — — Stock-based compensation expense 369,840 515,583 86,167 Charitable donation of Class A common stock 5,499 — — Amortization of operating lease right-of-use assets 11,675 8,875 7,266 Provision for deferred income taxes 861 ( 5,832 ) ( 7,587 ) Other non-cash (credits) charges, net ( 2,465 ) 1,983 1,019 Changes in operating assets and liabilities: Accounts receivable ( 123,783 ) ( 86,387 ) ( 76,907 ) Contract assets ( 185 ) ( 43,660 ) ( 21,964 ) Deferred contract acquisition costs ( 118,909 ) ( 130,186 ) ( 51,058 ) Prepaid expenses and other assets ( 59,810 ) ( 15,360 ) ( 8,564 ) Accounts payable ( 1,571 ) 3,507 1,893 Accrued expenses and other liabilities ( 14,954 ) 45,729 6,122 Accrued compensation and employee benefits 15,086 24,038 49,924 Operating lease liabilities, net ( 3,307 ) ( 9,064 ) ( 8,080 ) Deferred revenue 160,746 105,481 98,973 Net cash (used in) provided by operating activities ( 9,981 ) ( 54,963 ) 29,177 Cash flows from investing activities: Purchases of marketable securities ( 388,409 ) ( 212,512 ) ( 103,108 ) Sales of marketable securities — 89,383 — Maturities of marketable securities 151,426 107,745 — Purchases of property and equipment ( 23,815 ) ( 8,879 ) ( 1,953 ) Payments related to business acquisitions, net of cash acquired ( 29,542 ) ( 5,498 ) ( 19,690 ) Capitalized software development costs — ( 2,950 ) ( 1,240 ) Other investing, net (1) 1,197 ( 2,731 ) — Net cash used in investing activities ( 289,143 ) ( 35,442 ) ( 125,991 ) Cash flows from financing activities: Proceeds from initial public offering, net of underwriting discounts and commissions — 692,369 — Payments of initial public offering costs — ( 3,734 ) ( 732 ) Proceeds from issuance of convertible preferred stock — 750,000 225,903 Issuance costs related to convertible preferred stock — ( 164 ) ( 324 ) Proceeds from exercise of stock options 8,388 12,197 26,379 Payments of tax withholdings on net settlement of equity awards ( 73,095 ) ( 10,467 ) — Net (payments) receipts of tax withholdings on sell-to-cover equity award transactions ( 9,480 ) 10,432 — Proceeds from employee stock purchase plan contributions 15,011 19,040 — Repurchase of unvested early exercised stock options ( 1,493 ) — — Proceeds from credit agreement — — 78,587 Repayment of credit agreement — — ( 78,587 ) Payment of deferred loan costs related to senior secured credit facility — — ( 808 ) Net cash (used in) provided by financing activities ( 60,669 ) 1,469,673 250,418 Effect of exchange rate changes ( 6,811 ) 18,265 ( 16,545 ) Net (decrease) increase in cash, cash equivalents, and restricted cash ( 366,604 ) 1,397,533 137,059 Cash, cash equivalents, and restricted cash at beginning of period 1,768,723 371,190 234,131 Cash, cash equivalents, and restricted cash at end of period $ 1,402,119 $ 1,768,723 $ 371,190 Supplemental disclosures of cash flow information: Cash paid for interest $ 651 $ 691 $ 1,708 Cash paid for income taxes 20,999 8,454 4,509 Supplemental disclosures of non-cash investing and financing activity: Stock-based compensation capitalized for software development $ — $ 4,487 $ 261 Value of shares issued in payment of business acquisitions 2,965 30,467 — Deferred consideration related to business acquisitions 11,433 — — Reduction in accrued expenses and other liabilities for vesting of early exercised stock options 1,357 3,017 1,762 Tax withholdings on net settlement of restricted stock units, accrued but not yet paid 2,213 270 — Property and equipment included in accounts payable 1,056 1,863 — (1) Prior period amounts have been combined to conform to current presentation The accompanying notes are an integral part of these consolidated financial statements. 79 UiPath, Inc. Notes to Consolidated Financial Statements 1 Organization and Description of Business UiPath, Inc. (the “Company,” “we,” “us,” or “our”) was incorporated in Delaware in June 2015 and is headquartered in New York, New York. Our end-to-end automation platform, the UiPath Business Automation Platform, offers a robust set of capabilities that allows our customers to discover opportunities for automation, automate using a digital workforce that seamlessly collaborates with humans, and operate a mission critical automation program at scale. We have legal presence in 32 countries, with our principal operations in the U.S. , Romania, and Japan. 2 Summary of Significant Accounting Policies Basis of Presentation The consolidated financial statements have been prepared in accordance with U.S. GAAP and include the financial statements of UiPath, Inc. and its subsidiaries in which we hold a controlling financial interest. Intercompany transactions and accounts have been eliminated in consolidation. Fiscal Year Our fiscal year ends on January 31. References to fiscal years 2023, 2022, and 2021 refer to the fiscal years ended January 31, 2023, 2022, and 2021, respectively. Stock Split On July 9, 2020, we effected a three -for-one stock split of our outstanding common stock and convertible preferred stock, without any change in the par value per share. All information related to common stock, convertible preferred stock, equity awards, and net loss per share presented in our consolidated financial statements and the accompanying notes reflects the impact of this stock split. Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts of assets and liabilities at the balance sheet date and the amounts of revenue and expenses reported during the period. We evaluate estimates based on historical and anticipated results, trends, and various other assumptions. Such estimates include, but are not limited to, certain aspects of revenue recognition, estimated expected period of benefit for deferred contract acquisition costs, allowance for credit losses, fair value of financial assets and liabilities, fair value of acquired assets and assumed liabilities, useful lives of long-lived assets, capitalized software development costs, carrying value of operating lease ROU assets and operating lease liabilities, incremental borrowing rates for operating leases, amount of stock-based compensation expense including determination of fair value of common stock prior to our IPO, timing and amount of contingencies, costs related to our restructuring actions, uncertain tax positions, and valuation allowance for deferred income taxes. Actual results could differ from these estimates and assumptions. Foreign Currency The functional currency of our non-U.S. subsidiaries is the local currency. Asset and liability balances denominated in non-U.S. dollar currencies are translated into U.S. dollars using period-end exchange rates, while revenue and expenses are translated using the average monthly exchange rates. Differences are included in stockholders’ equity as a component of accumulated other comprehensive income. Financial assets and liabilities denominated in currencies other than the functional currency are recorded at the exchange rate at the time of the transaction and subsequent gains and losses related to changes in the foreign currency are included in other income (expense), net in the consolidated statements of operations. For fiscal years 2023, 2022 and 2021, we 80 UiPath, Inc. Notes to Consolidated Financial Statements recognized transaction (losses) gains of $( 0.5 ) million, $( 17.2 ) million, and $ 22.4 million, respectively, excluding the impact of foreign currency forward contracts, which are discussed below. Derivative Financial Instruments From time to time, we use derivative financial instruments, such as foreign currency forward contracts, to manage foreign currency exposures. We account for our derivative instruments as either assets or liabilities and carry them at fair value. These foreign currency contracts are not designated and do not qualify as hedging instruments, as defined by ASC 815, Derivatives and Hedging . Our foreign currency forward contract was terminated on January 28, 2022. We did not have foreign currency forward contracts during fiscal year 2023. We record changes in the fair value of these derivatives as a component of other income (expense), net in the consolidated statements of operations. Net gains (losses) associated with foreign currency forward contracts were zero , $ 8.3 million and $( 4.0 ) million for fiscal years 2023, 2022 and 2021, respectively. Concentration of Risks Financial instruments that potentially subject us to significant concentrations of credit risk consist principally of cash and cash equivalents, marketable securities and accounts receivable. We maintain our cash balance at financial institutions that management believes are high-credit, quality financial institutions, where deposits exceed the FDIC limits. As of January 31, 2023 and 2022, 98 % and 96 % of our cash and cash equivalents were concentrated in the U. S . , EU countries, and Japan, respectively. We extend differing levels of credit to customers based on creditworthiness, do not require collateral deposits, and when necessary maintain reserves for potential credit losses based upon the expected collectability of accounts receivable. We manage credit risk related to our customers by performing periodic evaluations of creditworthiness and applying other credit risk monitoring procedures. Significant customers are those which represent 10% or more of our total revenue for the period or accounts receivable at the balance sheet date. For fiscal years 2023, 2022, and 2021, no single customer accounted for 10% or more of our total revenue. As of January 31, 2023 and 2022, no single customer accounted for 10% or more of our accounts receivable. Fair Value of Financial Instruments We utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. We determine fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels: Level 1—Quoted prices in active markets for identical assets or liabilities that we can access at the measurement date. Level 2—Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, such as: • quoted prices for similar assets or liabilities in active markets; • quoted prices for identical or similar assets or liabilities in markets that are not active; or • inputs other than quoted prices that are observable or can be corroborated by observable market data. Level 2 inputs must be observable for substantially the full term of the asset or liability. Level 3—Unobservable inputs for the asset or liability that are supported by little or no market activity and that are significant to the fair value. Financial instruments consist of cash equivalents, marketable securities, accounts receivable, derivative financial instruments, and accounts payable. Marketable securities and derivative instruments are recorded at fair 81 UiPath, Inc. Notes to Consolidated Financial Statements value. Cash equivalents, accounts receivable and accounts payable are recorded at their carrying value, which approximates fair value due to the short time to the expected receipt or payment date. Cash and Cash Equivalents We consider all highly liquid investments purchased with original maturity dates of three months or less to be cash equivalents. Marketable Securities Our marketable securities consist of corporate bonds, municipal bonds, agency bonds, treasury bills and commercial paper with original maturity dates of more than three months from the date of purchase. We determine the appropriate classification of our marketable securities at the time of purchase and reevaluate such designation at each balance sheet date. We have classified and accounted for our marketable securities as available-for-sale securities based on our intentions with regard to these instruments and we classify them as current or non-current assets in the consolidated balance sheets based on their stated maturity dates. The fair value of available-for-sale marketable securities is remeasured each reporting period. Any premiums and discounts are amortized or accreted over the life of the related available-for-sale security as an adjustment to yield. Interest income is recognized when earned. Unrealized gains and losses on marketable securities are reported as a separate component of accumulated other comprehensive income on the consolidated balance sheets until realized. We evaluate an available-for-sale debt security for impairment if the estimated fair value is below its amortized cost basis. We consider our intent to sell the security or whether it is more likely than not that we will be required to sell the security before recovery of its amortized basis. If either of these conditions exist, the debt security’s amortized cost basis is written down to fair value, with the change recognized in other income (expense), net in the consolidated statements of operations. If neither of these conditions are present, we evaluate whether unrealized losses have resulted from a credit loss or other factors. To determine whether a decline in value is related to credit loss, we evaluate, among other factors, the extent to which the fair value is less than the amortized cost basis and any adverse conditions specifically related to an issuer of a security or its industry. Credit related unrealized losses are recognized as an allowance on the consolidated balance sheets with a corresponding charge to other income (expense), net in the consolidated statements of operations. As of January 31, 2023, we have not recorded any allowance for credit losses related to our available-for-sale marketable securities. Accounts Receivable and Allowance for Credit Losses Accounts receivable consist of amounts billed and currently due from customers, which are subject to collection risk. Our accounts receivable are reduced by an allowance for credit losses. This allowance contemplates estimated losses resulting from the inability of our customers to make required payments. It is an estimate and is regularly evaluated for adequacy by taking into consideration a combination of factors such as historical write-off experience, credit quality of the customer, age of the receivable balance, current economic conditions and forecasts of future economic conditions, and projections of future collections. We write off accounts receivable when they are determined to be uncollectible. We have not experienced significant credit losses from accounts receivable. The allowance for credit losses was $ 2.7 million and $ 2.6 million as of January 31, 2023 and 2022, respectively. Credit loss expense was $ 1.2 million, $ 0.7 million, and $ 2.2 million for fiscal years 2023, 2022, and 2021, respectively. 82 UiPath, Inc. Notes to Consolidated Financial Statements Property and Equipment, Net Property and equipment are recorded at historical cost, less accumulated depreciation. Property and equipment are depreciated on a straight-line basis over the estimated useful lives of the assets. Useful lives by asset category are as follows: Asset Category Estimated Useful Life Computer and equipment 1 to 2 years Furniture and fixtures 2 to 9 years Leasehold improvements Shorter of remaining lease term or estimated useful life ( 1 to 15 years) Internal-Use Software Pursuant to ASC 350-40, Internal Use Software , we capitalize costs incurred to implement cloud computing arrangements that are service contracts and costs incurred to develop internal-use software, which has historically included our SaaS products. ASC 350-40 prescribes capitalization of costs incurred during the application development stage, costs incurred to develop or obtain software that allows for access to or conversion of old data by new systems, and costs incurred in connection with upgrades and enhancements to internal-use software if it is probable that such expenditures will result in additional functionality. These capitalized costs exclude training costs, project management costs, and data migration costs. We evaluate our long-lived assets, including these capitalized costs, for indicators of possible impairment when events or changes in circumstances indicate the carrying amount of an asset or asset group may not be recoverable. Beginning in the fourth quarter of fiscal 2022, we began to broadly market on-premises versions of certain of our SaaS products, thereby establishing a pattern of marketing internal-use software and a rebuttable presumption that we intend to market any SaaS products we develop. As a result, our ongoing and future SaaS projects must be accounted for under ASC 985-20, Costs of Software to be Sold, Leased or Marketed, which is discussed below under "Software Development Costs." Costs previously capitalized under ASC 350-40 in connection with development of our SaaS products are amortized on a straight-line basis over the product’s estimated useful life of five years and are included in cost of subscription services revenue on the consolidated statements of operations. Capitalized costs include salaries, benefits, and stock-based compensation charges for employees that are directly involved in developing our SaaS products. These capitalized costs are included in other assets, non-current on the consolidated balance sheets. Gross capitalized internal-use software development costs were $ 7.5 million and $ 10.1 million as of January 31, 2023 and 2022, respectively. Amortization expense was $ 1.3 million, $ 1.2 million, and $ 0.5 million for fiscal years 2023, 2022, and 2021, respectively. Accumulated amortization was $ 3.0 million and $ 1.7 million as of January 31, 2023 and 2022, respectively. Capitalized costs related to the implementation of cloud computing arrangements that are service contracts are amortized on a straight-line basis over the terms of the associated hosting arrangements and are recorded under operating expenses in the same line item on the consolidated statements of operations as the associated hosting arrangement fees. These gross capitalized costs were $ 2.2 million and $ 2.3 million as of January 31, 2023 and 2022, respectively, and are recorded in other assets, non-current on our consolidated balance sheets. Related amortization expense was $ 1.0 million, $ 0.9 million and $ 0.4 million for fiscal years 2023, 2022, and 2021, respectively. Accumulated amortization was $ 2.2 million and $ 1.2 million as of January 31, 2023 and 2022, respectively. Software Development Costs We account for costs incurred to develop software to be licensed in accordance with ASC 985-20, Costs of Software to be Sold, Leased or Marketed . These costs include internal development costs and license fees paid to third parties for their software that is integrated into our products. Beginning in the fourth quarter of fiscal year 2022, we also account for costs incurred to develop our SaaS products in accordance with ASC 985-20. This guidance requires that all costs to establish technological feasibility be expensed as they are incurred. Technological feasibility is established when the working model is complete. Costs incurred subsequent to establishing 83 UiPath, Inc. Notes to Consolidated Financial Statements technological feasibility are capitalized until the product is available for general release to customers, at which point they are amortized on a product-by-product basis. Management evaluates the useful life of these assets on an annual basis and tests for impairment whenever events or changes in circumstances occur that could impact their recoverability. Our internal development costs are amortized over the estimated useful life of the software, which is five years , on a straight-line basis, and are included in cost of licenses revenue or cost of subscription services revenue in the consolidated statements of operations based on the nature of the underlying product. Capitalized costs include salaries, benefits, and stock-based compensation charges for employees that are directly involved in developing our products. Capitalized costs are included in other assets, non-current on the consolidated balance sheets. Gross capitalized software development costs were $ 4.3 million as of both January 31, 2023 and 2022, and amortization expense was $ 0.9 million, $ 0.7 million, and $ 0.5 million for fiscal years 2023, 2022 and 2021, respectively. Accumulated amortization was $ 2.1 million and $ 1.2 million as of January 31, 2023 and 2022, respectively. Capitalized license fees paid to third parties are amortized over the license term at the greater of a straight-line or a consumption basis and are included in cost of licenses revenue or cost of subscription services revenue in the consolidated statements of operations based on the nature of the underlying third-party product. Capitalized costs are included in other assets, non-current on the consolidated balance sheets. Gross capitalized license fees were $ 22.4 million and $ 16.3 million as of January 31, 2023 and 2022, respectively, and amortization expense was $ 7.3 million, $ 7.5 million, and $ 4.1 million for fiscal years 2023, 2022 and 2021, respectively. Accumulated amortization was $ 17.6 million and $ 10.3 million as of January 31, 2023 and 2022, respectively. Leases We determine if an arrangement contains a lease at inception based on whether there is an identified asset and whether we control the use of the identified asset throughout the period of use. We classify leases as either financing or operating leases. We do not have any financing leases. Operating lease liabilities represent our obligation to make payments arising from a lease. Operating lease liabilities are recognized at the lease commencement date based on the present value of future lease payments over the lease term. The present value of lease payments is discounted based on our incremental borrowing rate unless the rate implicit in the lease is readily determinable, which generally is not the case. We estimate our incremental borrowing rate based on information available at the lease commencement date for collateralized borrowings with a similar term, amount, borrower creditworthiness, and economic environment. Operating lease ROU assets represent our right to use an underlying asset for the lease term. Our operating lease ROU assets are measured based on the corresponding operating lease liability adjusted for (1) payments made to the lessor at or before the commencement date, (2) initial direct costs incurred, and (3) tenant incentives under the lease. Options to renew or terminate the lease are recognized as part of our operating lease ROU assets and operating lease liabilities when it is reasonably certain the options will be exercised. We do not allocate consideration between lease and non-lease components, such as maintenance costs, as we have elected to not separate lease and non-lease components for any leases within our existing classes of assets. Operating lease expense for fixed lease payments is recognized on a straight-line basis over the lease term. Variable lease payments for real estate taxes, insurance, maintenance, and utilities, which are generally based on our pro-rata share of the total property, are expensed as incurred and are not included in the measurement of the operating lease ROU assets or operating lease liabilities. In addition, we do not recognize ROU assets and lease liabilities for short-term leases which have a lease term of 12 months or less and do not include an option to purchase the underlying asset that we are reasonably certain to exercise. Lease cost for short-term leases is recognized on a straight-line basis over the lease term. Business Acquisitions Assets acquired and liabilities assumed in a business combination are recorded at their respective fair values at the date of the acquisition. Determination of the fair value of assets acquired and liabilities assumed relies on 84 UiPath, Inc. Notes to Consolidated Financial Statements management judgments and often involves the use of estimates and assumptions, including but not limited to assumptions about future cash inflows and outflows, discount rates, and lives of intangible and other assets. Any excess of the purchase price over the fair value of the net assets acquired is recognized as goodwill. During the one-year measurement period following an acquisition, we may record adjustments to the fair value of the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion of the measurement period, subsequent adjustments, if any, are recorded in our consolidated statements of operations. Acquisition costs, such as legal and consulting fees, are expensed as incurred. Goodwill and Intangible Assets Goodwill represents the excess of the purchase price in a business acquisition over the fair value of the net assets acquired and is not amortized. We test goodwill for impairment at the reporting unit level at least annually in November and may test more frequently when events or changes in circumstances indicate that the carrying value may not be recoverable. At the time of testing, if we determine that it is more likely than not that the estimated fair value of our single reporting unit is less than its carrying value, a quantitative assessment is performed by comparing the fair value of the reporting unit with its carrying value. In order to make this determination, we may make an initial assessment of qualitative factors, or may proceed directly to the quantitative impairment test. There were no impairment charges to goodwill during fiscal years 2023, 2022, and 2021. Acquired intangible assets consist primarily of developed technology and customer relationships resulting from our business acquisitions. Intangible assets are recorded at fair value on the date of acquisition and are amortized over their estimated useful lives. Impairment of Long-Lived Assets We evaluate our long-lived assets for indicators of possible impairment when events or changes in circumstances suggest that the carrying amount of an asset or asset group may not be recoverable. We assess recoverability by comparing the carrying amount of such asset or asset group to the net undiscounted future cash flows we expect the asset or asset group to generate. If the carrying amount of an asset or asset group exceeds the related undiscounted cash flows, it is considered to be impaired and an impairment charge is recognized for the amount by which the carrying value of the asset or asset group exceeds its fair value. There were no events or changes in circumstances during fiscal years 2023 and 2022 which indicated potential impairment of our long-lived assets. During fiscal year 2020, we concluded that the carrying values of long-lived assets related to our Houston office, including operating lease ROU assets, leasehold improvements, and furniture and fixtures, exceeded their estimated fair values as the result of a restructuring plan. Revenue Recognition We derive revenue from the sale of: (1) software licenses for use of our proprietary software and related maintenance and support; (2) the right to access certain software products we host (i.e., SaaS); and (3) professional services. For certain of our products that are available both on-premise and via SaaS, we sell a single offering that allows customers the choice of either deployment option throughout the term of contract. These Flex Offerings are comprised of three types of performance obligations: term license, maintenance and support, and SaaS. In accordance with ASC 606, Revenue from Contracts with Customers , revenue is recognized when or as a customer obtains control of the promised goods and services. The amount of revenue recognized reflects the consideration to which we expect to be entitled in exchange for those goods or services. To achieve the core principle of ASC 606, we apply the following five steps: 1. Identification of the contract, or contracts, with the customer; 2. Identification of the performance obligations in the contract; 3. Determination of the transaction price; 85 UiPath, Inc. Notes to Consolidated Financial Statements 4. Allocation of the transaction price to the performance obligations in the contract; and 5. Recognition of the revenue when, or as, a performance obligation is satisfied. Our significant performance obligations and our application of ASC 606 to each of those performance obligations are discussed in further detail below. Payment terms and conditions vary by contract type, although terms generally require payment within 30 to 60 days of the invoice date. In certain arrangements, we receive payment from a customer either before or after the performance obligation has been satisfied; however, our contracts do not contain a significant financing component. The primary purpose of our invoicing terms is to provide customers with simplified and predictable ways of purchasing our products and services, not to receive financing from our customers or to provide customers with financing. We apply the practical expedient in ASC 606 and do not evaluate payment terms of one year or less for the existence of a significant financing component. Revenue is recorded net of sales tax. We generally do not offer a right of refund in our contracts. Licenses We primarily sell term licenses (including the term license portion of Flex Offerings), which provide customers the right to use software for a specified period of time. Revenue for licenses is recognized at the point in time at which the customer is able to use and benefit from the software, which is generally upon delivery to the customer or upon commencement of the renewal term. For licenses revenue, we generally invoice when the license(s) are provided or annually at contract anniversary. Subscription Services We generate subscription services revenue through the provision of: (1) maintenance and support, which include technical support and unspecified updates and upgrades on a when-and-if-available basis for our licenses, and (2) SaaS products, including those sold as part of our Flex Offerings. Maintenance and support represent stand-ready obligations for which revenue is recognized ratably over the term of the arrangements. For maintenance and support, we generally invoice when the associated license(s) are provided or annually at contract anniversary. Customers do not have the contractual right to take possession of the software underlying our SaaS products. Therefore, SaaS products are stand-ready obligations to provide access to our products, and the related revenue is recognized ratably over the contractual term of the arrangement, as control of the services is transferred to the customer. We generally invoice for our SaaS products when the customer is provided access and may begin using the SaaS products or annually at contract anniversary. Professional Services and Other Professional services and other revenue consists of fees associated with professional services for process automation, customer education, and training services. Our professional services contracts are structured on a time and materials or fixed price basis, and the related revenue is recognized as the services are rendered. We use a cost-based input method as the measure of progress toward satisfying the performance obligation. For professional services, we invoice as the services are provided or in advance. Contracts with Multiple Performance Obligations Most of our contracts with customers contain multiple performance obligations. The transaction price is allocated to the separate performance obligations on a relative SSP basis. Whenever possible, we allocate the transaction price based on observable SSP, which is the price of the same good or service in standalone sales to similar customers in similar circumstances. If observable SSP is not available, we estimate the SSP using data that may include historical prices, discounting practices, list prices, cost data, and other observable inputs. Our SSP reflects the amount we would charge for each performance obligation if it were sold separately in standalone sales to similar customers in similar circumstances in similar geographies. 86 UiPath, Inc. Notes to Consolidated Financial Statements Consideration Payable to Customers From time to time, we enter into arrangements wherein we sell our products and services to a customer or partner while also having made commitments to purchase products or services from that customer or partner or make investments to enable that customer or partner to create or enhance their RPA practice. These commitments are treated as consideration payable to a customer, and therefore as a reduction to the transaction price, when it is determined that the payment is not in exchange for a distinct good or service that is priced at fair market value. Modifications We frequently modify contracts to offer customers additional products or services. The additional products and services are generally determined to be distinct from those products or services transferred to the customer before the modification. We evaluate whether the price for the additional products and services reflects the SSP in order to determine the appropriate modification model to apply. If the price reflects SSP, the purchase of additional products and services is accounted for as a separate contract. If the price does not reflect SSP, we account for the modification as the termination of the existing contract and the creation of a new contract. Contract Balances Contract assets consist of unbilled accounts receivable related to goods or services that have been transferred to customers but whose payment is contingent upon future performance. Contract liabilities consist of deferred revenue. Revenue is deferred when we invoice in advance of performance under a contract. Often, certain performance obligations under a contract will be in a contract asset position while other performance obligations under the same contract are in a contract liability position. Contract assets and liabilities pertaining to the same contract are netted in the consolidated balance sheets. Deferred Contract Acquisition Costs We defer sales commissions that are incremental to the acquisition of customer contracts. These costs are recorded as deferred contract acquisition costs on the consolidated balance sheets. We determine whether costs should be deferred based on the terms of our sales compensation plans and whether the sales commissions are incremental to a customer contract (i.e. would not have occurred absent the customer contract). Under our current sales compensation plan, commissions for renewals of subscription contracts are not commensurate with the commissions paid on the initial contract. We allocate deferred contract acquisition costs to performance obligations in proportion to the transaction price allocated to each performance obligation and amortize the costs accordingly. Commissions allocated to licenses and license renewals are expensed at the time the corresponding licenses revenue is recognized. Commissions allocated to subscription services are capitalized and amortized on a straight-line basis over a period of five years for initial contracts, reflecting our estimate of the expected period that we will benefit from those commissions. We determine the period of benefit by taking into consideration the length of our customer contracts, retention rate, the technology lifecycle, and other factors. Commissions paid on renewal contracts that are allocated to subscription services are capitalized and amortized over the renewal term. We apply the practical expedient in ASC 340-40, Other Assets and Deferred Costs to expense costs as incurred for costs to obtain a contract with a customer when the amortization period would have been one year or less. We periodically review deferred contract acquisition costs to determine whether events or changes in circumstances have occurred that could impact the period of benefit. There were no impairment losses recorded for fiscal years 2023, 2022, and 2021. During fiscal year 2021, sales commissions for renewal of a subscription contract were commensurate with the sales commissions paid for the acquisition of the initial subscription contract because there was minimal to no difference in sales commission rates between new and renewal contracts. Sales commissions paid upon the initial acquisition of a contract were amortized over the contract term, while sales commissions paid related to renewal contracts were amortized over the renewal term. The change to the sales compensation plan for fiscal 2022 was accounted for as a change in accounting estimate, of which the impact to fiscal year 2021 was $ 9.2 million, resulting 87 UiPath, Inc. Notes to Consolidated Financial Statements from the reversal of accrued sales commission of $ 14.6 million partially offset by the reversal of deferred contract acquisition cost of $ 5.4 million. Cost of Revenue Licenses Cost of licenses revenue consists of all direct costs to deliver our licenses to customers, amortization of software development costs related to our licenses, and amortization of acquired developed technology. Subscription Services Cost of subscription services revenue primarily consists of personnel-related expenses of our customer support and technical support teams, including salaries and bonuses, stock-based compensation expense, and employee benefit costs. Cost of subscription services revenue also includes third-party consulting services, hosting costs related to our SaaS products, amortization of acquired developed technology and capitalized development costs related to SaaS products, and allocated overhead. Overhead is allocated to cost of subscription services revenue based on applicable headcount. We recognize these expenses as they are incurred. Professional Services and Other Cost of professional services and other revenue primarily consists of personnel-related expenses of our professional services team, including salaries and bonuses, stock-based compensation expense, and employee benefit costs. Cost of professional services and other revenue also includes third-party consulting services and allocated overhead. We recognize these expenses as they are incurred. Sales and Marketing Sales and marketing expenses consist primarily of personnel-related expenses associated with our sales and marketing employees and related sales support teams, including salaries and bonuses, stock-based compensation expense, and employee benefit costs, sales and partner commissions, marketing events, advertising costs, travel, trade shows, other marketing materials, and allocated overhead. Advertising costs are expensed as incurred and are included in sales and marketing expenses. Such costs were $ 41.5 million, $ 43.3 million, and $ 21.3 million for fiscal years 2023, 2022, and 2021, respectively. Research and Development Research and development expenses consist primarily of personnel-related expenses, including salaries and bonuses, stock-based compensation expense, and employee benefits costs, for our research and development employees, and allocated overhead. Research and development expenditures are expensed as incurred. General and Administrative General and administrative expenses consist primarily of personnel-related expenses, including salaries and bonuses, stock-based compensation expense, and employee benefits costs, associated with our finance, legal, human resources, compliance, and other administrative employees, as well as accounting and legal professional services fees, other corporate-related expenses, and allocated overhead. Stock-Based Compensation We recognize stock-based compensation expense in accordance with the provisions of ASC 718, Compensation—Stock Compensation . ASC 718 requires the measurement and recognition of compensation expense for all stock-based awards made to employees, directors, and non-employees based on the grant date fair value of the awards. The fair value of each stock option is determined using the Black-Scholes pricing model. The fair value of each RSU and RSA is determined based on the fair value of our Class A common stock on the grant date. The fair value of ESPP awards is determined using the Black-Scholes pricing model. 88 UiPath, Inc. Notes to Consolidated Financial Statements Stock-based compensation expense is included in cost of revenue and operating expenses within our consolidated statements of operations based on the expense classification of the individual earning the award. The fair value of awards with only service-based vesting conditions is recognized as expense over the requisite service period on a straight-line basis. The fair value of awards that contain both service-based and performance-based vesting conditions, such as RSUs that were granted under the 2018 Plan before our IPO, are expensed using the accelerated attribution method once it is probable that the performance condition will be met. The fair value of ESPP awards is recognized over the relevant offering period on a straight-line basis. We account for forfeitures as they occur. Income Taxes Pursuant to ASC 740, Income Taxes , we account for our income taxes using the asset and liability method, whereby DTAs and DTLs are recognized based on temporary differences between the bases used for financial reporting and income tax reporting purposes. Deferred income taxes are provided based on the enacted tax rates and laws that will be in effect at the time such temporary differences are expected to reverse. A valuation allowance is provided for DTAs if it is more likely than not that we will not realize those tax assets through future operations. ASC 740 prescribes a two-step approach to recognizing and measuring uncertain tax positions: (1) evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any; and (2) measure the tax benefit as the largest amount which is more likely than not of being realized and effectively settled. We consider many factors when evaluating and estimating tax positions and tax benefits, which may require periodic adjustments, and which may not accurately reflect actual outcomes. We recognize any interest and penalties related to uncertain tax positions as a component of provision for (benefit from) income taxes in the consolidated statements of operations. Net Loss Per Share Attributable to Common Stockholders Basic and diluted net loss per share is calculated by dividing net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Net loss is allocated between Class A and Class B common stock based on the weighted-average shares outstanding for each class. Diluted net loss per share is the same as basic net loss per share because potentially dilutive common stock equivalents are anti-dilutive when in a net loss position. In a period of net income, diluted net income per share would be calculated by giving effect to all potentially dilutive securities outstanding for the period (including unvested RSUs and unexercised stock options under our equity incentive plans, outstanding purchase periods under our ESPP, unvested restricted stock awards and early exercised options subject to repurchase, and returnable common stock issued in connection with business acquisitions) using the treasury stock method. For past periods in which our convertible preferred stock was outstanding, we computed net income or loss per share using the two-class method. The two-class method requires income available to common stockholders for the period to be allocated between common stock and participating securities based upon their respective rights to receive dividends as if all income for the period had been distributed. We considered our convertible preferred stock to be a participating security, as holders had non-forfeitable dividend rights in the event of our declaration of a dividend for shares of common stock. Our convertible preferred stock did not contractually require holders to participate in our losses. As such, net loss for the relevant periods presented was not allocated to our convertible preferred stock. All potentially dilutive common stock equivalents were anti-dilutive in fiscal years 2023, 2022, and 2021, as we were in a net loss position for these periods. Geographic Information We operate as one segment. In May 2022, we adopted a Co-CEO model. Our Co-CEOs act together as our chief operating decision makers, and allocate resources and assess performance based upon financial information at the consolidated level. 89 UiPath, Inc. Notes to Consolidated Financial Statements The following table presents our long-lived assets other than financial instruments, net of accumulated depreciation and amortization, by geographic region (in thousands): As of January 31, 2023 2022 U.S. $ 212,727 $ 155,780 Romania 74,994 66,558 United Kingdom (1) 47,370 115 Netherlands 29,800 35,132 Rest of world (1) 21,466 16,541 Total long-lived assets $ 386,357 $ 274,126 (1) Prior period amounts have been expanded to conform to current period presentation Variable Interest Entity When we make an initial investment in or establish other variable interests in an entity, we determine whether that entity is considered a VIE , and, if so, whether we are the primary beneficiary of that VIE. The primary beneficiary of a VIE is a party that meets both of the following criteria: (1) it has the power to direct the activities that most significantly impact the economic performance of the VIE; and (2) it has the obligation to absorb losses or the right to receive benefits that could be potentially significant to the VIE. Periodically, we assess whether any change in our interest in or relationship with the entity affects our determination as to whether the entity is a VIE, and, if so, whether we are the primary beneficiary. We consolidate any VIE of which we are the primary beneficiary. If we are not the primary beneficiary of a VIE, we account for the investment or other variable interests in that VIE in accordance with the applicable accounting guidance. During the third quarter of fiscal 2022, we entered into an agreement whereby we have acquired a variable interest in a special purpose LLC owned by our Co-CEO Daniel Dines, that owns a specific aircraft. This arrangement allows us to use the aircraft, when available, for business purposes in the course of our normal operations at rates that approximate the cost of operating the aircraft but that do not exceed current market rates. We determined at the inception of this agreement that the LLC is a VIE. Our variable interest is limited to sharing cost savings; we do not have any obligation to fund losses of the LLC, do not have a minimum commitment related to our use of the aircraft, have not guaranteed the LLC's debt, and do not have any other involvement with the LLC. We have determined that the governance structure of the LLC does not allow us to direct the activities that would significantly impact its economic performance, such as approving terms or pricing associated with the chartering of the aircraft or participating in decision-making related to financing. As such, we are not the primary beneficiary of the LLC and accordingly do not consolidate it in our consolidated financial statements. Recently Adopted Accounting Pronouncements In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , to amend previous accounting guidance that required the measurement of all expected losses to be based on historical experience, current conditions, and reasonable and supportable forecasts. For trade receivables, contract assets, and other financial instruments, the new guidance requires us to use a forward-looking expected loss model that reflects probable losses, rather than the incurred loss model, for recognizing credit losses. We adopted ASU No. 2016-13 and all subsequent amendments on a modified retrospective basis on February 1, 2022, and the adoption did not have a material impact on our consolidated financial statements. In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740)—Simplifying the Accounting for Income Taxes , which is intended to simplify various aspects related to accounting for income taxes. ASU No. 2019-12 removes certain exceptions associated with (1) intraperiod tax allocations, (2) recognition of DTLs for equity method investments of foreign subsidiaries, and (3) the calculation of income taxes in an interim period when in a loss position within the framework of ASC 740. ASU No. 2019-12 also clarifies and amends existing guidance to encourage consistent application. We adopted the applicable provisions of ASU No. 2019-12 on a 90 UiPath, Inc. Notes to Consolidated Financial Statements modified retrospective basis on February 1, 2022, and the adoption did not have a material impact on our consolidated financial statements. In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805)—Accounting for Contract Assets and Contract Liabilities from Contracts with Customers , to amend the current accounting guidance in ASC 805 to require entities to apply ASC 606 to recognize and measure contract assets and contract liabilities acquired in a business combination. We early adopted ASU No. 2021-08 on a prospective basis on February 1, 2022, and the adoption did not have a material impact on our consolidated financial statements. 3 Revenue Recognition Disaggregation of Revenue The following table summarizes revenue by geographical region (dollars in thousands): Year Ended January 31, 2023 2022 2021 Amount Percentage of Revenue Amount Percentage of Revenue Amount Percentage of Revenue Americas (1) $ 529,060 50 % $ 430,326 48 % $ 260,016 43 % Europe, Middle East, and Africa 301,036 28 % 261,857 29 % 187,072 31 % Asia-Pacific (2) 228,485 22 % 200,069 23 % 160,555 26 % Total revenue $ 1,058,581 100 % $ 892,252 100 % $ 607,643 100 % (1) Revenue from the U.S. represented 46 %, 43 % and 39 % of our total revenues for fiscal years 2023, 2022, and 2021, respectively. (2) Revenue from Japan represented 10 %, 11 % and 14 % of our total revenues for fiscal years 2023, 2022, and 2021, respectively. Contract Balances Significant changes in our contract assets and deferred revenue balances during the periods presented were as follows (in thousands): Year Ended January 31, Contract Assets 2023 2022 Beginning balance $ 77,561 $ 36,306 Contract assets recognized during the year 74,265 77,714 Amounts transferred to accounts receivable from unbilled accounts receivable presented at the beginning of the year ( 74,831 ) ( 34,221 ) Translation adjustments ( 1,212 ) ( 2,238 ) Ending balance $ 75,783 $ 77,561 Contract assets, current $ 69,260 $ 74,831 Contract assets, non-current 6,523 2,730 Total contract assets $ 75,783 $ 77,561 91 UiPath, Inc. Notes to Consolidated Financial Statements Year Ended January 31, Deferred Revenue 2023 2022 Beginning balance $ 366,020 $ 272,403 Additions to deferred revenue during the year 1,145,584 952,177 Additions to deferred revenue from business acquisitions 173 3,640 Revenue recognized that was included in deferred revenue at the beginning of the period ( 297,355 ) ( 211,078 ) Revenue recognized that was not included in deferred revenue at the beginning of the period ( 687,603 ) ( 636,418 ) Translation adjustments ( 6,788 ) ( 14,704 ) Ending balance $ 520,031 $ 366,020 Deferred revenue, current $ 398,334 $ 297,355 Deferred revenue, non-current 121,697 68,665 Total deferred revenue $ 520,031 $ 366,020 Remaining Performance Obligations Our remaining performance obligations are comprised of licenses, subscription services, and professional services and other revenue not yet delivered. As of January 31, 2023, the aggregate amount of the transaction price allocated to remaining performance obligations was $ 894.0 million , which consists of both billed consideration in the amount of $ 520.0 million and unbilled consideration in the amount of $ 374.0 million that we expect to recognize as revenue. We expect to recognize 63 % of our remaining performance obligations as revenue in the next twelve months , and the remainder thereafter. Deferred Contract Acquisition Costs Our deferred contract acquisition costs are comprised of sales commissions that represent incremental costs to obtain customer contracts, and are determined based on sales compensation plans. The following table represents a rollforward of our deferred contract acquisition costs (in thousands): Year Ended January 31, 2023 2022 Beginning balance $ 130,150 $ 43,206 Additions to deferred contract acquisition costs 118,909 130,206 Amortization of deferred contract acquisition costs ( 59,826 ) ( 39,257 ) Translation adjustments ( 1,730 ) ( 4,005 ) Ending balance $ 187,503 $ 130,150 Deferred contract acquisition costs, current $ 49,887 $ 29,926 Deferred contract acquisition costs, non-current 137,616 100,224 Total deferred contract acquisition costs $ 187,503 $ 130,150 92 UiPath, Inc. Notes to Consolidated Financial Statements 4 Marketable Securities The following is a summary of our marketable securities (in thousands): As of January 31, 2023 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Commercial paper $ 62,470 $ — $ — $ 62,470 Treasury bills (1) 234,848 — ( 308 ) 234,540 Corporate bonds 46,684 — ( 198 ) 46,486 Municipal bonds 6,374 — ( 66 ) 6,308 Agency bonds 7,959 — ( 47 ) 7,912 Total marketable securities $ 358,335 $ — $ ( 619 ) $ 357,716 (1) Treasury bills with both amortized cost and estimated fair value of $ 10.0 million are included in cash and cash equivalents due to their original maturity of three months or less. As of January 31, 2022 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Commercial paper $ 15,343 $ — $ — $ 15,343 Corporate bonds 91,735 — ( 303 ) 91,432 Municipal bonds 9,197 — ( 32 ) 9,165 Total marketable securities $ 116,275 $ — $ ( 335 ) $ 115,940 As of January 31, 2023 and 2022, $ 2.9 million and $ 19.5 million, respectively, of our marketable securities had remaining contractual maturities of one year or more, and the remainder had contractual maturities of less than one year. As of January 31, 2023 and 2022, $ 3.5 million and zero , respectively, of interest receivable was included in prepaid expenses and other current assets on the consolidated balance sheets. The Company did not recognize an allowance for credit losses against interest receivable as of January 31, 2023. Unrealized losses during the period are a result of changes in market conditions. We do not believe that any unrealized losses are attributable to credit-related factors based on our evaluation of available evidence. To determine whether a decline in value is related to credit loss, we evaluate, among other factors: the extent to which the fair value is less than the amortized cost basis and any adverse conditions specifically related to an issuer of a security or its industry. 93 UiPath, Inc. Notes to Consolidated Financial Statements 5 Fair Value Measurement The following tables present our financial assets and liabilities measured at fair value on a recurring basis as of January 31, 2023 and 2022 (in thousands): As of January 31, 2023 Level 1 Level 2 Level 3 Total Financial Assets: Money market funds $ 319,801 $ — $ — $ 319,801 Treasury bills 9,968 — — 9,968 Total cash equivalents 329,769 — — 329,769 Commercial paper — 62,470 — 62,470 Treasury bills 234,540 — — 234,540 Corporate bonds — 46,486 — 46,486 Municipal bonds — 6,308 — 6,308 Agency bonds 7,912 — — 7,912 Total marketable securities 242,452 115,264 — 357,716 Total $ 572,221 $ 115,264 $ — $ 687,485 As of January 31, 2022 Level 1 Level 2 Level 3 Total Financial Assets: Money market funds $ 1,056,555 $ — $ — $ 1,056,555 Total cash equivalents 1,056,555 — — 1,056,555 Commercial paper — 15,343 — 15,343 Corporate bonds — 91,432 — 91,432 Municipal bonds — 9,165 — 9,165 Total marketable securities — 115,940 — 115,940 Total $ 1,056,555 $ 115,940 $ — $ 1,172,495 Our money market funds, treasury bills and agency bonds are classified within Level 1 of the fair value hierarchy because they are valued based on quoted market prices in active markets. We classify commercial paper, corporate bonds, and municipal bonds as Level 2 because they are valued using inputs other than quoted prices which are directly or indirectly observable in the market, including readily-available pricing sources for the identical underlying security which may not be actively traded. None of our financial instruments were classified as Level 3 as of January 31, 2023 and 2022. 6 Business Acquisitions Fiscal Year 2023 Acquisitions Re:infer On July 29, 2022, we acquired all of the outstanding capital stock of Re:infer , a natural language processing company focused on unstructured documents and communications. Re:infer uses machine learning technology to mine context from communication messages and transform them into actionable data. With this acquisition, we gained technology and an experienced team which we believe will accelerate our technology roadmap, expand the breadth of our current AI-powered automation capabilities, and unlock new automation opportunities for our customers. The Re:infer acquisition was accounted for as a business combination. 94 UiPath, Inc. Notes to Consolidated Financial Statements The total purchase consideration for the acquisition of Re:infer was $ 44.6 million, consisting of the following: Cash paid at closing $ 30,117 Fair value of Class A common stock issued at closing ( 0.2 million shares) 2,965 Loan note to be paid on first anniversary of closing (included in accrued expenses and other current liabilities) 5,863 Loan note to be paid on second anniversary of closing (included in other liabilities, non-current) 5,570 Working capital adjustment 66 Total $ 44,581 At closing, we also issued an additional 0.4 million shares of Class A common stock that will be released to sellers in equal installments on the first, second, and third anniversaries of the closing date, subject to certain employment-related clawback provisions. The aggregate fair value of these shares totaled $ 7.6 million and will be expensed as compensation for post-acquisition services over the three years following the acquisition date. The following table summarizes the fair values of the assets acquired and liabilities assumed as of the acquisition date (in thousands): July 29, 2022 Net tangible assets $ 300 Intangible assets 13,100 Goodwill 34,351 Total assets acquired 47,751 Deferred tax liabilities assumed ( 3,170 ) Total $ 44,581 The following table sets forth the identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition: Fair Value (in thousands) Estimated Useful Life (in years) Developed technology $ 10,000 5.0 Customer relationships 3,100 3.0 Total $ 13,100 The acquisition of Re:infer generated goodwill of $ 34.4 million representing expected synergies and acquired skilled workforce. None of this goodwill is deductible for tax purposes. During fiscal year 2023, we incurred transaction costs in connection with the Re:infer acquisition of $ 1.1 million, which are included in general and administrative expenses in the consolidated statements of operations. Fiscal Year 2022 Acquisitions Cloud Elements On March 19, 2021, we acquired all of the outstanding capital stock of Cloud Elements , the provider of an API integration platform for SaaS application providers and the digital enterprise. The acquisition of Cloud Elements brought technology and an experienced team which we believe accelerates our technology roadmap in areas such as native integrations and system event automation triggers. The Cloud Elements acquisition was accounted for as a business combination. 95 UiPath, Inc. Notes to Consolidated Financial Statements The total purchase consideration for the acquisition of Cloud Elements was $ 36.1 million, which consisted of the following (in thousands): Amount Cash $ 5,660 Fair value of common stock 30,467 Total $ 36,127 The following table summarizes the fair values of the assets acquired and liabilities assumed as of the acquisition date (in thousands): March 19, 2021 Cash $ 162 Accounts receivable 743 Other assets 1,996 Intangible assets 11,200 Goodwill 27,686 Total assets acquired 41,787 Total liabilities assumed ( 5,660 ) Total $ 36,127 The following table sets forth the identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition: Fair Value (in thousands) Estimated Useful Life (in years) Developed technology $ 6,600 5.0 Customer relationships 4,500 3.0 Trade name 100 3.0 Total $ 11,200 The acquisition of Cloud Elements generated $ 27.7 million in goodwill due to the synergies expected and the skilled workforce acquired. None of this goodwill is deductible for tax purposes. We incurred transaction costs in connection with the Cloud Elements acquisition of $ 1.1 million. Of these transaction costs, $ 0.9 million was included in general and administrative expenses in the consolidated statement of operations for fiscal year 2022 , and the remainder was recognized in fiscal year 2021. 7 Intangible Assets and Goodwill Intangible Assets, Net Intangible assets, net consisted of the following as of January 31, 2023 (dollars in thousands): Intangible Assets, Gross Accumulated Amortization Intangible Assets, Net Weighted-Average Remaining Useful Life (Years) Developed technology $ 28,517 $ ( 11,095 ) $ 17,422 3.5 Customer relationships 8,174 ( 3,601 ) 4,573 2.0 Trade names and trademarks 272 ( 233 ) 39 1.2 Other intangibles 1,231 ( 255 ) 976 7.7 Total $ 38,194 $ ( 15,184 ) $ 23,010 96 UiPath, Inc. Notes to Consolidated Financial Statements Intangible assets, net consisted of the following as of January 31, 2022 (dollars in thousands): Intangible Assets, Gross Accumulated Amortization Intangible Assets, Net Weighted-Average Remaining Useful Life (Years) Developed technology $ 18,627 $ ( 6,584 ) $ 12,043 3.4 Customer relationships 5,010 ( 1,479 ) 3,531 2.2 Trade names and trademarks 274 ( 185 ) 89 1.9 Other intangibles 1,231 ( 77 ) 1,154 8.3 Total $ 25,142 $ ( 8,325 ) $ 16,817 We record amortization expense associated with acquired developed technology in cost of licenses revenue and cost of subscription services revenue, trade names and trademarks in sales and marketing expense, customer relationships in sales and marketing expense, and other intangibles in general and administrative expense in the consolidated statements of operations. Amortization expense of intangible assets was $ 6.9 million , $ 5.1 million and $ 2.6 million for fiscal years 2023, 2022, and 2021, respectively. The expected future amortization expense related to intangible assets as of January 31, 2023 was as follows (in thousands): Year Ended January 31, Amount 2024 $ 8,560 2025 6,594 2026 4,030 2027 2,389 2028 1,134 Thereafter 303 Total $ 23,010 Goodwill Changes in the carrying amount of goodwill were as follows during the periods presented (in thousands): Carrying Amount Balance as of January 31, 2021 $ 28,059 Acquisition of Cloud Elements 27,686 Effect of foreign currency translation ( 2,181 ) Balance as of January 31, 2022 53,564 Acquisition of Re:infer 34,351 Effect of foreign currency translation 95 Balance as of January 31, 2023 $ 88,010 8 Operating Leases Our operating leases consist of real estate and vehicles and have remaining lease terms of one year to 15 years. For purposes of calculating operating lease liabilities, lease terms may be deemed to include options to extend the lease when it is reasonably certain that we will exercise those options. Our operating lease arrangements do not contain any material restrictive covenants or residual value guarantees. 97 UiPath, Inc. Notes to Consolidated Financial Statements Lease costs are presented below (in thousands): Year Ended January 31, 2023 2022 2021 Operating lease cost $ 11,675 $ 8,875 $ 7,266 Short-term lease cost 5,895 4,387 8,853 Variable lease cost 1,418 582 735 Sublease income (1) ( 2,129 ) ( 355 ) — Total lease cost $ 16,859 $ 13,489 $ 16,854 (1) Included in other income (expense), net in the consolidated statements of operations Supplemental balance sheet information related to leases is as follows (in thousands): As of January 31, 2023 2022 Assets: Operating lease right-of-use assets $ 52,052 $ 48,953 Liabilities: Accrued expenses and other current liabilities $ 6,997 $ 1,552 Operating lease liabilities, non-current 56,442 49,843 Total operating lease liabilities $ 63,439 $ 51,395 Supplemental cash flow information related to operating leases was as follows for the periods presented (in thousands): Year Ended January 31, 2023 2022 2021 Cash paid for amounts included in the measurement of operating lease liabilities $ 6,702 $ 9,358 $ 7,741 Operating lease ROU assets obtained in exchange for new operating lease liabilities $ 11,511 $ 35,262 $ 126 The following table represents the weighted-average remaining lease term and discount rate for the periods presented: Year Ended January 31, 2023 2022 Weighted-average remaining lease term (years) 12.1 13.7 Weighted-average discount rate 7.0 % 6.5 % 98 UiPath, Inc. Notes to Consolidated Financial Statements Future undiscounted lease payments for our operating lease liabilities as of January 31, 2023 were as follows (in thousands): Amount Year Ended January 31, 2024 $ 11,950 2025 9,957 2026 7,859 2027 7,514 2028 7,405 Thereafter 48,728 Total operating lease payments 93,413 Less: imputed interest ( 29,974 ) Total operating lease liabilities $ 63,439 As of January 31, 2023, we had non-cancellable commitments in the amount of $ 2.1 million related to operating leases of real estate facilities that have not yet commenced. 9 Consolidated Balance Sheet Components Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consisted of the following (in thousands): As of January 31, 2023 2022 Prepaid expenses and service credits (1) $ 67,794 $ 45,341 Other current assets (1) 26,356 10,075 Prepaid expenses and other current assets $ 94,150 $ 55,416 (1) Prior period amounts have been combined to conform to current presentation Property and Equipment, Net Property and equipment, net consisted of the following (in thousands): As of January 31, 2023 2022 Computers and equipment $ 28,450 $ 22,478 Leasehold improvements 19,622 9,338 Furniture and fixtures 6,485 4,875 Construction in progress 2,419 2,552 Property and equipment, gross 56,976 39,243 Less: accumulated depreciation ( 27,931 ) ( 22,067 ) Property and equipment, net $ 29,045 $ 17,176 Depreciation expense was $ 8.6 million , $ 6.8 million, and $ 8.4 million for fiscal years 2023, 2022, and 2021, respectively. 99 UiPath, Inc. Notes to Consolidated Financial Statements Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consisted of the following (in thousands): As of January 31, 2023 2022 Accrued expenses $ 19,411 $ 21,736 Withholding tax from employee equity transactions 3,772 16,618 Employee stock purchase plan withholdings 3,365 4,302 Payroll taxes and other benefits payable 7,644 7,016 Income tax payable 8,750 18,210 Value-added taxes payable 6,381 9,327 Operating lease liabilities, current 6,997 1,552 Deferred consideration for business acquisition, current 5,863 — Other 14,462 9,197 Accrued expenses and other current liabilities $ 76,645 $ 87,958 10 Credit Facility On October 30, 2020, we entered into the Credit Facility with HSBC Ventures USA Inc., Silicon Valley Bank, Sumitomo Mitsui Banking Corporation, and Mizuho Bank, LTD. The Credit Facility replaced the two-year $ 100.0 million senior secured revolving credit agreement described in the Final Prospectus, which was repaid in full in July 2020. Substantive changes from that agreement include a credit limit of $ 200.0 million, an extension of maturity to October 30, 2023 and the removal of certain financial covenants. The Credit Facility contains certain customary covenants, including, but not limited to, those relating to additional indebtedness, liens, asset divestitures, and affiliate transactions. We may use the proceeds of future borrowings under the Credit Facility for refinancing other indebtedness, working capital, capital expenditures and other general corporate purposes, including permitted business acquisitions. Our obligations under the Credit Facility are secured by substantially all of our assets, except for our intellectual property. Borrowings under the Credit Facility bear interest at a base rate, as defined in the Credit Facility, plus a margin of 2.0 % or 3.0 % depending on the base rate. The Credit Facility is subject to customary fees for loan facilities of this type, including ongoing commitment fees at a rate of 0.25 % per annum on the daily amount available to be drawn. As of January 31, 2023 and 2022, there were no amounts outstanding under the Credit Facility. 11 Commitments and Contingencies Letters of Credit We had a total of $ 4.3 million and $ 5.3 million in letters of credit outstanding in favor of certain landlords for office space and for credit line facilities as of January 31, 2023 and 2022, respectively. These letters of credit renew annually and expire on various dates through fiscal year 2025. Indemnification In the ordinary course of business, we may provide indemnification of varying scope and terms to customers, vendors, directors, and officers with respect to certain matters, including, but not limited to, losses arising out of our breach of such agreements, services to be provided by us, or from intellectual property infringement claims made by third parties. 100 UiPath, Inc. Notes to Consolidated Financial Statements These indemnification provisions may survive termination of the underlying agreement and the potential amount of future payments we could be required to make under these indemnification provisions may not be subject to maximum loss clauses. The maximum potential amount of future payments we could be required to make under these indemnification provisions is indeterminable. As of January 31, 2023 and 2022, we have not accrued a liability for these indemnification arrangements because the likelihood of incurring a payment obligation, if any, in connection with these indemnification arrangements was remote. Workforce Restructuring On June 24, 2022, our board of directors approved restructuring actions to manage our operating expenses by reducing our global workforce by approximately 5 %. The workforce reduction aimed to simplify our go-to-market approach and improve sales productivity. In connection with these workforce reductions, we also ceased use of our office in Brooklyn, NY. On November 10, 2022, our board of directors approved further restructuring actions to reduce our global workforce across functions by an additional 6 %. We substantially completed these actions and recognized related restructuring costs, consisting predominantly of employee termination benefits and contractual changes, during fiscal year 2023, with any remaining activities expected to be completed by the second quarter of fiscal year 2024. We incurred $ 23.4 million of exp ense related to our restructuring actions for fiscal year 2023, of which $ 22.3 million relates to employee termination benefits and the remainder relates to lease abandonment costs. The following table shows the total amount incurred during fiscal year 2023 and the liability, which is recorded in accrued compensation and employee benefits in the consolidated balance sheets, for restructuring-related costs as of January 31, 2023 (in thousands): Accrued restructuring costs as of January 31, 2022 $ — Restructuring costs incurred during fiscal year 2023 23,446 Amount paid during fiscal year 2023 ( 19,339 ) Write-off of assets associated with Brooklyn office ( 218 ) Accrued restructuring costs as of January 31, 2023 $ 3,889 The following table shows the restructuring charges incurred during fiscal year 2023 (in thousands): Employee Termination Benefits Lease Exit Costs Total Restructuring Costs Cost of subscription services revenue $ 76 $ 106 $ 182 Cost of professional services and other revenue 585 125 710 Sales and marketing 18,965 526 19,491 Research and development 448 46 494 General and administrative 2,192 377 2,569 Total $ 22,266 $ 1,180 $ 23,446 Defined Contribution Plans We sponsor retirement plans for qualifying employees, including a 401(k) plan in the U.S. and defined contribution plans in certain other countries, to which we make matching contributions. Our total matching contributions to all defined contribution plans during fiscal years 2023, 2022, and 2021 were $ 14.5 million , $ 10.4 million and $ 5.1 million, respectively. Litigation From time to time, we may be involved in lawsuits, claims, investigations, and proceedings, consisting of intellectual property, commercial, employment, and other matters, which arise in the ordinary course of business. In accordance with ASC 450, Contingencies , we make a provision for a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. We are not presently a party to any litigation the outcome of which, we believe, if determined adversely to us, would individually or taken together have a material adverse effect on our business, operating results, cash flows, or 101 UiPath, Inc. Notes to Consolidated Financial Statements financial condition. We have determined that the existence of a material loss is neither probable nor reasonably possible. Warranty We warrant to customers that our platform will operate substantially in accordance with its specifications. Historically, no significant costs have been incurred related to product warranties. Based on such historical experience, the probability of incurring such costs in the future is deemed remote. As such, no accruals for product warranty costs have been made. Non-Cancelable Purchase Obligations In the normal course of business, we enter into non-cancelable purchase commitments with various parties, mainly for hosting services and software products and services. During fiscal year 2023, we made commitments to purchase $ 138.1 million of cloud infrastructure services from a third-party vendor and $ 82.5 million of service credits toward products and services from strategic alliance partners, which together constitute the majority of the increase in our non-cancelable purchase commitments during the fiscal year. As of January 31, 2023, we had outstanding non-cancelable purchase obligations with a term of 12 months or longer as follows (in thousands): Year Ended January 31, Amount 2024 $ 66,846 2025 88,931 2026 46,746 2027 12,131 2028 — Thereafter — Total $ 214,654 12 Convertible Preferred Stock and Stockholders' Equity (Deficit) Convertible Preferred Stock No convertible preferred stock was outstanding as of January 31, 2023 and 2022. Convertible preferred stock consisted of the following as of January 31, 2021 (in thousands except per share amounts): Series of Convertible Preferred Stock Shares Authorized Shares Issued and Outstanding Original Issue Price per Share Carrying Value Net of Issuance Costs Aggregate Liquidation Preference A-1 96,825 96,825 $ 0.31 $ 29,523 $ 29,633 A-2 48,000 48,000 $ 0.03 1,600 1,600 B-1 43,734 43,734 $ 2.70 117,592 118,000 B-2 12,972 12,972 $ 2.70 34,880 35,000 C-1 19,626 19,626 $ 6.38 124,969 125,200 C-2 16,459 16,459 $ 6.38 104,816 105,000 D-1 34,504 34,504 $ 13.12 452,140 452,600 D-2 9,987 9,987 $ 13.12 130,869 131,000 E 15,866 12,150 $ 18.59 225,579 225,903 Total 297,973 294,257 $ 1,221,968 $ 1,223,936 102 UiPath, Inc. Notes to Consolidated Financial Statements In February 2021, we issued to certain investors approximately 12.0 million shares of Series F convertible preferred stock at a purchase price of $ 62.28 per share, for an aggregate purchase price of $ 750.0 million. The principle rights, privileges, and preferences of our convertible preferred stock were as follows: Voting The holder of each share of convertible preferred stock was entitled to the number of votes equal to the number of shares of convertible preferred stock held by such holder as of the record date for determining stockholders entitled to vote. As of January 31, 2021 , the holders of the shares of Series A-1 and A-2 convertible preferred stock were entitled to elect two directors, the holders of the shares of Series B-1 and B-2 convertible preferred stock were entitled to elect one director, the holders of the shares of common stock were entitled to elect two directors, and the holders of the shares of common stock and convertible preferred stock, voting together as a single class, were entitled to elect the remaining number of directors. Redemption and Liquidation Holders of our convertible preferred stock did not have any date-specific redemption rights. However, certain redemption provisions did apply following certain deemed liquidation events, which are considered contingent redemption provisions that are not solely within our control. Accordingly, the convertible preferred stock was presented outside of permanent equity in the mezzanine section of the consolidated balance sheets as of January 31, 2021. Conversion Each share of convertible preferred stock was convertible at the option of the holder without payment of additional consideration at any time into Class A common stock at the relevant Conversion Rate for the series. The initial conversion price per share for each series of convertible preferred stock was equal to the original issue price for such series (i.e., 1 :1 conversion). Each share of convertible preferred stock was to automatically convert into shares of Class A common stock at the then applicable Conversion Rate upon the earlier to occur of (a) our sale of Class A common stock in an IPO, the price of which is at least equal to the original issue price per share for the Series D convertible preferred stock, and that results in at least $ 75 million of proceeds in the aggregate (net of underwriting discounts and commissions) (a “Qualified Public Offering”), ( b) the date specified by vote or written consent of the preferred majority, or (c) the business day immediately prior to the first trading day with respect to our initial listing of Class A common stock for trading on the Nasdaq Stock Market, the New York Stock Exchange or another exchange or marketplace approved by our board of directors. Pursuant to the above, immediately prior to the completion of our IPO , all convertible preferred stock outstanding, totaling approximately 306.3 million shares, was automatically converted into an equivalent number of shares of Class A common stock on a one -to-one basis and their carrying value of $ 1,971.8 million was reclassified to stockholders’ equity. Preferred Stock In April 2021, we amended and restated our certificate of incorporation, which authorized 20.0 million shares of preferred stock. Common Stock In April 2021, we amended and restated our certificate of incorporation, which authorized a total of 2.0 billion shares of Class A common stock and 115.7 million shares of Class B common stock. Each share of Class B common stock will convert automatically into Class A common stock, on a one -to-one basis, upon certain circumstances, including: (1) the sale or transfer of such share of Class B common stock (except under certain circumstances described in the amended and restated certificate of incorporation), (2) a date fixed by the board of directors that is no less than 120 days and no more than 180 days following the date that the number of shares of Class B common stock outstanding is less than 20 % of the number of shares of Class B 103 UiPath, Inc. Notes to Consolidated Financial Statements common stock outstanding immediately prior to the completion of the IPO, or (3) six months after the death or incapacity of Daniel Dines. The Class A common stock is entitled to one vote per share and the Class B common stock is entitled to thirty-five votes per share. At IPO, we reserved 2.8 million shares of our Class A common stock to fund our social impact and environmental, social, and governance initiatives. During fiscal year 2023 , we contributed 0.3 million shares of our Class A common stock to a donor-advised fund in connection with our Pledge 1% commitment. The aggregate fair value of the shares on the contribution date of $ 5.5 million was recorded within general and administrative expense in the consolidated statements of operations. Secondary Transactions During fiscal year 2021, certain of our employees sold shares of our Class A and Class B common stock to new and existing investors. We recognized $ 5.0 million in stock-based compensation expense as a result of these transactions related to the excess of the selling price per share paid to the applicable employees over the then-assessed fair market value of the purchased shares. Shares of Class B common stock sold in such secondary transactions each converted into one share of our Class A common stock at closing. Dividends Holders of common stock are entitled to receive dividends whenever funds are legally available and when declared by the board of directors, subject to the priority rights of holders of preferred stock. No dividends have been declared by the board of directors from inception through January 31, 2023. Accumulated Other Comprehensive Income (Loss) Changes in the components of accumulated other comprehensive income (loss) were as follows during the periods presented (in thousands): Foreign Currency Translation Adjustments Unrealized Loss on Marketable Securities Accumulated Other Comprehensive Income (Loss) Balance as of January 31, 2021 $ ( 12,504 ) $ ( 17 ) $ ( 12,521 ) Other comprehensive income (loss), net of tax 23,738 ( 318 ) 23,420 Balance as of January 31, 2022 $ 11,234 $ ( 335 ) $ 10,899 Other comprehensive loss, net of tax ( 3,003 ) ( 284 ) ( 3,287 ) Balance as of January 31, 2023 $ 8,231 $ ( 619 ) $ 7,612 13 Equity Incentive Plans and Stock-Based Compensation 2021 Stock Plan In April 2021, prior to and in connection with the IPO , we adopted the 2021 P lan , which provides for grants of incentive stock options, nonstatutory stock options, stock appreciation rights, RSAs , RSUs , performance awards, and other forms of awards. As of January 31, 2023, w e have reserved 145.9 million shares of our Class A common stock to be issued under the 2021 Plan. In addition, the number of shares of our Class A common stock reserved for issuance under the 2021 Plan will automatically increase on February 1 of each year for a period of 10 years, beginning on February 1, 2022 and continuing through February 1, 2031, in an amount equal to (1) 5 % of the total number of shares of our common stock (both Class A and Class B) outstanding on the preceding January 31, or (2) a lesser number of shares determined by our board of directors no later than the February 1 increase. 104 UiPath, Inc. Notes to Consolidated Financial Statements 2021 Employee Stock Purchase Plan In April 2021, prior to and in connection with the IPO, we adopted the ESPP . As of January 31, 2023, t he ESPP authorizes the issuance of 15.9 million shares of our Class A common stock under purchase rights granted to our employees or to employees of any of our designated affiliates. The number of shares of our Class A common stock reserved for issuance will automatically increase on February 1 of each year for a period of 10 years, beginning on February 1, 2022 and continuing through February 1, 2031, by the lesser of (1) 1 % of the total number of shares of our common stock (both Class A and Class B) outstanding on the preceding January 31; and (2) 15.5 million shares, except before the date of any such increase, our board of directors may determine that such increase will be less than the amount set forth by (1) and (2) above. The plan allows participants to purchase shares at the lesser of (a) 85 % of the fair market value our Class A common stock as of the commencement of the offering period, and (b) 85 % of the fair market value of our Class A common stock on the corresponding purchase date. Prior Stock Plans In June 2015, we adopted the 2015 Plan . The 2015 Plan was terminated in June 2018 in connection with the adoption of the 2018 Plan . Accordingly, no shares are available for future issuance under the 2015 Plan following the adoption of the 2018 Plan. In June 2018, we adopted the 2018 Plan, which provided for grants of stock-based awards, including RSUs, RSAs, and stock options. The 2018 Plan was terminated in April 2021 in connection with the adoption of the 2021 Plan. Accordingly, no shares are available for future issuance under the 2018 Plan following the adoption of the 2021 Plan. Outstanding Equity Awards Stock Options Stock options generally vest over four years and expire ten years from the date of grant. Vested stock options generally expire three months after termination of employment. Stock option activity during fiscal year 2023 was as follows: Options Outstanding Stock Options (in thousands) Weighted-Average Exercise Price Weighted-Average Remaining Contractual Life (Years) Aggregate Intrinsic Value (in thousands) Balance as of January 31, 2022 14,544 $ 1.64 7.6 $ 507,419 Granted 5,027 $ 6.61 Exercised ( 4,770 ) $ 1.73 Forfeited ( 903 ) $ 3.01 Expired — $ — Balance as of January 31, 2023 13,898 $ 3.32 7.7 $ 169,324 Vested and exercisable as of January 31, 2023 6,740 $ 1.87 6.3 $ 90,911 The weighted-average grant date fair value of stock options granted during fiscal years 2023, 2022, and 2021 was $ 12.23 , $ 45.78 and $ 17.45 per share, respectively. The intrinsic value of stock options exercised during fiscal years 2023, 2022, and 2021 was $ 83.6 million, $ 557.5 million, and $ 839.0 million, respectively. As of January 31, 2023, unrecognized compensation expense associated with unvested stock options granted and outstanding was $ 122.9 million, to be recognized over a weighted-average remaining period of 2.7 years. 105 UiPath, Inc. Notes to Consolidated Financial Statements Fair value of each stock option grant was estimated on the date of grant using the Black-Scholes pricing model with the following assumptions: 2023 2022 2021 Weighted-Average Weighted-Average Range Expected term (years) 5.9 6.1 5.0 – 6.1 Expected volatility 60.6 % 57.2 % 60.0 % – 61.1 % Risk-free interest rate 3.5 % 1.4 % 0.2 % – 0.7 % Expected dividend yield 0.0 % 0.0 % 0.0 % During fiscal years 2023, 2022, and 2021, our compensation committee approved modifications to allow acceleration of the service-based vesting condition of certain employee stock options upon termination. These modifications, which were considered improbable-to-probable (Type 3) modifications under ASC 718, resulted in accelerated vesting of 0.3 million, 0.2 million and 0.3 million shares of Class A common stock subject to outstanding stock options, and incremental compensation expense of $ 2.8 million, $ 2.9 million, and $ 4.6 million was recognized during fiscal years 2023, 2022, and 2021, respectively. In July 2020, we repriced 4.6 million stock options which had been issued in fiscal years 2021 and 2020 after the Series D convertible preferred stock financing closing date. In conjunction with the modification of these stock options, we recognized incremental compensation expense of approximately $ 1.6 million. Expense related to vested shares of $ 0.9 million was expensed on the repricing date and the remaining amount of $ 0.7 million related to unvested shares was amortized over the remaining vesting period of such options. Early Exercised Options Certain stock option holders have the right to exercise unvested options, subject to a repurchase right held by us at the original exercise price in the event of voluntary or involuntary termination of employment of the option holders, until the options are fully vested. During fiscal year 2023, we repurchased 0.4 million unvested early exercised options in the amount of $ 1.5 million. Cash proceeds associated with early exercises are recorded within accrued expenses and other current liabilities and other liabilities, non-current in our consolidated balance sheets, depending on the future vesting dates of the associated options. Such accrued amounts were not material and $ 2.8 million as of January 31, 2023 and 2022, respectively. Proceeds are transferred to additional paid-in capital at the time of option vesting. Restricted Stock Units RSUs granted under th e 2021 Plan g enerally vest over four years . RSUs are forfeited in case of termination of employment or service before the satisfaction of service-based vesting conditions. RSU activity during fiscal year 2023 was as follows: RSUs (in thousands) Weighted-Average Grant Date Fair Value Per Share Unvested as of January 31, 2022 27,515 $ 35.35 Granted 30,039 $ 15.85 Vested (1) ( 13,786 ) $ 27.21 Forfeited ( 6,983 ) $ 34.25 Unvested as of January 31, 2023 36,785 $ 22.48 (1) Class A common stock has not been issued in connection with 142 vested RSUs because such RSUs were unsettled as of January 31, 2023. The vesting date fair value of RSUs that vested during fiscal years 2023, 2022, and 2021 was $ 228.8 million , $ 1.4 billion, and none , respectively. 106 UiPath, Inc. Notes to Consolidated Financial Statements Prior to the IPO, we granted RSUs under th e 2018 Plan that vested upon the satisfaction of both a service-based condition (generally four years ) and a performance-based condition. The performance-based vesting condition was deemed satisfied on April 23, 2021, the date that our IPO was completed. At that time, we recognized $ 233.0 million of cumulative stock-based compensation expense for the portion of these RSUs for which the service-based vesting condition had been fully or partially satisfied. As of January 31, 2023, unrecognized compensation expense associated with unvested RSUs was approximately $ 703.3 million , to be recognized over a weighted-average remaining period of 2.8 years . During fiscal year 2023, our compensation committee approved modifications to allow accelerated vesting of approximately 0.5 million RSUs upon employee terminations. The modifications, which were considered improbable-to-probable (Type 3) modifications under ASC 718, resulted in a net reduction of $ 7.4 million in the fair value of the modified awards due to the decrease in our stock price between the grant and modification dates. During fiscal year 2022, our compensation committee approved modifications to allow accelerated vesting of approximately 0.2 million RSUs upon employee terminations, resulting in the recognition of $ 10.9 million of incremental expense. In addition, during fiscal year 2022, our compensation committee approved adjustments to the vesting schedules of our unvested RSUs which standardize their future vesting schedules by shifting each vesting date to the first day of the calendar quarter in which that vesting date was originally scheduled to occur. These adjustments caused a slight reduction in service periods for the affected tranches and resulted in $ 2.2 million of expense acceleration during fiscal year 2022. Restricted Stock Awards In September 2020, we issued 0.1 million RSAs to a member of our board of directors at a grant date fair value of $ 33.22 per share, totaling $ 4.0 million. Such RSAs vest monthly over four years from the grant date. The unvested shares are subject to a repurchase right held by us at the original purchase price. As of January 31, 2023, total unrecognized compensation expense related to unvested RSAs was $ 1.6 million , to be recognized over the remaining vesting period of 1.6 years . Employee Stock Purchase Plan Awards The fair value of ESPP awards was estimated using the Black-Scholes option pricing model with the following weighted average assumptions: Year Ended January 31, Year Ended January 31, 2023 2022 Expected term (years) 0.5 0.6 Expected volatility 69.0 % 55.7 % Risk-free interest rate 1.86 % 0.05 % Expected dividend yield 0.0 % 0.0 % During the fiscal year ended January 31, 2023, 1.2 million shares were purchased under the ESPP at a weighted average purchase price of $ 13.28 per share. As of January 31, 2023, unrecognized compensation expense related to the ESPP was approximately $ 2.9 million, to be recognized over a weighted-average remaining period of 0.4 years. Stock-Based Compensation Associated with Business Acquisition At the closing of the acquisition of Re:infer on July 29, 2022, we issued 0.4 million shares of Class A common stock (outside of the 2021 Plan) that will be released to certain employee sellers in equal installments on the first, second, and third anniversaries of the closing date, subject to employment-related clawback provisions. As of 107 UiPath, Inc. Notes to Consolidated Financial Statements January 31, 2023, total unrecognized compensation expense related to these shares was $ 6.4 million, which is to be recognized over a weighted-average remaining period of 2.5 years. Stock-based Compensation Expense Stock-based compensation expense is classified in the consolidated statements of operations as follows (in thousands): Year Ended January 31, 2023 2022 2021 Cost of subscription services revenue $ 11,894 $ 12,232 $ 513 Cost of professional services and other revenue 11,855 29,849 1,860 Sales and marketing 154,922 237,975 16,356 Research and development 102,546 135,713 11,435 General and administrative 88,623 99,814 56,003 Total $ 369,840 $ 515,583 $ 86,167 The expense presented in the above table is net of capitalized stock-based compensation relating to software development costs of zero , $ 4.5 million, and $ 0.3 million for fiscal years 2023, 2022, and 2021, respectively. See Note 12, Convertible Preferred Stock and Stockholders' Equity (Deficit) for further information regarding stock-based compensation expense recognized in connection with secondary transactions. 14 Income Taxes The U.S. and foreign components o f (loss) income before income taxes for fiscal years 2023, 2022, and 2021 are as follows (in thousands): Year Ended January 31, 2023 2022 2021 U.S. $ ( 273,467 ) $ ( 306,814 ) $ ( 105,589 ) Foreign ( 44,094 ) ( 204,069 ) 10,931 Loss before income taxes $ ( 317,561 ) $ ( 510,883 ) $ ( 94,658 ) The components of the provision for (benefit from) income taxes for fiscal years 2023, 2022, and 2021 are as follows (in thousands): Year Ended January 31, 2023 2022 2021 Provision for (benefit from) income taxes Current expense Federal $ 213 $ — $ — State 493 80 47 Foreign 9,224 20,455 5,275 Total current expense 9,930 20,535 5,322 Deferred expense (benefit) Federal — — — State — — — Foreign 861 ( 5,832 ) ( 7,587 ) Total deferred expense (benefit) $ 861 $ ( 5,832 ) $ ( 7,587 ) Total provision for (benefit from) income taxes $ 10,791 $ 14,703 $ ( 2,265 ) 108 UiPath, Inc. Notes to Consolidated Financial Statements The following is a reconciliation of the statutory federal income tax rate to our effective tax rate for fiscal years 2023, 2022, and 2021: Year Ended January 31, 2023 2022 2021 Federal statutory income tax rate 21.0 % 21.0 % 21.0 % Foreign taxes ( 2.2 ) ( 3.7 ) 0.2 Non-deductible expenses ( 2.1 ) ( 2.7 ) ( 1.1 ) Stock-based compensation ( 10.8 ) 27.1 ( 14.0 ) Valuation allowance ( 12.3 ) ( 48.2 ) ( 10.1 ) Research and development credits 3.3 3.8 6.7 Other, net ( 0.3 ) ( 0.2 ) ( 0.3 ) Effective income tax rate ( 3.4 ) % ( 2.9 ) % 2.4 % Significant components of DTAs and DTLs as of January 31, 2023 and 2022 are as follows (in thousands): As of January 31, 2023 2022 Deferred tax assets: Net operating loss carryforwards $ 387,822 $ 377,285 Accruals and reserves 15,072 9,429 Stock-based compensation 25,665 37,751 Deferred revenue 9,477 4,722 Research and development 67,103 15,372 Foreign exchange — 4,478 Depreciation and amortization 587 — Excessive borrowing 1,668 1,370 Other 7,406 1,170 Total deferred tax assets, gross 514,800 451,577 Less: valuation allowance ( 476,589 ) ( 422,262 ) Total deferred tax assets, net of valuation allowance 38,211 29,315 Deferred tax liabilities: Intangible assets ( 3,312 ) ( 579 ) Foreign exchange ( 97 ) — Depreciation and amortization — ( 1,446 ) Commissions ( 29,245 ) ( 16,695 ) Other — ( 1 ) Total deferred tax liabilities ( 32,654 ) ( 18,721 ) Net deferred tax assets $ 5,557 $ 10,594 Net deferred tax assets $ 5,895 $ 10,628 Net deferred tax liabilities (included in other liabilities, non-current) ( 338 ) ( 34 ) Net deferred tax assets $ 5,557 $ 10,594 We have evaluated the available positive and negative evidence supporting the realization of our U.S. federal and state, Romanian, and U.K. DTAs, including cumulative losses and the amount and timing of future taxable income, and have determined that it is more likely than not that these assets will not be realized. Accordingly, we have recorded a full valuation allowance against U.S. federal and state, Romanian, and U.K DTAs as of January 31, 2023 and 2022. 109 UiPath, Inc. Notes to Consolidated Financial Statements The table below details the changes in DTA valuation allowances for fiscal years 2023 and 2022 (in thousands): Beginning Balance Valuation Allowance Recorded During the Period Valuation Allowance Released During the Period Ending Balance Year ended January 31, 2023 $ 422,262 $ 54,327 $ — $ 476,589 Year ended January 31, 2022 $ 137,766 $ 284,496 $ — $ 422,262 As of January 31, 2023, we had U.S. federal NOLs of $ 979.9 million available to offset future taxable income, all of which can be carried forward indefinitely. As of January 31, 2022 we had U.S. federal NOLs of $ 1,015.4 million, $ 1,006.1 million of which could be carried forward indefinitely, and $ 9.3 million of which were to begin expiring in 2035. As of January 31, 2023 and 2022, we had state NOLs of $ 771.5 million and $ 648.5 million, respectively, which begin expiring in 2024. As of January 31, 2023 and 2022, we had Romanian NOLs of $ 601.6 million and $ 531.4 million, respectively, which begin expiring in 2024. As of January 31, 2023 and 2022, we had Japanese NOLs of $ 10.4 million and $ 13.5 million, respectively, which begin expiring in 2027. Additionally, as of January 31, 2023 and 2022, we had U.K. NOLs of $ 135.1 million and $ 139.2 million, respectively, which may be carried forward indefinitely. Pursuant to Section 382 of the I R C , annual use of our U.S. NOLs may be limited in the event a cumulative change in ownership of more than 50% occurs within a three-year period. We determined that two such ownership changes have occurred. The first resulted in an annual limitation, independent of net unrealized built-in gains, of $ 0.1 million for our NOLs as of April 24, 2017 but did not result in permanent disallowance of any NOLs. The second resulted in an annual limitation, independent of net unrealized built-in gains, of $ 29.0 million for our NOLs as of July 9, 2020 but did not result in permanent disallowance of any NOLs. We do not provide for deferred taxes on $ 76.0 million of the undistributed earnings of our foreign subsidiaries as of January 31, 2023, because we intend to indefinitely reinvest such undistributed earnings in our non-U.S. operations. As of January 31, 2023, we had gross unrecognized tax benefits totaling $ 2.3 million related to income taxes, which would impact the effective tax rate if recognized. Of this amount, the total liability pertaining to uncertain tax positions was $ 0.5 million, excluding interest and penalties, which are accounted for as a component of our income tax provision. As of January 31, 2022, we had gross unrecognized tax benefits of $ 2.5 million. Of this amount, the total liability pertaining to uncertain tax positions was $ 0.6 million, excluding interest and penalties Our tax positions are subject to income tax audits in multiple tax jurisdictions globally, and we believe that we have provided adequate reserves for our income tax uncertainties in all open tax years. Our Romanian subsidiary is currently under audit for tax years from 2017 through 2022. Our Indian subsidiary is currently under audit for tax years from 2019 through 2021. We file income tax returns in the U.S. federal jurisdiction, various state jurisdictions, and various international jurisdictions. Tax years 2019 and forward generally remain open for examination for federal and state tax purposes. Tax years 2017 and forward generally remain open for examination for foreign tax purposes. To the extent utilized in future years’ tax returns, NOLs at January 31, 2023 and 2022 will remain subject to examination until the respective tax year is closed. 110 UiPath, Inc. Notes to Consolidated Financial Statements 15 Net Loss Per Share Attributable to Common Stockholders The following table sets forth the computation of basic and diluted net loss per share attributable to common stockholders for the periods presented (in thousands except per share amounts): Year Ended January 31, 2023 2022 2021 Class A Class B Class A Class B Class A Class B Numerator: Net loss $ ( 278,950 ) $ ( 49,402 ) $ ( 423,296 ) $ ( 102,290 ) $ ( 29,243 ) $ ( 63,150 ) Denominator: Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted 465,569 82,453 366,146 88,479 53,253 115,002 Net loss per share attributable to common stockholders, basic and diluted $ ( 0.60 ) $ ( 0.60 ) $ ( 1.16 ) $ ( 1.16 ) $ ( 0.55 ) $ ( 0.55 ) Anti-dilutive common stock equivalents excluded from the computation of diluted net loss per share attributable to common stockholders were as follows (in thousands): Year Ended January 31, 2023 2022 2021 Class A Class B Class A Class B Class A Class B Convertible preferred stock — — 68,015 — 288,979 — Unvested RSUs 31,427 — 23,237 — 31,074 — Outstanding stock options 13,967 — 18,424 — 37,814 — Shares subject to repurchase from RSAs and early exercised stock options 284 — 1,539 — 1,428 — Shares issuable under 2021 ESPP 828 — 312 — — — Returnable shares issued in connection with business acquisition 219 — — — — — Total weighted-average anti-dilutive common stock equivalents 46,725 — 111,527 — 359,295 — 111 UiPath, Inc. Notes to Consolidated Financial Statements 16 Related Party Transactions For a description of certain related party transactions, see Note 12, Convertible Preferred Stock and Stockholders' Equity (Deficit) —Secondary Transactions. Since the third quarter of fiscal 2022, we have made use of an aircraft owned by Daniel Dines, our Co-CEO , through a special purpose limited liability company in which we have a variable interest. The aircraft is operated by a third-party aircraft management company. Mr. Dines, through the special purpose limited liability company, obtained financing for the aircraft and bears all associated operating, personnel, and maintenance costs. We are able to use the aircraft, when available, for business purposes in the course of our normal operations at rates that approximate the cost of operating the aircraft but that do not exceed current market rates. For fiscal years 2023 and 2022 we incurred expenses of $ 1.9 million and $ 1.1 million, respectively, related to our business use of the aircraft. 112 Table of Contents Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.