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 ) 76 Consolidated Balance Sheets 78 Consolidated Statements of Operations 79 Consolidated Statements of Comprehensive Loss 80 Consolidated Statements of Stockholders' Equity 81 Consolidated Statements of Cash Flows 82 Notes to Consolidated Financial Statements 83 75 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 sheets of UiPath, Inc. and subsidiaries (the Company) as of January 31, 2025 and 2024, the related consolidated statements of operations, comprehensive loss, stockholders’ equity (deficit), and cash flows for each of the years in the three-year period ended January 31, 2025, 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, 2025, 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, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the three-year period ended January 31, 2025, 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, 2025 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 audits 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 audits 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. 76 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 Matters The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate 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 critical audit matters 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 matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. 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, 2025, the Company recorded revenue of $1.43 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, 2025 77 Table of Contents UiPath, Inc. Consolidated Balance Sheets Amounts in thousands except per share data As of January 31, 2025 2024 ASSETS Current assets Cash and cash equivalents $ 879,196 $ 1,061,678 Restricted cash 438 438 Marketable securities 750,322 818,145 Accounts receivable, net of allowance for credit losses of $ 1,642 and $ 1,119 , respectively 451,131 436,296 Contract assets 88,735 84,197 Deferred contract acquisition costs 82,461 74,678 Prepaid expenses and other current assets 86,276 104,980 Total current assets 2,338,559 2,580,412 Marketable securities, non-current 94,113 — Contract assets, non-current 3,447 6,214 Deferred contract acquisition costs, non-current 139,341 154,317 Property and equipment, net 32,740 23,982 Operating lease right-of-use assets 66,500 56,072 Intangible assets, net 7,905 14,704 Goodwill 87,304 89,026 Deferred tax assets 27,963 4,678 Other assets, non-current 67,398 25,353 Total assets $ 2,865,270 $ 2,954,758 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Accounts payable $ 33,178 $ 3,447 Accrued expenses and other current liabilities 83,923 83,997 Accrued compensation and employee benefits 112,355 137,442 Deferred revenue 569,464 486,805 Total current liabilities 798,920 711,691 Deferred revenue, non-current 135,843 161,027 Operating lease liabilities, non-current 74,230 58,713 Other liabilities, non-current 10,515 7,213 Total liabilities 1,019,508 938,644 Commitments and contingencies (Note 11) Stockholders’ equity: Preferred stock, $ 0.00001 par value per share, 20,000 shares authorized; none issued and outstanding — — Class A common stock, $ 0.00001 par value per share, 2,000,000 shares authorized; 508,680 and 492,660 shares issued, respectively; 471,059 and 486,820 shares outstanding, respectively 5 5 Class B common stock, $ 0.00001 par value per share, 115,741 shares authorized; 82,453 shares issued and outstanding 1 1 Treasury stock, at cost, 37,621 shares and 5,840 , respectively ( 494,779 ) ( 102,615 ) Additional paid-in capital 4,333,300 4,024,079 Accumulated other comprehensive (loss) income ( 4,890 ) 8,825 Accumulated deficit ( 1,987,875 ) ( 1,914,181 ) Total stockholders’ equity 1,845,762 2,016,114 Total liabilities and stockholders’ equity $ 2,865,270 $ 2,954,758 The accompanying notes are an integral part of these consolidated financial statements. 78 Table of Contents UiPath, Inc. Consolidated Statements of Operations Amounts in thousands except per share data Year Ended January 31, 2025 2024 2023 Revenue: Licenses $ 587,162 $ 621,392 $ 497,836 Subscription services 801,947 649,918 508,823 Professional services and other 40,555 36,762 51,922 Total revenue 1,429,664 1,308,072 1,058,581 Cost of revenue: Licenses 8,565 10,469 10,421 Subscription services 167,630 111,922 87,366 Professional services and other 70,747 73,533 82,264 Total cost of revenue 246,942 195,924 180,051 Gross profit 1,182,722 1,112,148 878,530 Operating expenses: Sales and marketing 738,493 713,130 701,558 Research and development 380,682 332,101 285,750 General and administrative 226,116 231,637 239,505 Total operating expenses 1,345,291 1,276,868 1,226,813 Operating loss ( 162,569 ) ( 164,720 ) ( 348,283 ) Interest income 49,422 57,130 27,955 Other income, net 35,047 31,775 2,767 Loss before income taxes ( 78,100 ) ( 75,815 ) ( 317,561 ) (Benefit from) provision for income taxes ( 4,406 ) 14,068 10,791 Net loss $ ( 73,694 ) $ ( 89,883 ) $ ( 328,352 ) Net loss per share, basic and diluted $ ( 0.13 ) $ ( 0.16 ) $ ( 0.60 ) Weighted-average shares used in computing net loss per share, basic and diluted 559,933 563,855 548,022 The accompanying notes are an integral part of these consolidated financial statements. 79 Table of Contents UiPath, Inc. Consolidated Statements of Comprehensive Loss Amounts in thousands Year Ended January 31, 2025 2024 2023 Net loss $ ( 73,694 ) $ ( 89,883 ) $ ( 328,352 ) Other comprehensive income (loss), net of tax: Unrealized (loss) gain on available-for-sale marketable securities, net ( 272 ) 519 ( 284 ) Foreign currency translation adjustments, net ( 13,443 ) 694 ( 3,003 ) Other comprehensive (loss) income, net ( 13,715 ) 1,213 ( 3,287 ) Comprehensive loss $ ( 87,409 ) $ ( 88,670 ) $ ( 331,639 ) The accompanying notes are an integral part of these consolidated financial statements. 80 Table of Contents UiPath, Inc. Consolidated Statements of Stockholders’ Equity Amounts in thousands Common stock Treasury stock Additional paid-in capital Accumulated other comprehensive income (loss) Accumulated deficit Total stockholders’ equity Class A Class B Shares Amount Shares Amount Shares Amount Amount Amount Amount Amount 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 Issuance of common stock upon exercise of stock options 5,221 — — — — — 6,728 — — 6,728 Vesting of early exercised stock options — — — — — — 2 — — 2 Issuance of common stock upon settlement of restricted stock units 17,695 — — — — — — — — — Tax withholdings on settlement of restricted stock units ( 6,061 ) — — — — — ( 113,162 ) — — ( 113,162 ) Charitable donation of Class A common stock 281 — — — — — 4,215 — — 4,215 Repurchase of Class A common stock — — — — ( 5,840 ) ( 102,615 ) — — — ( 102,615 ) Issuance of common stock under the employee stock purchase plan 1,364 — — — — — 17,313 — — 17,313 Stock-based compensation — — — — — — 372,145 — — 372,145 Other comprehensive income, net of tax — — — — — — — 1,213 — 1,213 Net loss — — — — — — — — ( 89,883 ) ( 89,883 ) Balance as of January 31, 2024 492,660 $ 5 82,453 $ 1 ( 5,840 ) $ ( 102,615 ) $ 4,024,079 $ 8,825 $ ( 1,914,181 ) $ 2,016,114 Issuance of common stock upon exercise of stock options 4,002 — — — — — 8,032 — — 8,032 Vesting of early exercised stock options — — — — — — 2 — — 2 Issuance of common stock upon settlement of restricted stock units 15,357 — — — — — — — — — Tax withholdings on settlement of restricted stock units ( 5,170 ) — — — — — ( 79,299 ) — — ( 79,299 ) Charitable donation of Class A common stock 281 — — — — — 6,564 — — 6,564 Repurchase of Class A common stock — — — — ( 31,781 ) ( 392,164 ) — — — ( 392,164 ) Issuance of common stock under employee stock purchase plan 1,550 — — — — — 15,708 — — 15,708 Stock-based compensation — — — — — — 358,214 — — 358,214 Other comprehensive loss, net of tax — — — — — — — ( 13,715 ) — ( 13,715 ) Net loss — — — — — — — — ( 73,694 ) ( 73,694 ) Balance as of January 31, 2025 508,680 $ 5 82,453 $ 1 ( 37,621 ) $ ( 494,779 ) $ 4,333,300 $ ( 4,890 ) $ ( 1,987,875 ) $ 1,845,762 The accompanying notes are an integral part of these consolidated financial statements. 81 Table of Contents UiPath, Inc. Consolidated Statements of Cash Flows Amounts in thousands Year Ended January 31, 2025 2024 2023 Cash flows from operating activities: Net loss $ ( 73,694 ) $ ( 89,883 ) $ ( 328,352 ) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 17,232 22,597 18,723 Amortization of deferred contract acquisition costs 92,089 75,471 59,826 Net accretion on marketable securities ( 31,778 ) ( 28,246 ) ( 1,782 ) Stock-based compensation expense 358,151 371,955 369,840 Charitable donation of Class A common stock 6,564 4,215 5,499 Non-cash operating lease expense 15,899 13,047 11,675 Abandonment and impairment charges — — 2,881 (Benefit from) provision for deferred income taxes ( 19,794 ) 554 861 Other non-cash credits, net ( 2,332 ) ( 3,700 ) ( 2,465 ) Changes in operating assets and liabilities: Accounts receivable ( 22,173 ) ( 64,217 ) ( 123,783 ) Contract assets ( 3,991 ) ( 14,694 ) ( 185 ) Deferred contract acquisition costs ( 89,157 ) ( 118,833 ) ( 118,909 ) Prepaid expenses and other assets 7,065 4,222 ( 59,810 ) Accounts payable 27,856 ( 5,052 ) ( 1,571 ) Accrued expenses and other liabilities 9,235 11,804 ( 14,954 ) Accrued compensation and employee benefits ( 23,428 ) ( 4,039 ) 15,086 Operating lease liabilities, net ( 15,527 ) ( 13,590 ) ( 3,307 ) Deferred revenue 68,348 137,471 160,746 Net cash provided by (used in) operating activities 320,565 299,082 ( 9,981 ) Cash flows from investing activities: Purchases of marketable securities ( 1,470,355 ) ( 1,485,965 ) ( 388,409 ) Maturities of marketable securities 1,475,584 1,050,984 151,426 Purchases of property and equipment ( 14,923 ) ( 7,342 ) ( 23,815 ) Payments related to business acquisitions, net of cash acquired — — ( 29,542 ) Purchases of investments ( 35,809 ) — — Other investing, net — 2,754 1,197 Net cash used in investing activities ( 45,503 ) ( 439,569 ) ( 289,143 ) Cash flows from financing activities: Repurchases of Class A common stock ( 390,751 ) ( 102,615 ) — Proceeds from exercise of stock options 8,032 6,740 8,388 Payments of tax withholdings on net settlement of equity awards ( 77,930 ) ( 112,067 ) ( 73,095 ) Net receipts (payments) of tax withholdings on sell-to-cover equity award transactions 99 ( 645 ) ( 9,480 ) Proceeds from employee stock purchase plan contributions 15,605 17,555 15,011 Payment of deferred consideration related to business acquisition ( 5,570 ) ( 5,863 ) — Repurchase of unvested early exercised stock options — — ( 1,493 ) Net cash used in financing activities ( 450,515 ) ( 196,895 ) ( 60,669 ) Effect of exchange rate changes ( 7,029 ) ( 2,621 ) ( 6,811 ) Net decrease in cash, cash equivalents, and restricted cash ( 182,482 ) ( 340,003 ) ( 366,604 ) Cash, cash equivalents, and restricted cash at beginning of period 1,062,116 1,402,119 1,768,723 Cash, cash equivalents, and restricted cash at end of period $ 879,634 $ 1,062,116 $ 1,402,119 Supplemental disclosures of cash flow information: Cash paid for interest $ 309 $ 563 $ 651 Cash paid for income taxes 16,709 10,822 20,999 Supplemental disclosures of non-cash investing and financing activity: Value of shares issued in payment of business acquisitions — — 2,965 Loan notes issued in connection with business acquisitions — — 11,433 Reduction in accrued expenses and other liabilities for vesting of early exercised stock options 2 2 1,357 Tax withholdings on net settlement of restricted stock units, accrued but not yet paid 4,674 3,354 2,213 Purchases of property and equipment included in accounts payable 2,897 511 1,056 The accompanying notes are an integral part of these consolidated financial statements. 82 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 AI-powered UiPath 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 prese nce in 31 countries, with our principal operations in t he U.S., R omania, 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 2025, 2024, and 2023 refer to the fiscal years ended January 31, 2025, 2024, and 2023, respectively. 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, 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 and internal-use software costs, carrying value of operating lease ROU assets and operating lease liabilities, incremental borrowing rates for operating leases, amount of stock-based compensation expense, 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, net in the consolidated statements of operations. For fiscal years 2025, 2024, and 2023, we recognized foreign currency transaction gains (losses) of $ 6.9 million, $ 0.3 million, and $( 0.5 ) million, respectively. 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 83 UiPath, Inc. Notes to Consolidated Financial Statements instruments, as defined by ASC 815, Derivatives and Hedging . We did not have foreign currency forward contracts during fiscal year 2025, 2024, or 2023. 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, at times, exceed FDIC limits. As of January 31, 2025 and 2024, 86 % and 91 %, respectively, of our cash and cash equivalents were concentrated in the U.S., EU countries, and Japan. The selection of investments in marketable securities is governed by our investment policy. The policy aims to emphasize principles of safety and liquidity, with the overall objective of earning an attractive rate of return while limiting exposure to risk of loss and avoiding inappropriate concentrations. We use this policy to guide our investment decisions as it stipulates, among other things, a list of eligible investment types, minimum ratings and other restrictions for each type, and overall portfolio composition constraints. With regard to accounts receivable, we extend differing levels of credit to customers based on creditworthiness, do not require collateral deposits, and when necessary maintain an allowance 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 that represent 10% or more of our total revenue for the period or accounts receivable at the balance sheet date. For fiscal years 2025, 2024, and 2023, no single customer accounted for 10% or more of our total revenue. As of January 31, 2025 and 2024, 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 and other investments, accounts receivable, and accounts payable. Marketable securities and other investments are recorded at fair 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. 84 UiPath, Inc. Notes to Consolidated Financial Statements 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 primarily of treasury bills and U.S. government securities, corporate bonds, 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, 2025 and 2024 we did not record any allowance for credit losses related to our available-for-sale marketable securities, and we did not record any impairments related to these securities in fiscal year 2025, 2024, or 2023. 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. The allowance for credit losses was $ 1.6 million and $ 1.1 million as of January 31, 2025 and 2024, respectively. Credit loss expense (recovery) was $ 2.0 million, $( 1.6 ) million, and $ 1.2 million for fiscal years 2025, 2024, and 2023, respectively. 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 13 years) 85 UiPath, Inc. Notes to Consolidated Financial Statements 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 year 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 such amortization is 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 $ 7.4 million and $ 7.5 million as of January 31, 2025 and 2024, respectively. Amortization expense was $ 1.3 million for fiscal years 2025, 2024, and 2023. Accumulated amortization was $ 5.5 million and $ 4.3 million as of January 31, 2025 and 2024, 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 such amortization is included in operating expenses in the same line item on the consolidated statements of operations as the associated hosting arrangement fees. These gross capitalized costs were $ 12.1 million and $ 2.7 million as of January 31, 2025 and 2024, respectively, and are recorded in other assets, non-current on our consolidated balance sheets. Related amortization expense was $ 0.3 million, none , and $ 1.0 million for fiscal years 2025, 2024, and 2023, respectively. Accumulated amortization was $ 2.4 million and $ 2.2 million as of January 31, 2025 and 2024, 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 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 such amortization is 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 $ 4.2 million as of January 31, 2025 and 2024. Related amortization expense was $ 0.8 million, $ 0.9 million, and $ 0.9 million for fiscal years 2025, 2024, and 2023, 86 UiPath, Inc. Notes to Consolidated Financial Statements respectively. Accumulated amortization was $ 3.7 million and $ 3.0 million as of January 31, 2025 and 2024, 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 such amortization is 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 prepaid expenses and other current assets and other assets, non-current on the consolidated balance sheets. Capitalized license fees were $ 2.7 million and $ 4.2 million as of January 31, 2025 and 2024, respectively. Related amortization expense was $ 7.7 million, $ 8.4 million, and $ 7.3 million for fiscal years 2025, 2024, and 2023, 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 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 in accordance with ASC 805, Business Combinations (with the exception of contract assets and contract liabilities, which are measured according to ASC 606, Revenue from Contracts with Customers, discussed under the heading "Revenue Recognition," below). Determination of the fair value of assets acquired and liabilities assumed relies on 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. 87 UiPath, Inc. Notes to Consolidated Financial Statements Goodwill and Acquired 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 2025, 2024, and 2023. 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 year 2025, 2024, or 2023 which indicated potential impairment of our long-lived assets. Revenue Recognition We derive revenue from the sale of: (1) software licenses for on-premises 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 many of our products that are available both on-premises and via SaaS, we sell a single offering that allows customers the choice of either on-premises or SaaS deployment throughout the term of the 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 distinct 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; 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 88 UiPath, Inc. Notes to Consolidated Financial Statements 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 Our term licenses (typically sold as a portion of Flex Offerings), 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, which results in a contract asset at contract inception. 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 (typically sold as a portion of 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, which results in a contract liability at contract inception. 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, which results in either a contract asset or liability, depending on the timing of the services, or in advance, which results in a contract liability at contract inception. 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. 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 making 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 automation 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. If the consideration payable includes a variable amount, we estimate the transaction price, including assessing whether the estimate of variable consideration must be constrained. We also offer certain rebate incentives to our partners which are treated as consideration payable to a customer and therefore accounted for as a reduction to the transaction price of the related revenue arrangements. 89 UiPath, Inc. Notes to Consolidated Financial Statements 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 and partner incentive plans and whether the commissions are incremental to a customer contract (i.e. would not have occurred absent the customer contract). Under our current sales compensation and certain of our partner incentive plans, 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 associated with licenses and license renewals are expensed at the time the corresponding licenses revenue is recognized. Commissions associated with 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 associated with 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 year 2025, 2024, or 2023. 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 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 90 UiPath, Inc. Notes to Consolidated Financial Statements 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 subcontracted third-party 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, 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 $ 45.9 million, $ 44.3 million, and $ 41.5 million for fiscal years 2025, 2024, and 2023, 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 RSUs and RSA s is determined based on the fair value of our Class A common stock on the grant date. The fair value of PSUs that are dependent on the satisfaction of a performance condition is also 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. 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. For PSUs dependent on the satisfaction of a performance condition, compensation expense is recognized only when management believes it is probable that the performance condition will be achieved. The fair value of ESPP shares is recognized over the relevant offering period on a straight-line basis. With all award types, we account for forfeitures as they occur. 91 UiPath, Inc. Notes to Consolidated Financial Statements Income Taxes Pursuant to ASC 740, Income Taxes , we account for 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 (benefit from) provision for income taxes in the consolidated statements of operations. Net Loss Per Share Basic and diluted net loss per share is calculated by dividing net loss 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. All potentially dilutive common stock equivalents were anti-dilutive in fiscal years 2025, 2024, and 2023, as we were in a net loss position for these periods. Segment Information Our chief operating decision maker, or CODM , is our CEO. (From the second quarter of fiscal year 2023 through the second quarter of fiscal year 2025, our Co-CEOs acted together as CODM.) The CODM reviews financial information at the consolidated level and manages business activities as one operating and reportable segment. Because the assets of our single reportable segment are presented as total assets on our consolidated balance sheets, no other measure of segment assets is regularly provided to the CODM. Net (loss) income, as reported on our consolidated statements of operations, is one of the measures of segment profit or loss used by our CODM to evaluate performance relative to plan, make resource allocation decisions, and monitor profitability trends. Significant Segment Expenses Revenue (the sources of which are described under the heading "Revenue Recognition," above) is reduced by significant expenses regularly provided to the CODM, as well as other segment items, to arrive at net loss for the periods presented as follows (in thousands): 92 UiPath, Inc. Notes to Consolidated Financial Statements Year Ended January 31, 2025 2024 2023 Revenue $ 1,429,664 $ 1,308,072 $ 1,058,581 Significant segment expenses: Adjusted cost of licenses (1) 5,818 7,098 7,667 Adjusted cost of subscription services (1)(2)(3)(4) 142,654 94,265 73,207 Adjusted cost of professional services and other (2)(3)(4) 59,068 62,248 69,436 Adjusted sales and marketing (1)(2)(3)(4) 583,898 560,009 520,387 Adjusted research and development (2)(3)4) 242,679 210,722 181,018 Adjusted general and administrative (1)(2)(3)(4)(5) 154,965 141,166 141,706 Other segment items (6) 361,393 356,909 403,780 Amortization of acquired intangible assets 6,711 8,600 6,896 Interest income ( 49,422 ) ( 57,130 ) ( 27,955 ) (Benefit from) provision for income taxes ( 4,406 ) 14,068 10,791 Net loss $ ( 73,694 ) $ ( 89,883 ) $ ( 328,352 ) (1) Excludes amortization of acquired intangible assets (2) Excludes stock-based-compensation (3) Excludes employer payroll tax on employee equity transactions (4) Excludes restructuring costs (5) Excludes charitable donation of Class A common stock (6) Other segment items include stock-based compensation expense; employer payroll tax expense related to employee equity transactions; restructuring costs; Charitable donation of Class A common stock; and other income, net. Entity-Wide Disclosures 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, 2025 2024 U.S. $ 183,244 $ 189,227 Romania 86,933 81,740 United Kingdom 75,574 45,445 Netherlands 24,071 27,004 Rest of world 26,449 29,430 Total long-lived assets $ 396,271 $ 372,846 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. Recently Adopted Accounting Pronouncements In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures . ASU No. 2023-07 is intended to improve reportable segments disclosures requirements, primarily through enhanced disclosures about significant segment expenses. We adopted ASU No. 93 UiPath, Inc. Notes to Consolidated Financial Statements 2023-07 as of January 31, 2025 and have included the relevant disclosures under the heading "Segment Information" above. Recently Issued Accounting Pronouncements In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU No. 2023-09 will require additional tax disclosures, predominantly related to the effective income tax rate reconciliation and income taxes paid. ASU No. 2023-09 will be effective for us for annual periods beginning after December 15, 2024. Early adoption is permitted. We are currently evaluating the impact of this pronouncement on our consolidated financial statements. In November 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures. ASU No. 2024-03 requires additional disclosure on specific expense categories included in the expense captions presented on the statements of operations, and may be applied prospectively or retrospectively. ASU No. 2024-03 is effective for annual reporting periods beginning after December 15, 2026 and for interim reporting periods beginning after December 15, 2027. Early adoption is permitted. We are currently evaluating the impact of this pronouncement 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, 2025 2024 2023 Amount Percentage of Revenue Amount Percentage of Revenue Amount Percentage of Revenue Americas (1) $ 695,053 49 % $ 631,923 48 % $ 529,060 50 % Europe, Middle East, and Africa 457,703 32 % 415,915 32 % 301,036 28 % Asia-Pacific (2) 276,908 19 % 260,234 20 % 228,485 22 % Total revenue $ 1,429,664 100 % $ 1,308,072 100 % $ 1,058,581 100 % (1) Revenue from the U.S. represented 44 %, 43 %, and 46 % of our total revenues for fiscal years 2025, 2024, and 2023, respectively. (2) Revenue from Japan represented 9 %, 9 %, and 10 % of our total revenues for fiscal years 2025, 2024, and 2023, 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 2025 2024 Beginning balance $ 90,411 $ 75,783 Contract assets recognized during the year 88,862 84,180 Amounts transferred to accounts receivable from unbilled accounts receivable presented at the beginning of the year ( 84,197 ) ( 69,260 ) Translation adjustments ( 2,894 ) ( 292 ) Ending balance $ 92,182 $ 90,411 Contract assets, current $ 88,735 $ 84,197 Contract assets, non-current 3,447 6,214 Total contract assets $ 92,182 $ 90,411 94 UiPath, Inc. Notes to Consolidated Financial Statements Year Ended January 31, Deferred Revenue 2025 2024 Beginning balance $ 647,832 $ 520,031 Additions to deferred revenue during the year 1,410,482 1,364,473 Revenue recognized that was included in deferred revenue at the beginning of the period ( 486,805 ) ( 398,334 ) Revenue recognized that was not included in deferred revenue at the beginning of the period ( 855,330 ) ( 828,668 ) Translation adjustments ( 10,872 ) ( 9,670 ) Ending balance $ 705,307 $ 647,832 Deferred revenue, current $ 569,464 $ 486,805 Deferred revenue, non-current 135,843 161,027 Total deferred revenue $ 705,307 $ 647,832 Remaining Performance Obligations Our remaining performance obligations are comprised of licenses, subscription services, and professional services not yet delivered. As of January 31, 2025, the aggregate amount of the transaction price allocated to remaining performance obligations was $ 1,242.6 million , which consists of $ 705.3 million of billed consideration and $ 537.3 million of unbilled consideration. We expect to recognize 65 % of our remaining performance obligations as revenue over 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, 2025 2024 Beginning balance $ 228,995 $ 187,503 Additions to deferred contract acquisition costs 89,124 118,844 Amortization of deferred contract acquisition costs ( 92,089 ) ( 75,471 ) Translation adjustments ( 4,228 ) ( 1,881 ) Ending balance $ 221,802 $ 228,995 Deferred contract acquisition costs, current $ 82,461 $ 74,678 Deferred contract acquisition costs, non-current 139,341 154,317 Total deferred contract acquisition costs $ 221,802 $ 228,995 95 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, 2025 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Treasury bills and U.S government securities $ 703,740 $ — $ ( 421 ) $ 703,319 Corporate bonds 93,989 36 — 94,025 Commercial paper 42,371 20 — 42,391 Yankee bonds 4,707 — ( 7 ) 4,700 Total marketable securities $ 844,807 $ 56 $ ( 428 ) $ 844,435 As of January 31, 2024 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Treasury bills and U.S government securities $ 641,263 $ 29 $ ( 100 ) $ 641,192 Corporate bonds 1,993 — ( 2 ) 1,991 Agency bonds 174,990 — ( 28 ) 174,962 Total marketable securities $ 818,246 $ 29 $ ( 130 ) $ 818,145 As of January 31, 2025 and 2024, $ 94.1 million and none , respectively, of our marketable securities had remaining contractual maturities of one year or more. As of January 31, 2025 and 2024, $ 2.4 million and $ 3.3 million, respectively, of interest receivable was included in prepaid expenses and other current assets on the consolidated balance sheets. We did not recognize an allowance for credit losses against interest receivable as of January 31, 2025 or 2024. Unrealized losses during the periods presented 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. 96 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 (in thousands): As of January 31, 2025 Level 1 Level 2 Level 3 Total Financial Assets: Money market funds $ 311,942 $ — $ — $ 311,942 Total cash equivalents 311,942 — — 311,942 Treasury bills & U.S. government securities 703,319 — — 703,319 Corporate bonds — 94,025 — 94,025 Commercial paper — 42,391 — 42,391 Yankee bonds — 4,700 — 4,700 Total marketable securities 703,319 141,116 — 844,435 Other investments carried at fair value — — 11,879 11,879 Total $ 1,015,261 $ 141,116 $ 11,879 $ 1,168,256 As of January 31, 2024 Level 1 Level 2 Level 3 Total Financial Assets: Money market funds $ 509,053 $ — $ — $ 509,053 Total cash equivalents 509,053 — — 509,053 Treasury bills and U.S. government securities 641,192 — — 641,192 Corporate bonds — 1,991 — 1,991 Agency bonds 174,962 — — 174,962 Total marketable securities 816,154 1,991 — 818,145 Total $ 1,325,207 $ 1,991 $ — $ 1,327,198 Our money market funds, treasury bills and U.S. government securities, 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 corporate bonds, commercial paper, and Yankee 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. Other investments carried at fair value, which consist of convertible bonds of private company the H Company purchased during fiscal year 2025, are classified as Level 3 because their valuation relies on unobservable inputs. None of our financial instruments were classified as Level 3 as of January 31, 2024. 6 Business Acquisitions Fiscal Year 2023 Acquisition 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 continue to accelerate our technology roadmap, expand the breadth of our AI-powered automation capabilities, and unlock new automation opportunities for our customers. The Re:infer acquisition was accounted for as a business combination. 97 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 paid on first anniversary of closing (July 29, 2023) 5,863 Loan note paid on second anniversary of closing (July 29, 2024) 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 to 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 is 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. We incurred transaction costs in connection with the Re:infer acquisition of $ 1.1 million, which were included in general and administrative expenses in the consolidated statement of operations for fiscal year 2023. 7 Intangible Assets and Goodwill Intangible Assets, Net Intangible assets, net consisted of the following as of January 31, 2025 (dollars in thousands): Intangible Assets, Gross Accumulated Amortization Intangible Assets, Net Weighted-Average Remaining Useful Life (Years) Developed technology $ 28,130 $ ( 21,416 ) $ 6,714 2.2 Customer relationships 8,183 ( 7,648 ) 535 0.5 Trade names and trademarks 271 ( 271 ) — 0.0 Other intangibles 1,231 ( 575 ) 656 6.4 Total $ 37,815 $ ( 29,910 ) $ 7,905 98 UiPath, Inc. Notes to Consolidated Financial Statements Intangible assets, net consisted of the following as of January 31, 2024 (dollars in thousands): Intangible Assets, Gross Accumulated Amortization Intangible Assets, Net Weighted-Average Remaining Useful Life (Years) Developed technology $ 28,807 $ ( 16,881 ) $ 11,926 2.8 Customer relationships 8,266 ( 6,306 ) 1,960 1.3 Trade names and trademarks 272 ( 266 ) 6 0.2 Other intangibles 1,231 ( 419 ) 812 7.0 Total $ 38,576 $ ( 23,872 ) $ 14,704 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 of acquired intangible assets was $ 6.7 million , $ 8.6 million and $ 6.9 million for fiscal years 2025, 2024, and 2023, respectively. Expected future amortization expense related to intangible assets was as follows as of January 31, 2025 (in thousands): Year Ended January 31, Amount 2026 $ 4,053 2027 2,407 2028 1,143 2029 101 2030 62 Thereafter 139 Total $ 7,905 Goodwill Changes in the carrying amount of goodwill were as follows during the periods presented (in thousands): Carrying Amount Balance as of January 31, 2023 $ 88,010 Effect of foreign currency translation 1,016 Balance as of January 31, 2024 89,026 Effect of foreign currency translation ( 1,722 ) Balance as of January 31, 2025 $ 87,304 8 Operating Leases Our operating leases consist of real estate and vehicles and have remaining lease terms of one year to 13 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. 99 UiPath, Inc. Notes to Consolidated Financial Statements Lease costs are presented below (in thousands): Year Ended January 31, 2025 2024 2023 Operating lease cost $ 15,899 $ 13,047 $ 11,675 Short-term lease cost 3,722 4,965 5,895 Variable lease cost 2,065 2,142 1,418 Sublease income (1) — ( 1,615 ) ( 2,129 ) Total lease cost $ 21,686 $ 18,539 $ 16,859 (1) Included in other income, net in the consolidated statements of operations Supplemental balance sheet information related to leases is as follows (in thousands): As of January 31, 2025 2024 Assets: Operating lease right-of-use assets $ 66,500 $ 56,072 Liabilities: Operating lease liabilities, current (included in accrued expenses and other current liabilities) $ 3,587 $ 8,357 Operating lease liabilities, non-current 74,230 58,713 Total operating lease liabilities $ 77,817 $ 67,070 Supplemental cash flow information related to operating leases is as follows for the periods presented (in thousands): Year Ended January 31, 2025 2024 2023 Cash paid for amounts included in the measurement of operating lease liabilities $ 16,758 $ 12,907 $ 6,702 Operating lease ROU assets obtained in exchange for new operating lease liabilities $ 21,242 $ 12,986 $ 11,511 The following table represents the weighted-average remaining lease term and discount rate for the periods presented: As of January 31, 2025 2024 Weighted-average remaining lease term (years) 10.1 10.7 Weighted-average discount rate 7.2 % 7.1 % Future undiscounted lease payments for our operating lease liabilities as of January 31, 2025 were as follows (in thousands): Amount Year Ended January 31, 2026 $ 8,420 2027 14,567 2028 13,214 2029 9,808 2030 8,824 Thereafter 56,829 Total operating lease payments 111,662 Less: imputed interest ( 33,845 ) Total operating lease liabilities $ 77,817 100 UiPath, Inc. Notes to Consolidated Financial Statements As of January 31, 2025, we had non-cancellable commitments in the amount of $ 0.2 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, 2025 2024 Prepaid expenses and service credits $ 65,334 $ 87,781 Other current assets 20,942 17,199 Prepaid expenses and other current assets $ 86,276 $ 104,980 Property and Equipment, Net Property and equipment, net consisted of the following (in thousands): As of January 31, 2025 2024 Computers and equipment $ 23,677 $ 23,767 Leasehold improvements 31,402 21,756 Furniture and fixtures 7,124 6,640 Construction in progress 9,562 4,560 Other 635 632 Property and equipment, gross 72,400 57,355 Less: accumulated depreciation ( 39,660 ) ( 33,373 ) Property and equipment, net $ 32,740 $ 23,982 Depreciation expense was $ 8.1 million , $ 11.1 million, and $ 8.6 million for fiscal years 2025, 2024, and 2023, respectively. Other Assets, Non-Current As of January 31, 2025 and January 31, 2024, other assets, non-current included $ 24.4 million and $ 1.5 million, respectively, related to equity investments in private companies without readily determinable fair values. As a measurement alternative, these investments are reported at cost and are assessed periodically to determine whether their carrying value must be adjusted for observable changes in price or indicators of impairment. As of January 31, 2025, other assets, non-current also included $ 11.9 million related to private-company convertible bonds, which are carried at fair value. Refer to Note 5, Fair Value Measurement for further information. 101 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, 2025 2024 Accrued expenses $ 19,810 $ 13,414 Withholding tax from employee equity transactions 4,699 3,277 Employee stock purchase plan withholdings 3,335 3,618 Payroll taxes and other benefits payable 8,258 3,888 Income tax payable 1,632 7,140 Value-added taxes payable 3,640 6,480 Operating lease liabilities, current 3,587 8,357 Deferred consideration for business acquisition, current — 5,570 Rebates payable to partners 13,314 7,289 Cloud infrastructure liabilities (1) 6,685 5,044 Other 18,963 19,920 Accrued expenses and other current liabilities $ 83,923 $ 83,997 (1) Prior period amounts have been expanded to conform to current period presentation 10 Credit Facility On October 30, 2020 we entered into the Credit Facility, a $ 200 million senior secured revolving credit facility with a maturity date of October 30, 2023, with HSBC Ventures USA Inc., Silicon Valley Bank, a division of First Citizens Bank & Trust Company (successor by purchase to the FDIC as receiver for Silicon Valley Bridge Bank, N.A. (as successor to Silicon Valley Bank)), Sumitomo Mitsui Banking Corporation, and Mizuho Bank, LTD. The Credit Facility contained certain customary covenants, including, but not limited to, those relating to additional indebtedness, liens, asset divestitures, and affiliate transactions. We did not borrow under the Credit Facility at any time. In September 2023, we and the lenders terminated the Credit Facility prior to its original maturity date. 11 Commitments and Contingencies Letters of Credit We had a total of $ 2.6 million in letters of credit outstanding predominantly in favor of certain landlords for office space as of January 31, 2025 and 2024. These letters of credit renew annually and expire on various dates through fiscal year 2027 . 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. 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, 2025 and 2024, 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. 102 UiPath, Inc. Notes to Consolidated Financial Statements Workforce Restructuring On June 24, 2022, our board of directors approved th e Fiscal Year 2023 Workforce Restructuring 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 th ese 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 %. The Fiscal Year 2023 Workforce Restructuring was completed during the second quarter of fiscal year 2024. On July 8, 2024, o ur board of directors approved the Fiscal Year 2025 Workforce Restructuring to re shape the organization by streamlining our structure, particularly in operational and corporate functions, to better prioritize our go-to-market investments and focus our research and development investments on AI and driving innovation across our platform. The Fiscal Year 2025 Workforce Restructuring is substantially completed, with any remaining actions now expected to be completed by end of the second quarter of fiscal year 2026. We incurred $ 24.7 million and $ 2.6 million of expense related to restructuring actions in fiscal years 2025 and 2024, respectively. The following table shows the amounts incurred during fiscal years 2025 and 2024, and the related liability, which is recorded in accrued compensation and employee benefits in the consolidated balance sheets, for restructuring-related costs (in thousands): Fiscal Year 2025 Workforce Restructuring Fiscal Year 2023 Workforce Restructuring Accrued restructuring costs as of January 31, 2023 $ — $ 3,889 Restructuring costs incurred during fiscal year 2024 — 2,626 Amount paid during fiscal year 2024 — ( 6,180 ) Accrued restructuring costs as of January 31, 2024 — 335 Restructuring costs incurred during fiscal year 2025 24,726 — Amount paid during fiscal year 2025 ( 14,948 ) ( 335 ) Accrued restructuring costs as of January 31, 2025 $ 9,778 $ — The following table presents restructuring charges, consisting primarily of employee termination benefits, incurred for the periods presented by financial statement line item (in thousands): Year Ended January 31, 2025 2024 2023 Cost of subscription services revenue $ 2,745 $ 114 $ 182 Cost of professional services and other revenue 105 — 710 Sales and marketing 15,452 1,376 19,491 Research and development 3,058 387 494 General and administrative 3,366 749 2,569 Total $ 24,726 $ 2,626 $ 23,446 Defined Contribution Plans We sponsor retirement plans for qualifying employees, including a 401(k) plan in the U.S. a nd 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 2025, 2024, and 2023 were $ 17.1 million , $ 16.0 million, and $ 14.5 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 103 UiPath, Inc. Notes to Consolidated Financial Statements 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. UiPath and certain of its officers are currently parties to the following litigation matters: On September 6, 2023, a putative class action lawsuit was filed in the United States District Court for the Southern District of New York against UiPath, then Co-CEO Daniel Dines, and CFO Ashim Gupta, captioned In re UiPath, Inc. Securities Litigation (the "2023 Securities Action"). The initial complaint asserted claims under Sections 10(b) and 20(a) of the Exchange Act, and alleged that defendants made material misstatements and omissions, including regarding UiPath’s competitive position and its financial results. On January 26, 2024, the lead plaintiff in the 2023 Securities Action filed an amended complaint, and on March 26, 2024, filed a second amended complaint, which alleges Securities Act claims under Sections 11 and 15 as well as Exchange Act claims under Section 10(b), Rule 10b-5, and Section 20(a). In support of the Securities Act claims, the plaintiff alleges material misstatements and omissions in UiPath’s April 2021 Registration Statement, including regarding UiPath’s competitive position and its financial results. The second amended complaint is purportedly brought on behalf of a putative class of persons who purchased or otherwise acquired UiPath common stock between April 21, 2021 and September 27, 2022. It seeks unspecified monetary damages, costs and attorneys’ fees, and other unspecified relief as the Court deems appropriate. On April 23, 2024, the defendants moved to dismiss the second amended complaint. On November 4, 2024, the Court issued its opinion and order on the motion to dismiss, wherein it dismissed all claims under the Securities Act, but allowed the case to proceed with respect to two statements relating to competition that the plaintiffs allege violated the Exchange Act. On February 28, 2025, plaintiff filed a motion for Class Certification and Appointment of Class Representative and Class Counsel. On November 30, 2023, a purported shareholder derivative lawsuit was filed in the United States District Court for the Eastern District of New York against UiPath, as nominal defendant, and then Co-CEO Daniel Dines, CFO Ashim Gupta, and several of UiPath’s current and former directors. The case was captioned Polilingua Limited v. Daniel Dines, et al. The lawsuit alleged that the individual defendants breached their fiduciary duties and committed other alleged misconduct in connection with the statements at issue in the 2023 Securities Action and by causing UiPath to repurchase shares at allegedly inflated prices. The plaintiff sought unspecified damages and/or restitution on behalf of UiPath, as well as costs and attorneys’ fees and certain changes to UiPath’s corporate governance and internal controls. Similar cases were filed in the District of Delaware (captioned In re UiPath, Inc. Stockholder Derivative Litigation) and in the Southern District of New York (captioned Ristea v. Botteri, et al.). On November 22, 2024, the In re UiPath, Inc. Stockholder Derivative Litigation case was voluntarily dismissed without prejudice. On January 8, 2025, the Polilingua Limited v. Daniel Dines, et al. case was voluntarily dismissed without prejudice. On February 5, 2025, the Ristea v. Botteri, et al. case was voluntarily dismissed. On June 20, 2024, a putative class action lawsuit was filed in the United States District Court for the Southern District of New York against UiPath, CEO Daniel Dines, former CEO Robert Enslin, and CFO Ashim Gupta. The case was captioned Steiner v. UiPath, et al . The complaint asserted claims under Sections 10(b) and 20(a) of the Exchange Act on behalf of a putative class of persons who purchased or acquired UiPath common stock between December 1, 2023 and May 29, 2024, and alleged that defendants made material misstatements and omissions, including regarding the Company's AI-powered Business Automation Platform. The complaint sought unspecified monetary damages, costs and attorneys' fees, and other unspecified relief. On August 6, 2024, a second putative class action was filed in the United States District Court for the Southern District of New York against UiPath, CEO Daniel Dines, former CEO Robert Enslin, and CFO Ashim Gupta. The case was captioned Brunozzi v. UiPath, et al . The allegations in the Brunozzi complaint were identical to those made in Steiner v. UiPath et al . except that the Brunozzi complaint defines the putative class to include purchasers of UiPath call options and sellers of put options. On September 5, 2024, the Court consolidated the Steiner and Brunozzi cases and appointed Brunozzi as the lead plaintiff. The consolidated action is captioned In re UiPath, Inc. Securities Litigation (the "2024 Securities Action"). On November 22, 2024, the lead plaintiff filed an amended complaint against UiPath, former CEO Robert Enslin, and CFO Ashim Gupta. CEO Daniel Dines is no longer a named defendant in the 2024 Securities Action. The allegations in the amended complaints are substantively similar to the allegations set forth in the complaints previously filed in Steiner and Brunozzi. The amended complaint seeks unspecified monetary damages, costs and attorneys' fees, and other unspecified relief as the Court deems appropriate. On January 21, 2025, the defendants moved to dismiss the amended complaint, and on March 21, 2025, plaintiffs filed their opposition to the motion. On July 8, 2024, a purported shareholder derivative lawsuit was filed in the United States District Court for the Southern District of New York against UiPath, as nominal defendant, CEO Daniel Dines, former CEO Robert Enslin, 104 UiPath, Inc. Notes to Consolidated Financial Statements CFO Ashim Gupta, and UiPath's board of directors. The case is captioned Gera v. UiPath, et al . The lawsuit alleges that the individual defendants breached their fiduciary duties and committed other alleged misconduct in connection with the statements made during the time period at issue in the 2024 Securities Action, and by allegedly causing UiPath to repurchase shares at allegedly inflated prices. The plaintiff seeks unspecified damages and/or restitution on behalf of UiPath, as well as costs and attorneys' fees and certain changes to UiPath's corporate governance and internal controls. The matter has been stayed pending further action in the 2024 Securities Action. We have not recorded any accrual related to the aforementioned litigation matters as of January 31, 2025, as we believe a loss in these matters is neither probable nor estimable at this time. 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. Other Matters Our indirect tax positions are subject to audit in multiple jurisdictions globally, with a key focus on our largest operational territories, including the U.S., Romania, India, and the U.K. Our Romanian subsidiary was subjected to audits by the ANAF for value-added tax and corporate income tax for the periods January 2020 through January 2022 and January 2018 through January 2022, respectively, which were completed during the first quarter of fiscal year 2025. With regard to the value-added tax audit, an assessment of $ 14.3 million has been issued. While we paid this assessment during fiscal year 2025, we disagree with the assessment and are in the process of appealing through litigation. The amount of the payment is included in other assets, non-current on our consolidated balance sheets as of January 31, 2025, and we have not recorded any estimated liability related to this litigation as of January 31, 2025, as we believe it is not probable that a material loss will be incurred. Additionally, our Romanian subsidiary is currently subject to audit for value-added tax for the periods February 2022 through April 2024. While the audit is ongoing, and no official assessment has been issued, we estimate an approximate exposure of $ 13.0 million. We have not recorded any estimated liability related to this audit as of January 31, 2025, as we believe it is not probable that a material loss will be incurred. Our Indian subsidiary is currently subject to audit for the goods and services tax for the periods April 2018 through March 2023. While no official assessment has been issued, we estimate an approximate exposure of $ 18.7 million. We are preparing our responses to the tax authority's requests. We have not recorded any estimated liability related to this audit as of January 31, 2025, as we believe it is not probable that a material loss will be incurred. For additional information regarding tax audits, refer to Note 14. Income Taxes . Non-Cancelab le 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. As of January 31, 2025, we had outstanding non-cancelable purchase obligations with a term of 12 months or longer as follows (in thousands): Year Ended January 31, Amount 2026 $ 78,613 2027 64,251 2028 24,930 2029 2,370 2030 4 Thereafter — Total $ 170,168 105 UiPath, Inc. Notes to Consolidated Financial Statements 12 Stockholders' Equity Common Stock Our amended and restated certificate of incorporation authorizes 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 common stock outstanding immediately prior to the completion of the IPO, or (3) six months after the death or incapacity of Daniel Dines. Class A common stock is entitled to one vote per share and Class B common stock is entitled to thirty-five votes per share. Stock Repurchase Program On September 1, 2023, our board of directors authorized a stock repurchase program, pursuant to which we may repurchase from time to time up to $ 500.0 million of our outstanding shares of Class A common stock. This authorization was scheduled to expire on March 1, 2025. On August 30, 2024, our board of directors authorized the repurchase of an additional $ 500.0 million of our Class A common stock. The current authorization may be suspended or discontinued at any time and does not have a specified expiration date. Repurchases under the program may be effected through open market purchases, privately-negotiated transactions, or otherwise in accordance with applicable federal securities laws, including through Rule 10b5-1 trading plans and under Rule 10b-18 of the Exchange Act. The timing and actual number of shares repurchased will depend on a variety of factors, including price, general business and market conditions, and alternate uses of capital. We repurchased 31.8 million shares of our Class A common stock at an average price of $ 12.30 per share during fiscal year 2025 and 5.8 million shares of our Class A common stock at an average price of $ 17.57 per share during fiscal year 2024 (inclusive of brokerage commission) . For fiscal year 2025, we accrued $ 1.4 million of related excise tax pursuant to the Inflation Reduction Act of 2022, which is included in the cost of treasury stock on our condensed consolidated balance sheet as of January 31, 2025. Subsequent to January 31, 2025, between February 1, 2025 and March 20, 2025, we repurchased an additional 2.3 million shares of our Class A common stock at an average price of $ 11.76 per share. Charitable Donations of Class A Common Stock We have reserved 2.8 million shares of our Class A common stock to fund our social impact and ESG initiatives. We contributed 0.3 million shares of our Class A common stock during each of fiscal years 2025, 2024, and 2023 to a donor-advised fund in connection with our Pledge 1% commitment. The aggregate fair values of the shares on the respective contribution dates of $ 6.6 million, $ 4.2 million, and $ 5.5 million were recorded within general and administrative expense in the consolidated statements of operations for fiscal years 2025, 2024, and 2023, respectively. Preferred Stock Our amended and restated our certificate of incorporation authorizes a total of 20.0 million shares of preferred stock. 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, 2025. 106 UiPath, Inc. Notes to Consolidated Financial Statements 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 Gain (Loss) on Marketable Securities Accumulated Other Comprehensive Income (Loss) Balance as of January 31, 2023 $ 8,231 $ ( 619 ) $ 7,612 Other comprehensive income, net of tax 694 519 1,213 Balance as of January 31, 2024 $ 8,925 $ ( 100 ) $ 8,825 Other comprehensive loss ( 14,012 ) ( 272 ) ( 14,284 ) Tax benefit 569 — 569 Balance as of January 31, 2025 $ ( 4,518 ) $ ( 372 ) $ ( 4,890 ) 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 Plan , which provides for grants of incentive stock options, nonstatutory stock options, stock appreciation rights, RSAs, RSUs, PSUs, and other forms of awards. As of January 31, 2025, w e have reserved 202.2 million shares of our Class A common stock to be issued under the 2021 Plan. 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 ten years , which began on February 1, 2022 and continues 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. Although certain stock options remain outstanding under our prior stock plans, the UiPath, Inc. 2018 Stock Plan and the UiPath, Inc. 2015 Stock Plan, no shares are available for issuance of new awards under these plans. 2021 Employee Stock Purchase Plan In April 2021, prior to and in connection with the IPO, we adopted the ESPP. As of January 31, 2025, t he ESPP authorizes the issuance of 27.2 million shares of our Class A common stock under purchase rights granted to our employees. 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, which began on February 1, 2022 and continues 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 that 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 ESPP 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. 107 UiPath, Inc. Notes to Consolidated Financial Statements Outstanding Equity Awards Stock Options Stock options granted under the 2021 Plan generally vest over three to 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 2025 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, 2024 11,080 $ 3.49 7.8 $ 216,010 Granted 2,738 $ 0.10 Exercised ( 4,002 ) $ 2.01 Forfeited ( 1,881 ) $ 13.91 Expired — $ — Balance as of January 31, 2025 7,935 $ 0.60 7.5 $ 108,138 Vested and exercisable as of January 31, 2025 3,017 $ 1.39 5.8 $ 38,695 The weighted-average grant date fair value of stock options granted during fiscal years 2025, 2024, and 2023 was $ 18.00 , $ 16.84 and $ 12.23 per share, respectively. The intrinsic value of stock options exercised during fiscal years 2025, 2024, and 2023 was $ 58.5 million, $ 93.2 million, and $ 83.6 million, respectively. As of January 31, 2025, unrecognized compensation expense associated with unvested stock options granted and outstanding was $ 78.9 million, to be recognized over a weighted-average remaining period of 1.8 years. Fair value of each stock option grant was estimated on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions: Year Ended January 31, 2025 2024 2023 Expected term (years) 5.7 5.9 5.9 Expected volatility 64.2 % 65.2 % 60.6 % Risk-free interest rate 4.2 % 3.6 % 3.5 % Expected dividend yield 0.0 % 0.0 % 0.0 % During fiscal year 2023, 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 shares of Class A common stock subject to outstanding stock options and incremental compensation expense of $ 2.8 million during fiscal year 2023. 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 years 2025 and 2024, we did not repurchase any unvested early exercised options. 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 108 UiPath, Inc. Notes to Consolidated Financial Statements of the associated options. Such accrued amounts were not material as of January 31, 2025 and 2024. 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 three to four years . RSUs are generally forfeited in case of termination of employment or service before the satisfaction of service-based vesting conditions. RSU activity during fiscal year 2025 was as follows: RSUs (in thousands) Weighted-Average Grant Date Fair Value Per Share Unvested as of January 31, 2024 31,272 $ 19.89 Granted 17,704 $ 17.50 Vested ( 15,359 ) $ 20.90 Forfeited ( 11,168 ) $ 18.89 Unvested as of January 31, 2025 22,449 $ 17.81 The intrinsic value of RSUs released during fiscal years 2025, 2024, and 2023 was $ 234.6 million , $ 329.6 million, and $ 228.8 million, respectively. As of January 31, 2025, unrecognized compensation expense associated with unvested RSUs was approximately $ 371.2 million, to be recognized over a weighted-average remaining period of 2.0 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. Performance Stock Units During fiscal year 2024, we granted approximately 0.1 million PSUs at a grant date fair value of $ 18.08 per share. The PSUs were subject to performance conditions related to the achievement of certain individual and company targets for fiscal year 2024, which were not met. As a result, the PSUs were cancelled and no expense was recognized. 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, 2025 2024 2023 Expected term (years) 0.5 0.5 0.5 Expected volatility 63.0 % 67.4 % 69.0 % Risk-free interest rate 5.15 % 5.02 % 1.86 % Expected dividend yield 0.0 % 0.0 % 0.0 % During fiscal year 2025, 1.6 million shares were purchased under the ESPP at a weighted average purchase price of $ 10.13 per share. As of January 31, 2025, unrecognized compensation expense related to the ESPP was approximately $ 2.4 million, to be recognized over a weighted-average remaining period of 0.4 years. 109 UiPath, Inc. Notes to Consolidated Financial Statements 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) to 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 January 31, 2025, total unrecognized compensation expense related to these shares was $ 1.3 million, which is to be recognized over a weighted-average remaining period of 0.5 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, 2025 2024 2023 Cost of subscription services revenue $ 19,401 $ 14,750 $ 11,894 Cost of professional services and other revenue 11,386 10,958 11,855 Sales and marketing 134,646 144,863 154,922 Research and development 132,757 117,965 102,546 General and administrative 59,961 83,419 88,623 Total $ 358,151 $ 371,955 $ 369,840 14 Income Taxes The U.S. and foreign components of loss before income taxes are as follows for the periods presented (in thousands): Year Ended January 31, 2025 2024 2023 U.S. $ ( 136,507 ) $ ( 168,587 ) $ ( 273,467 ) Foreign 58,407 92,772 ( 44,094 ) Loss before income taxes $ ( 78,100 ) $ ( 75,815 ) $ ( 317,561 ) The components of the provision for income taxes are as follows for the periods presented (in thousands): Year Ended January 31, 2025 2024 2023 Current expense (benefit) Federal $ — $ ( 106 ) $ 213 State 586 ( 166 ) 493 Foreign 14,802 13,786 9,224 Total current expense 15,388 13,514 9,930 Deferred expense (benefit) Federal 593 — — State — — — Foreign ( 20,387 ) 554 861 Total deferred (benefit) expense $ ( 19,794 ) $ 554 $ 861 Total (benefit from) provision for income taxes $ ( 4,406 ) $ 14,068 $ 10,791 110 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 the periods presented: Year Ended January 31, 2025 2024 2023 Federal statutory income tax rate 21.0 % 21.0 % 21.0 % Foreign taxes ( 11.6 ) ( 2.0 ) ( 2.2 ) Non-deductible expenses ( 9.5 ) ( 17.9 ) ( 2.1 ) Stock-based compensation ( 25.0 ) ( 4.6 ) ( 10.8 ) Valuation allowance 62.2 ( 5.7 ) ( 12.3 ) Research and development credits 14.7 18.9 3.3 Cross border tax law ( 44.6 ) ( 27.4 ) — Other, net ( 1.6 ) ( 0.9 ) ( 0.3 ) Effective income tax rate 5.6 % ( 18.6 ) % ( 3.4 ) % Significant components of DTAs and DTLs are as follows as of the periods presented (in thousands): As of January 31, 2025 2024 Deferred tax assets: Net operating loss carryforwards $ 317,489 $ 344,067 Accruals and reserves 12,643 15,823 Stock-based compensation 6,512 11,888 Deferred revenue 29,376 25,942 Research and development 90,110 103,263 Depreciation and amortization 1,459 587 Lease liabilities 8,255 11,563 Other 6,428 5,602 Total deferred tax assets, gross 472,272 518,735 Less: valuation allowance ( 406,251 ) ( 470,040 ) Total deferred tax assets, net of valuation allowance 66,021 48,695 Deferred tax liabilities: Intangible assets ( 1,431 ) ( 2,409 ) Foreign exchange ( 34 ) ( 37 ) Right-of-use assets ( 5,728 ) ( 8,957 ) Commissions ( 30,871 ) ( 32,747 ) Other ( 3,791 ) — Total deferred tax liabilities ( 41,855 ) ( 44,150 ) Net deferred tax assets $ 24,166 $ 4,545 Net deferred tax assets $ 27,963 $ 4,678 Net deferred tax liabilities (included in other liabilities, non-current) ( 3,797 ) ( 133 ) Net deferred tax assets $ 24,166 $ 4,545 111 UiPath, Inc. Notes to Consolidated Financial Statements The table below details our DTA valuation allowances and the changes therein for the periods presented (in thousands): Beginning Balance Additions During the Period Reductions During the Period Ending Balance Year ended January 31, 2025 $ 470,040 $ 17,314 $ ( 81,103 ) $ 406,251 Year ended January 31, 2024 $ 476,589 $ 5,474 $ ( 12,023 ) $ 470,040 For fiscal year 2025, we recorded a net decrease in valuation allowance of $ 63.8 million, which consists of a valuation allowance release of $ 24.7 million related to our U.K. entity, based on our reassessment of the amount of the U.K. DTAs that are more likely than not to be realized, and a net decrease of $ 39.1 million related to a decrease in net DTAs associated with our U.S., Romania, and U.K. entities. For fiscal year 2024, we recorded a net decrease in valuation allowance of $ 6.5 million, driven by a decrease in Romania and U.K. net DTAs. The realization of tax benefits of net DTAs is dependent upon future levels of taxable income of an appropriate character in the periods the items are expected to be deductible or taxable. As of January 31, 2025, based on the available positive and negative evidence, including the amount of taxable income in the U.K. in recent years and our expectations of future profits in the U.K., we now believe it is more likely than not that the U.K. DTA is realizable. Therefore, during fiscal year 2025, we released the $ 24.7 million valuation allowance associated with the U.K. DTA. We continue to maintain full valuation allowances against our U.S. and Romania DTAs as of January 31, 2025 because we believe based on our current evaluations that it is more likely than not that these DTAs will not be realized. We intend to maintain each of these full valuation allowances until sufficient positive evidence exists to support a reversal of, or decrease in, each of the respective valuation allowances. However, we may release our U.S. or Romania valuation allowances in future periods if objective negative evidence of cumulative losses is no longer present and positive evidence, such as projection of future growth, supports the realization of such DTAs. Release of all or a portion of these valuation allowances would result in a decrease in the provision for income taxes in the period of the release. As of January 31, 2025, we had U.S. federal NOLs of $ 645.8 million available to offset future taxable income, all of which can be carried forward indefinitely. As of January 31, 2024 we had U.S. federal NOLs of $ 827.4 million, all of which could be carried forward indefinitely. As of January 31, 2025 and 2024, we had state NOLs of $ 834.6 million and $ 824.7 million, respectively, which begin expiring in 2026. As of January 31, 2025 and 2024, we had Romania NOLs of $ 658.2 million and $ 549.9 million, respectively, which begin expiring in 2026. As of January 31, 2025 and 2024, we had Japan NOLs of $ 1.8 million and $ 6.3 million, respectively, which begin expiring in 2027. Additionally, as of January 31, 2025 and 2024, we had U.K. NOLs of $ 101.7 million and $ 118.3 million, respectively, which may be carried forward indefinitely. Pursuant to Section 382 of the IRC, 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. As of January 31, 2025, we have recorded a deferred tax liability of $ 3.8 million associated with the undistributed earnings of our foreign subsidiaries that we no longer intend to indefinitely reinvest. 112 UiPath, Inc. Notes to Consolidated Financial Statements The table below details our gross unrecognized tax benefits (excluding penalties and interest) and the changes therein for the periods presented (in thousands): Year Ended January 31, 2025 2024 Beginning unrecognized tax benefits $ 504 $ 504 Additions for tax positions related to prior years 59,671 — Ending unrecognized tax benefits $ 60,175 $ 504 As of January 31, 2025, we had gross unrecognized tax benefits totaling $ 60.9 million (inclusive of penalties and interest) related to income taxes, of which $ 1.6 million would impact the effective tax rate if recognized. Of this amount, the total liability pertaining to uncertain tax positions was $ 0.9 million, excluding interest and penalties. The remainder of the unrecognized tax benefits, which primarily relate to the Romanian corporate income tax audit by ANAF and bilateral transfer pricing negotiations between the U.S. and Romania (described in further detail below), would not affect the effective tax rate because the unrecognized tax benefit is recorded as a reduction in our gross deferred assets, offset by a corresponding reduction in our valuation allowance. As of January 31, 2024, we had gross unrecognized tax benefits of $ 2.3 million (inclusive of penalties and interest) 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. Our policy is to recognize interest and penalties associated with tax matters as part of the income tax provision. During fiscal year 2025, the penalties and interest recorded related to uncertain tax positions was not material. Our tax positions are subject to income tax audits in multiple tax jurisdictions globally. Our estimate of the potential outcome of any uncertain tax position is subject to management's assessment of the relevant risks, facts, and circumstances existing at that time. We believe that we have provided adequate reserves for our income tax uncertainties in all open tax years. However, our future results may include adjustments to estimates in the period the audits are settled, which may impact our effective tax rate. Currently, our India subsidiary is appealing the corporate income tax assessment of $ 2.1 million for the audit period of April 2019 through March 2021. It also has an open corporate income tax audit for the period from January 2018 through January 2022. During fiscal year 2025, the Romanian ANAF completed a corporate income tax audit for the period from January 2018 through January 2022. Certain deductions have been disallowed, resulting in a proposed reduction of NOLs of approximately $ 66.7 million. We are appealing $ 64.3 million of the disallowance through litigation, $ 25.4 million of which we believe more likely than not will not be sustained. As a result, as of January 31, 2025, the Romania DTA and the corresponding valuation allowance has been reduced by $ 25.4 million. In addition, we have engaged in two bilateral transfer pricing negotiations for our transfer pricing model, one between the U.S and Romania, and one between Japan and Romania. These negotiations are still underway, and the authorities are in the process of determining the cost sharing allocations between the respective countries, and the ultimate outcomes remain uncertain. However, after evaluating recent developments in the transfer pricing negotiation between the U.S. and Romania, in anticipation of the agreement, during fiscal year 2025, we recorded a $ 33.8 million decrease in the U.S. DTA and the corresponding valuation allowance, representing the unrecognized tax benefit related to the U.S.-Romania bilateral advance pricing agreement. We also recorded a $ 16.0 million increase in the Romania DTA and its related valuation allowance. These amounts represent our best estimate of the tax expense associated with the proposed transfer pricing arrangements and their related effects. We file income tax returns in the U.S. federal jurisdiction, various state jurisdictions, and various international jurisdictions. Tax years 2021 and forward generally remain open for examination for federal and state tax purposes. Tax years 2018 and forward generally remain open for examination for foreign tax purposes. To the extent utilized in future years’ tax returns, NOLs at January 31, 2025 and 2024 will remain subject to examination until the respective tax year is closed. On December 20, 2021, the OECD published the Pillar Two Model Rules defining the global minimum tax, which calls for 15% global minimum tax for multinational enterprises with an annual revenue above €750.0 million. The OECD has since issued administrative guidance providing transition and safe harbor rules around the implementation of the Pillar Two global minimum tax. As of January 31, 2025, various countries, including EU, U.K., Japan, and Australia, have implemented the Pillar Two rules to varying degrees. We assessed and concluded that 113 UiPath, Inc. Notes to Consolidated Financial Statements the Pillar Two Model Rules do not have a significant impact on our consolidated financial statements for fiscal year 2025. We will continue to monitor developments and evaluate potential impact on future periods. 15 Net Loss Per Share The following table sets forth the computation of basic and diluted net loss per share for the periods presented (in thousands except per share amounts): Year Ended January 31, 2025 2024 2023 Class A Class B Class A Class B Class A Class B Numerator: Net loss $ ( 62,842 ) $ ( 10,852 ) $ ( 76,739 ) $ ( 13,144 ) $ ( 278,950 ) $ ( 49,402 ) Denominator: Weighted-average shares used in computing net loss per share, basic and diluted 477,480 82,453 481,402 82,453 465,569 82,453 Net loss per share, basic and diluted $ ( 0.13 ) $ ( 0.13 ) $ ( 0.16 ) $ ( 0.16 ) $ ( 0.60 ) $ ( 0.60 ) Anti-dilutive common stock equivalents excluded from the computation of diluted net loss per share were as follows (in thousands): Year Ended January 31, 2025 2024 2023 Class A Class B Class A Class B Class A Class B Unvested RSUs 30,239 — 36,878 — 31,427 — Outstanding stock options 10,171 — 13,247 — 13,967 — Shares subject to repurchase from RSAs and early exercised stock options 12 — 52 — 284 — Shares issuable under ESPP 783 — 705 — 828 — Returnable shares issued in connection with business acquisition 204 — 349 — 219 — Total 41,409 — 51,231 — 46,725 — 16 Related Party Transactions Beginning in the third quarter of fiscal year 2022, we have at times made use of an aircraft which is owned by Daniel Dines, our co-founder and CEO, through a special purpose LLC and which is operated by a third-party aircraft management company. Mr. Dines, through this special purpose LLC, obtained financing for the aircraft and bears all associated operating, personnel, and maintenance costs for the aircraft. We determined at the inception of this arrangement that the LLC is a VIE of which we are not the primary beneficiary; accordingly, we do not consolidate it in our consolidated financial statements. We did not incur any expense related to the use of the aircraft in fiscal year 2025 or 2024. In fiscal year 2023, we incurred expenses of $ 1.9 million in connection with our business use of the aircraft. 114 UiPath, Inc. Notes to Consolidated Financial Statements 17 Subsequent Events On March 7, 2025, we acquired all outstanding equity of Peak AI Limited ("Peak"), a U.K.-based software company, for approximately $ 65 million, consisting of a combination of up-front and contingent cash payments and stock-based compensation. Peak's AI platform provides pricing and inventory intelligence to customers in manufacturing and retail 115 Table of Contents Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.