path-20210731

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

___________________________________________

FORM 10-Q

___________________________________________

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended July 31, 2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission File Number: 001-40348

___________________________________________

UiPath, Inc.

(Exact Name of Registrant as Specified in its Charter)

___________________________________________


Delaware			47-4333187
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)
90 Park Ave, 20th Floor New York, New York			10016
(Address of principal executive offices)			(Zip Code)

Registrant’s telephone number, including area code: (844) 432-0455

___________________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading
Symbol(s)

Name of each exchange on which registered

Class A common stock, par value
$0.00001 per share

PATH

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☐

Emerging growth company

☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of September 3, 2021, the registrant had 431,082,559 shares of Class A common stock and 82,452,748 shares of Class B common stock, each with a par value of $0.00001 per share, outstanding.

Table of Contents


		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets	2
	Condensed Consolidated Statements of Operations	3
	Condensed Consolidated Statements of Comprehensive Loss	4
	Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit)	5
	Condensed Consolidated Statements of Cash Flows	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	46
Item 4.	Controls and Procedures	46

PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	48
Item 1A.	Risk Factors	48
Item 2.	Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchase of Equity Securities	85
Item 3.	Defaults Upon Senior Securities	86
Item 4.	Mine Safety Disclosures	86
Item 5.	Other Information	86
Item 6.	Exhibits	86
Signatures		87

Table of Contents

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, about UiPath, Inc. and its consolidated subsidiaries (“UiPath,” the “Company,” “we,” “us,” or “our”) and our industry that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations or financial condition, business strategy, and plans and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” or “would” or the negative of these words or other similar terms or expressions. These forward-looking statements include, but are not limited to, statements concerning the following:

•our expectations regarding our annualized renewal run-rate, or ARR, revenue, expenses, and other operating results;

•our ability to acquire new customers and successfully retain existing customers;

•our ability to increase the number of users who access our platform and the number of automations built on our platform by our existing customers;

•our ability to effectively manage our growth and achieve or maintain profitability;

•future investments in our business, our anticipated capital expenditures, and our estimates regarding our capital requirements;

•the costs and success of our marketing efforts and our ability to maintain and enhance our brand;

•our growth strategies, including any further expansion into the top 25 countries as measured by gross domestic product;

•the estimated addressable market opportunity for our platform and automation generally;

•our reliance on key personnel and our ability to attract and retain highly-qualified personnel;

•our ability to obtain, maintain, protect, and enforce our intellectual property rights and any costs associated therewith;

•the effect of global events, such as the COVID-19 pandemic or other public health crises, on our business, industry, and the global economy;

•our ability to compete effectively with existing competitors and new market entrants; and

•the size and growth rates of the markets in which we compete.

You should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, and operating results. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, and other factors described in the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. The results, events, and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events, or circumstances could differ materially from those described in the forward-looking statements.

In addition, statements that “we believe,” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this Quarterly Report on Form 10-Q. While we believe that information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive

Table of Contents

inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements.

The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments.

Table of Contents

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Table of Contents

UiPath, Inc.

Condensed Consolidated Balance Sheets

Amounts in thousands except per share data

(unaudited)


	As of
	July 31, 2021		January 31, 2021
ASSETS
Current assets
Cash and cash equivalents	$	1,826,424	$	357,690
Restricted cash, current	—		7,000
Marketable securities	70,140		102,828
Accounts receivable, net of allowance for doubtful accounts of $2,158 and $2,879, respectively	138,945		172,286
Contract assets, current	53,555		34,221
Deferred contract acquisition costs, current	18,142		10,653
Prepaid expenses and other current assets	51,886		49,752
Total current assets	2,159,092		734,430
Restricted cash, non-current	—		6,500
Contract assets, non-current	2,537		2,085
Deferred contract acquisition costs, non-current	58,289		32,553
Property and equipment, net	14,728		14,822
Operating lease right-of-use assets	16,302		17,260
Intangible assets, net	18,866		10,191
Goodwill	55,193		28,059
Deferred tax asset, non-current	7,927		8,118
Other assets, non-current	14,947		12,443
Total assets	$	2,347,881	$	866,461
LIABILITIES, CONVERTIBLE PREFERRED STOCK, AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities
Accounts payable	$	2,874	$	6,682
Accrued expenses and other current liabilities	60,558		36,660
Accrued compensation and employee benefits	75,628		110,736
Deferred revenues, current	235,484		211,078
Total current liabilities	374,544		365,156
Deferred revenues, non-current	54,465		61,325
Operating lease liabilities, non-current	12,328		14,152
Other liabilities, non-current	7,591		7,564
Total liabilities	448,928		448,197
Commitments and contingencies (Note 11)
Convertible preferred stock, $0.00001 par value per share, 0 and 297,973 shares authorized as of July 31, 2021 and January 31, 2021, respectively; 0 and 294,257 shares issued and outstanding as of July 31, 2021 and January 31, 2021, respectively	—		1,221,968
Stockholders' equity (deficit)
Preferred stock, $0.00001 par value per share, 20,000 and 0 shares authorized as of July 31, 2021 and January 31, 2021, respectively; 0 shares issued and outstanding as of July 31, 2021 and January 31, 2021	—		—
Class A common stock, $0.00001 par value per share, 2,000,000 and 581,000 shares authorized as of July 31, 2021 and January 31, 2021, respectively; 430,793 and 75,177 shares issued and outstanding as of July 31, 2021 and January 31, 2021, respectively	4		1
Class B common stock, $0.00001 par value per share, 115,741 shares authorized as of July 31, 2021 and January 31, 2021; 82,453 and 110,653 shares issued and outstanding as of July 31, 2021 and January 31, 2021, respectively	1		1
Additional paid-in capital	3,213,595		179,175
Accumulated other comprehensive loss	(4,598)		(12,521)
Accumulated deficit	(1,310,049)		(970,360)
Total stockholders’ equity (deficit)	1,898,953		(803,704)
Total liabilities, convertible preferred stock, and stockholders’ equity (deficit)	$	2,347,881	$	866,461

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

UiPath, Inc.

Condensed Consolidated Statements of Operations

Amounts in thousands except per share data

(unaudited)


	Three Months Ended July 31,				Six Months Ended July 31,
	2021		2020		2021		2020
Revenue:
Licenses	$	95,547	$	79,513	$	195,763	$	143,272
Maintenance and support	90,319		51,932		167,961		95,128
Services and other	9,655		7,931		18,014		14,079
Total revenue	195,521		139,376		381,738		252,479
Cost of revenue:
Licenses	2,434		1,636		4,888		3,053
Maintenance and support	12,238		5,501		26,417		11,044
Services and other	20,922		7,561		53,299		14,239
Total cost of revenue	35,594		14,698		84,604		28,336
Gross profit	159,927		124,678		297,134		224,143
Operating expenses:
Sales and marketing	144,268		90,331		350,019		181,262
Research and development	57,646		26,541		150,686		53,270
General and administrative	55,834		24,834		130,249		51,510
Total operating expenses	257,748		141,706		630,954		286,042
Operating loss	(97,821)		(17,028)		(333,820)		(61,899)
Interest income	766		77		1,707		607
Other (expense) income, net	(1,225)		24,010		(4,443)		16,173
(Loss) income before income taxes	(98,280)		7,059		(336,556)		(45,119)
Provision for income taxes	1,746		2,072		3,133		2,734
Net (loss) income	$	(100,026)	$	4,987	$	(339,689)	$	(47,853)
Undistributed earnings attributable to participating securities	—		4,987		—		—
Net loss attributable to common stockholders, basic and diluted	$	(100,026)	$	—	$	(339,689)	$	(47,853)
Net loss per share attributable to common stockholders, basic and diluted	$	(0.19)	$	—	$	(0.91)	$	(0.30)
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted	526,512		162,914		373,488		160,980

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

UiPath, Inc.

Condensed Consolidated Statements of Comprehensive Loss

Amounts in thousands

(unaudited)


	Three Months Ended July 31,				Six Months Ended July 31,
	2021		2020		2021		2020
Net (loss) income	$	(100,026)	$	4,987	$	(339,689)	$	(47,853)
Other comprehensive income (loss), net of tax:
Unrealized gain on available-for-sale marketable securities, net	36		—		9		—
Foreign currency translation adjustments	3,660		(23,942)		7,914		(15,629)
Other comprehensive income (loss), net	3,696		(23,942)		7,923		(15,629)
Comprehensive loss	$	(96,330)	$	(18,955)	$	(331,766)	$	(63,482)

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

UiPath, Inc.

Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit)

Amounts in thousands

(unaudited)


	Convertible Preferred Stock			Common Stock						Additional Paid-in Capital Amount		Accumulated Other Comprehensive Income (Loss) Amount		Accumulated Deficit Amount		Total Stockholders’ (Deficit) Equity Amount
				Class A			Class B
	Shares	Amount		Shares	Amount		Shares	Amount
Balance as of January 31, 2021	294,257	$	1,221,968	75,177	$	1	110,653	$	1	$	179,175	$	(12,521)	$	(970,360)	$	(803,704)
Issuance of convertible preferred stock, net of issuance costs	12,043	749,836		—	—		—	—		—		—		—		—
Conversion of convertible preferred stock to common stock upon initial public offering	(306,300)	(1,971,804)		306,300	3		—	—		1,971,801		—		—		1,971,804
Issuance of common stock upon initial public offering, net of underwriting discounts and commissions and other issuance costs	—	—		13,000	—		—	—		687,903		—		—		687,903
Conversion of shares of Class B common stock into shares of Class A common stock	—	—		28,200	—		(28,200)	—		—		—		—		—
Shares issued as consideration for business acquisition	—	—		543	—		—	—		30,446		—		—		30,446
Issuance of common stock upon exercise of stock options	—	—		1,881	—		—	—		3,114		—		—		3,114
Vesting of early exercised stock options	—	—		—	—		—	—		1,646		—		—		1,646
Issuance of common stock upon settlement of restricted stock units	—	—		389	—		—	—		—		—		—		—
Tax withholdings on settlement of restricted stock units	—	—		(164)	—		—	—		(9,218)		—		—		(9,218)
Stock-based compensation expense	—	—		—	—		—	—		252,986		—		—		252,986
Other comprehensive income, net of tax	—	—		—	—		—	—		—		4,227		—		4,227
Net loss	—	—		—	—		—	—		—		—		(239,663)		(239,663)
Balance as of April 30, 2021	—	$	—	425,326	$	4	82,453	$	1	$	3,117,853	$	(8,294)	$	(1,210,023)	$	1,899,541

Shares issued as consideration for business acquisition	—	—		—	—		—	—		21		—		—		21
Issuance of common stock upon exercise of stock options	—	—		2,993	—		—	—		3,537		—		—		3,537
Vesting of early exercised stock options	—	—		—	—		—	—		615		—		—		615
Issuance of common stock upon settlement of restricted stock units	—	—		2,492	—		—	—		—		—		—		—
Tax withholdings on settlement of restricted stock units	—	—		(18)	—		—	—		(1,175)		—		—		(1,175)
Stock-based compensation expense	—	—		—	—		—	—		92,744		—		—		92,744
Other comprehensive income, net of tax	—	—		—	—		—	—		—		3,696		—		3,696
Net loss	—	—		—	—		—	—		—		—		(100,026)		(100,026)
Balance as of July 31, 2021	—	$	—	430,793	$	4	82,453	$	1	$	3,213,595	$	(4,598)	$	(1,310,049)	$	1,898,953

Table of Contents

UiPath, Inc.

Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit)

Amounts in thousands

(unaudited)


	Convertible Preferred Stock			Common Stock						Additional Paid-in Capital Amount		Accumulated Other Comprehensive Income (Loss) Amount		Accumulated Deficit Amount		Total Stockholders Deficit Amount
				Class A			Class B
	Shares	Amount		Shares	Amount		Shares	Amount
Balance as of January 31, 2020	282,108	$	996,389	41,883	$	—	115,741	$	1	$	72,229	$	6,226	$	(877,967)	$	(799,511)
Issuance of common stock upon exercise of stock options	—	—		2,166	—		—	—		536		—		—		536
Compensation expense related to secondary transactions	—	—		—	—		—	—		35		—		—		35
Stock-based compensation expense	—	—		—	—		—	—		8,166		—		—		8,166
Other comprehensive income, net of tax	—	—		—	—		—	—		—		8,313		—		8,313
Net loss	—	—		—	—		—	—		—		—		(52,840)		(52,840)
Balance as of April 30, 2020	282,108	$	996,389	44,049	$	—	115,741	$	1	$	80,966	$	14,539	$	(930,807)	$	(835,301)
Issuance of convertible preferred stock, net of issuance costs	12,149	225,579		—	—		—	—		—		—		—		—
Issuance of common stock upon exercise of stock options	—	—		7,600	1		—	—		2,183		—		—		2,184
Stock-based compensation expense	—	—		—	—		—	—		8,829		—		—		8,829
Other comprehensive loss, net of tax	—	—		—	—		—	—		—		(23,942)		—		(23,942)
Net income	—	—		—	—		—	—		—		—		4,987		4,987
Balance as of July 31, 2020	294,257	$	1,221,968	51,649	$	1	115,741	$	1	$	91,978	$	(9,403)	$	(925,820)	$	(843,243)

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

UiPath, Inc.

Condensed Consolidated Statements of Cash Flows

Amounts in thousands

(unaudited)


	Six Months Ended July 31,
	2021		2020
Cash flows from operating activities
Net loss	$	(339,689)	$	(47,853)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	6,966		6,264
Amortization of deferred contract acquisition costs	10,971		18,991
Amortization of deferred loan cost	133		—
Net amortization of premium on marketable securities	867		—
Stock-based compensation expense	343,448		17,030
Amortization of operating lease right-of-use assets	3,580		3,708
(Benefit from) provision for bad debt	(659)		247
Deferred income taxes	(134)		(10)
Changes in operating assets and liabilities:
Accounts receivable	32,961		(17,740)
Contract assets	(20,355)		(13,955)
Deferred contract acquisition costs	(44,946)		(18,516)
Prepaid expenses and other assets	(4,340)		2,326
Accounts payable	(3,663)		1,414
Accrued expense and other liabilities	8,484		4,127
Accrued compensation and employee benefits	(32,686)		7,192
Operating lease liabilities, net	(3,698)		(4,097)
Deferred revenue	19,237		44,934
Net cash (used in) provided by operating activities	(23,523)		4,062
Cash flows from investing activities
Purchases of marketable securities	(94,157)		—
Sales of marketable securities	89,383		—
Maturities of marketable securities	36,605		—
Purchases of property and equipment	(3,641)		(587)
Capitalization of software development costs	(771)		—
Payment related to business acquisition, net of cash acquired	(5,498)		(1,000)
Net cash provided by (used in) investing activities	21,921		(1,587)
Cash flows from financing activities
Proceeds from initial public offering, net of underwriting discounts and commissions	692,369		—
Payments of initial public offering costs	(3,734)		—
Proceeds from issuance of convertible preferred stock	750,000		225,903
Payments of issuance costs for convertible preferred stock	(164)		(324)
Proceeds from exercise of stock options	6,651		2,719
Payments of tax withholdings on net settlement of equity awards	(9,554)		—
Net receipts of tax withholdings on sell-to-cover equity award transactions	9,483		—
Proceeds from employee stock purchase plan contributions	6,902		—
Proceeds from credit facility	—		78,587
Repayments of credit facility	—		(78,587)
Net cash provided by financing activities	1,451,953		228,298
Effect of exchange rate changes	4,883		(14,067)
Net increase in cash, cash equivalents and restricted cash	1,455,234		216,706
Cash, cash equivalents and restricted cash - beginning of period	371,190		234,131
Cash, cash equivalents and restricted cash - end of period	$	1,826,424	$	450,837
Supplemental disclosure of cash flow information
Cash paid for interest	$	313	$	1,247
Cash paid for income taxes	4,035		1,697
Supplemental disclosure of non-cash investing and financing activities
Stock-based compensation capitalized for software development	$	2,282	$	—
Value of shares issued in payment of business acquisition	30,467		—
Reduction in accrued expenses and other liabilities for vesting of early exercised stock options	2,261		—
Tax withholdings on net settlement of restricted stock units, accrued and unpaid	996		—
Deferred payments related to business acquisitions	—		18,984

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

UiPath, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

1. Organization and Description of Business

Description of Business

UiPath, Inc. (the “Company,” “we,” “us,” or “our”) was incorporated in Delaware in June 2015 and is headquartered in New York. We offer an end-to-end automation platform which provides a range of robotic process automation (“RPA”) solutions via a suite of interrelated software offerings (the “RPA Software”), including:

•UiPath Studio (“Studio”) – Studio is an easy to use, drag-and-drop development platform designed for RPA developers looking to build complex process automations with built-in governance capabilities. Studio features robust debugging tools, application programming interface (“API”) automation, wizards to automate desktop or web applications, the ability to leverage custom code, and a simple way to integrate machine learning models into production workflows.

•UiPath Robots (“Robots”) – Robots emulate human behavior to execute the processes built in Studio. Robots can work unattended (without human supervision in any environment, virtual or not) or attended (with a human triggering the process).

•UiPath Orchestrator (“Orchestrator”) – Orchestrator tracks and logs Robot activity, along with what people do in tandem, to maintain strict compliance and governance through dashboards and visualization tools. Orchestrator enables seamless integration with our marketplace, which is UiPath’s database of vetted, pre-built, and reusable automation activities and components, software, and third-party products, giving users the opportunity to leverage our global RPA community and deploy automations across cloud, on-premises, and hybrid environments.

We provide our offerings by selling a software license to customers, which allows customers to use the RPA Software on their own hardware (i.e., term and perpetual licenses) or in the cloud. Additionally, we offer maintenance and support, training, and implementation services to our customers to facilitate their adoption of the RPA Software.

We have legal presence in 29 countries, with our principal operations in the United States, Romania, and Japan.

Initial Public Offering

On April 23, 2021, we completed our initial public offering (“IPO”), in which we issued and sold 13.0 million shares of our Class A common stock at a public offering price of $56.00 per share, including 3.6 million shares of Class A common stock pursuant to the exercise in full of the underwriters’ option to purchase additional shares. We received net proceeds of $692.4 million after deducting underwriting discounts and commissions of $35.6 million. In addition, the selling stockholders, named in our final prospectus that forms a part of the Registration Statement on Form S-1 (File No. 333-254738) for the IPO filed with the Securities and Exchange Commission (“SEC”) pursuant to Rule 424(b)(4) on April 21, 2021 (the “Final Prospectus”), sold an additional 14.5 million shares, for which we did not receive any proceeds. In connection with the IPO, all shares of convertible preferred stock then outstanding automatically converted into an aggregate of 306.3 million shares of Class A common stock.

As of January 31, 2021, $1.5 million of deferred offering costs, which consisted primarily of accounting, legal and other fees related to the IPO, were capitalized within other assets, non-current in the condensed consolidated balance sheets. Upon the consummation of the IPO, $4.5 million of deferred offering costs were reclassified into stockholders’ equity as an offset to IPO proceeds. Deferred offering costs were paid in full as of July 31, 2021.

Table of Contents

UiPath, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

2. Summary of Significant Accounting Policies

The Company’s significant accounting policies are discussed in Note 2, Summary of Significant Accounting Policies, in the Notes to Consolidated Financial Statements in the Final Prospectus. There have been no significant changes to these policies during the six months ended July 31, 2021.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and applicable regulations of the SEC regarding interim financial reporting, and include the financial statements of UiPath, Inc. and its wholly owned subsidiaries in which we hold a controlling financial interest or are the primary beneficiary. Intercompany transactions and accounts have been eliminated in consolidation.

As permitted under those rules, certain footnotes or other financial information that are normally required by U.S. GAAP can be condensed or omitted. These financial statements have been prepared on the same basis as the Company’s annual financial statements and, in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments, which are necessary for the fair statement of the Company’s financial information. These interim results are not necessarily indicative of the results to be expected for the fiscal year ending January 31, 2022 or for any other interim period or for any other future year. The accompanying unaudited condensed consolidated financial statements and related financial information should be read in conjunction with the audited consolidated financial statements and the related notes thereto for the fiscal year ended January 31, 2021 contained in the Final Prospectus.

Fiscal Year

Our fiscal year ends on January 31. References to fiscal year 2022, for example, refer to the fiscal year ending January 31, 2022.

Use of Estimates

The preparation of condensed 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 date of the condensed consolidated financial statements 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, revenue recognition, estimated expected benefit period for deferred contract acquisition costs, allowance for doubtful accounts, fair value of financial assets and liabilities including accounting and fair value of derivatives, fair value of acquired assets and assumed liabilities, useful lives of long-lived assets, capitalized software development costs, carrying value of operating lease right-of-use (“ROU”) assets, incremental borrowing rates for operating leases, amount of stock-based compensation expense including determination of fair value of common stock prior to the IPO, timing and amount of contingencies, 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 (deficit) as a component of accumulated other comprehensive income (loss). 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 (expense) income, net in the condensed consolidated statements of operations. For the three months ended July 31, 2021 and 2020, we recognized transaction losses of $2.3 million and transaction gains of $24.3 million, respectively. For the six months ended July 31, 2021 and 2020, we recognized transaction losses of $5.2 million and transaction gains of $17.0 million, respectively.

Table of Contents

UiPath, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

Derivative Financial Instruments

Since fiscal year 2021, we use derivative financial instruments, such as foreign currency forward contracts, to manage foreign currency exposures. We account for our derivative financial instruments as either assets or liabilities and carry them at fair value. These foreign currency contracts are not designated and do not qualify as hedging instruments, as defined by Accounting Standards Codification (“ASC”) 815, Derivatives and Hedging.

As of July 31, 2021 and January 31, 2021, derivative financial instruments with a fair value totaling $0.1 million and $(0.6) million, respectively, were recorded in prepaid expenses and other current assets, and accrued expenses and other current liabilities within the condensed consolidated balance sheets, respectively. We record changes in the fair value of these derivatives as a component of other (expense) income net, in the condensed consolidated statements of operations. The notional amount of foreign currency forward contracts outstanding was $123.0 million and $138.6 million as of July 31, 2021 and January 31, 2021, respectively. The net gain associated with foreign currency forward contracts was $1.4 million and $2.0 million for the three and six months ended July 31, 2021. We did not have foreign currency forward contracts during the three and six months ended July 31, 2020.

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 our deposits, at times, exceed the Federal Deposit Insurance Corporation (“FDIC”) limits. As of July 31, 2021 and January 31, 2021, 99% and 92%, respectively, of our cash, cash equivalents, and restricted cash were concentrated in the United States, European Union (“EU”) countries, and Japan.

We extend differing levels of credit to customers based on creditworthiness, do not require collateral deposits, and when necessary maintain reserves for potential credit losses based upon the expected collectability of accounts receivable. We manage credit risk related to our customers by performing periodic evaluations of credit worthiness and applying other credit risk monitoring procedures.

Significant customers are those which represent 10% or more of our total revenue for the period or accounts receivable at the balance sheet date. For the three and six months ended July 31, 2021 and 2020, no single customer accounted for 10% or more of our total revenue. As of July 31, 2021, one customer accounted for 13% of our accounts receivable. As of January 31, 2021, no single customer accounted for 10% or more of our accounts receivable.

Revenue Recognition

We derive our revenue from the sale of licenses for use of our proprietary software, maintenance and support for licenses, right to access certain software products that we host (i.e., software as a service (“SaaS”)), and professional services. In accordance with ASC 606, Revenue from Contracts with Customers, revenue is recognized when or as a customer obtains control of the promised goods and services. The amount of revenue recognized reflects the consideration to which we expect to be entitled in exchange for those goods or services. To achieve the core principle of ASC 606, we apply the following five steps:

1.Identification of the contract, or contracts, with the customer;

2.Identification of the performance obligations in the contract;

3.Determination of the transaction price;

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.

Table of Contents

UiPath, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

Licenses

We primarily sell term licenses, including through hybrid offerings (comprised of a term license, maintenance and support, and SaaS), which provide customers the right to use software for a specified period of time, and perpetual licenses, which provide customers the right to use software for an indefinite period of time. For both types of licenses, revenue 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.

Maintenance and Support

We generate maintenance and support revenue through the provision of technical support services and the provision of unspecified updates and upgrades on a when-and-if-available basis for both term and perpetual license arrangements. Maintenance and support for perpetual licenses is renewable, generally on an annual basis, at the option of the customer. Maintenance and support represents a stand-ready obligation for which revenue is recognized ratably over the term of the arrangement. For maintenance and support services, we generally invoice when the associated license(s) are provided and upon renewals. Maintenance and support also includes revenue from the SaaS component of our hybrid offerings and revenue from our SaaS products, as such revenue constituted an immaterial portion of total revenue for the three and six months ended July 31, 2021 and 2020. The SaaS component of our hybrid offerings and our SaaS products are stand-ready obligations to provide access to our products, and the related revenue is recognized on a ratable basis over the contractual period of the arrangement, as control of the services is transferred to the customer.

Services and Other

Revenue from services and other consists of fees associated with professional services for process automation, customer education and training services. A substantial majority of our professional services contracts are recognized on a time and materials basis, and the related revenue is recognized as the services are rendered. For professional services, we invoice as the work is incurred or in advance.

Material Rights

Contracts with customers may include material rights, which are also performance obligations. Material rights primarily arise when the contract gives the customer the right to renew or to receive products or services at a greater discount in the future. The revenue associated with material rights is recognized at the earlier of the time of exercise or expiration of the customer’s rights.

Contracts with Multiple Performance Obligations

Most contracts with customers contain multiple performance obligations. The transaction price is allocated to the separate performance obligations on a relative stand-alone selling price (“SSP”) basis. When possible, we determine our SSP by reference to observable prices of our products and services in standalone sales. When we do not have such observable prices, we maximize the use of observable inputs when estimating the SSP; such observable inputs include historical contract pricing and industry pricing data available to the public. Our SSP reflects the amount we would charge for each performance obligation if it were sold separately in a standalone sale to similar customers in similar circumstances.

Other Policies and Judgments

Payment terms and conditions vary by contract type, although terms generally require payment within 30 to 60 days of the invoice date. In certain arrangements, we receive payment from a customer either before or after the performance obligation has been satisfied; however, our contracts do not contain a significant financing component. The primary purpose of our invoicing terms is to provide customers with simplified and predictable ways of purchasing our products and services, not to receive financing from our customers or to provide customers with financing. We apply the practical expedient in ASC 606 and do not evaluate payment terms of one year or less for the existence of a significant financing component. Revenue is recorded net of sales tax. We generally do not offer a right of refund in our contracts.

Table of Contents

UiPath, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

Contract Balances

Contract assets consist of unbilled accounts receivable, which occur when a right to consideration for our performance under the customer contract occurs before invoicing the customer. Accounts receivable are recorded when the customer has been billed and the right to consideration is unconditional.

Contract liabilities consist of deferred revenue. Revenue is deferred when we invoice in advance of performance under a contract.

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 condensed consolidated balance sheets. We determine whether costs should be deferred based on the terms of our sales compensation plans and based on whether the sales commissions are incremental to a customer contract and would not have occurred absent the customer contract.

During fiscal year 2021, sales commissions for renewals of subscription contracts were commensurate with the sales commissions paid for the acquisition of the initial subscription contract. Sales commissions paid upon the initial acquisition of a contract were therefore amortized over the contract term, while sales commissions paid related to renewal contracts were amortized over the renewal term. When the amortization period would have been one year or less, we applied the practical expedient in ASC 340-40, Other Assets, Deferred Costs, which allows for expensing of these costs as incurred.

At the end of fiscal year 2021, we approved a new sales incentive plan for fiscal year 2022 under which sales commissions for renewals of subscription contracts are not commensurate with the commissions paid on initial contracts. Under the new sales incentive plan, we defer incremental commissions related to initial contracts and amortize such costs over the expected period of benefit, which we determined to be five years. Renewal commissions are amortized over the renewal period except when such period is one year or less and the practical expedient applies.

Amortization is recognized consistently with the pattern of revenue recognition of the respective performance obligation to which the contract costs relate. Amortization of deferred contract acquisition costs is included in sales and marketing expense in the condensed consolidated statements of operations.

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 during the three and six months ended July 31, 2021 and 2020.

Cost of Revenue

Licenses

Cost of licenses revenue consists of all direct costs to deliver our licenses to customers, amortization of software development costs, direct costs related to third party software resales, and amortization of acquired developed technology.

Maintenance and Support

Cost of maintenance and support revenue primarily consists of personnel-related expenses of our customer support and technical support teams, including salaries and bonuses, stock-based compensation expense, and employee benefit costs. Cost of maintenance and support revenue also includes third-party consulting services, hosting costs related to our hybrid and cloud-based products, amortization of acquired developed technology and capitalized software development costs related to cloud products, and allocated overhead. Overhead is allocated to cost of maintenance and support revenue based on applicable headcount. We recognize these expenses as they are incurred.

Table of Contents

UiPath, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

Services and Other

Cost of 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 services and other revenue also includes third-party consulting services and allocated overhead. Overhead is allocated to cost of services and other revenue based on applicable headcount. We recognize these expenses as they are incurred.

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 estimated on the date of grant using the Black-Scholes pricing model. The fair value of employee stock purchase plan shares is estimated at the beginning of the relevant offering period using the Black-Scholes pricing model. The fair value of each restricted stock unit (“RSU”) and restricted stock award (“RSA”) is estimated based on the fair value of the Company’s Class A common stock on the grant date.

Prior to the IPO, the Company determined the fair value of its Class A common stock for financial reporting purposes as of each grant date based on numerous objective and subjective factors and management’s judgement. Subsequent to the IPO, the Company determines the fair value using the market closing price of its Class A common stock on the date of grant.

Stock-based compensation expense is included in cost of revenue and operating expenses within our condensed consolidated statements of operations based on the expense classification of the individual earning the award. The fair value of awards with only service-based vesting conditions is recognized as expense over the requisite service period on a straight-line basis. The fair value of awards that contain both service-based and performance-based vesting conditions, such as RSUs that were granted under the UiPath, Inc. 2018 Stock Plan (the “2018 Plan”) before our IPO, are recognized as expense using the accelerated attribution method once it is probable that the performance condition will be met.

Segment Information

Operating segments are defined as components of an entity for which discrete financial information is available and is regularly reviewed by the Chief Operating Decision Maker (“CODM”) in making decisions regarding resource allocation and performance assessment. The Company’s CODM is its Chief Executive Officer. The Company has determined that it has one operating and reportable segment as the CODM reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance.

Internal-Use Software

We capitalize costs incurred to implement cloud software and develop internal-use software pursuant to ASC 350-40, Internal Use Software. ASC 350-40 prescribes capitalization of costs incurred to develop internal-use software 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.

Costs incurred to implement a cloud computing arrangement that is a service contract are capitalized in our condensed consolidated financial statements in the same manner as other service costs and assets related to service contracts. These capitalized costs exclude training costs, project management costs, and data migration costs. Capitalized implementation costs are amortized on a straight-line basis over the terms of the associated hosting arrangements and are recorded under operating expenses in the same line item on the condensed consolidated statements of operations as the expense for fees for the associated hosting arrangement. Capitalized software implementation costs were $2.6 million and $2.6 million as of July 31, 2021 and January 31, 2021, respectively, and are recorded in other assets, non-current on our condensed consolidated balance sheets. Related amortization expense for the three months ended July 31, 2021 and 2020 was $0.2 million and $0.1 million,

Table of Contents

UiPath, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

respectively. Related amortization expense for the six months ended July 31, 2021 and 2020 was $0.4 million and $0.2 million, respectively.

Costs incurred to develop cloud offerings are capitalized and amortized on a straight-line basis over the product’s estimated useful life of five years and are included in cost of maintenance and support revenue on the condensed consolidated statements of operations. Capitalized costs include salaries, benefits, and stock-based compensation charges for employees that are directly involved in developing our cloud-based products. These capitalized costs are included in other assets, non-current on the condensed consolidated balance sheets and were $7.1 million and $4.4 million as of July 31, 2021 and January 31, 2021, respectively. Related amortization expense was $0.3 million and $0.1 million for the three months ended July 31, 2021 and 2020, respectively. Related amortization expense for the six months ended July 31, 2021 and 2020 was $0.5 million and $0.1 million, 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. ASC 985-20 requires all costs incurred to establish technological feasibility to 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. Capitalized costs are included in other assets, non-current on the condensed consolidated balance sheets. These costs are amortized on a straight-line basis over the software’s estimated useful life of five years, and are included in cost of licenses revenue in the condensed consolidated statements of operations. Management evaluates the remaining useful life of these assets on an annual basis and tests for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets. Capitalized software development costs were $3.2 million and $2.9 million as of July 31, 2021 and January 31, 2021, respectively. Related amortization expense was $0.2 million and $0.2 million for the three months ended July 31, 2021 and 2020, respectively. Related amortization expense for the six months ended July 31, 2021 and 2020 was $0.3 million and $0.3 million, respectively.

Recently Adopted Accounting Pronouncements

As an “emerging growth company,” the Jumpstart Our Business Startups Act (“JOBS Act”) allows us to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. We have elected to use this extended transition period under the JOBS Act.

In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40). ASU No. 2020-06 simplifies accounting for convertible instruments by removing certain separation models required under current U.S. GAAP. ASU No. 2020-06 also removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, and it revises the guidance in ASC 260, Earnings Per Share, to require entities to calculate diluted earnings per share for convertible instruments by using the if-converted method. We early adopted ASU No. 2020-06 on a retrospective basis on February 1, 2021, and the adoption did not have a material impact on our condensed consolidated financial statements.

Recently Issued Accounting Pronouncements

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740)—Simplifying the Accounting for Income Taxes, which is intended to simplify various aspects related to accounting for income taxes. ASU No. 2019-12 simplifies the accounting for income taxes by removing certain exceptions associated with (i) intraperiod tax allocations, (ii) recognition of deferred tax liabilities for equity method investments of foreign subsidiaries, and (iii) the calculation of income taxes in an interim period when in a loss position within the framework of ASC 740. ASU No. 2019-12 also clarifies and amends existing guidance to improve consistent application. ASU No. 2019-12 will be effective for us beginning February 1, 2022, and for interim periods in fiscal

Table of Contents

UiPath, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

years beginning February 1, 2023. We are currently evaluating the impact of this pronouncement on our condensed consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, to amend the current accounting guidance which requires the measurement of all expected losses to be based on historical experience, current conditions, and reasonable and supportable forecasts. For trade receivables, contract assets, and other financial instruments, we will be required to use a forward-looking expected loss model that reflects probable losses rather than the incurred loss model for recognizing credit losses. ASU No. 2016-13 will be effective for us beginning February 1, 2023. Early adoption is permitted. We are currently evaluating the impact of this pronouncement on our condensed consolidated financial statements.

3. Revenue Recognition

Disaggregation of Revenue

The following tables present revenue by region, according to the location of those customers from which the revenue was generated (in thousands except percentages):


	Three Months Ended July 31,
	2021				2020
	Amount		Percentage of Revenue		Amount		Percentage of Revenue
Americas (1)	$	89,266	46	%	$	61,541	44	%
Europe, Middle East, and Africa	60,405		31	%	39,483		28	%
Asia-Pacific (2)	45,850		23	%	38,352		28	%
Total revenue	$	195,521	100	%	$	139,376	100	%

(1)Revenue from the United States represented 42% and 41% of our total revenues for the three months ended July 31, 2021 and 2020, respectively.

(2)Revenue from Japan represented 12% and 15% of our total revenues for the three months ended July 31, 2021 and 2020, respectively.


	Six Months Ended July 31,
	2021				2020
	Amount		Percentage of Revenue		Amount		Percentage of Revenue
Americas (1)	$	173,892	46	%	$	102,894	41	%
Europe, Middle East, and Africa	110,489		29	%	76,163		30	%
Asia-Pacific (2)	97,357		25	%	73,422		29	%
Total revenue	$	381,738	100	%	$	252,479	100	%

(1)Revenue from the United States represented 41% and 37% of our total revenues for the six months ended July 31, 2021 and 2020, respectively.

(2)Revenue from Japan represented 14% and 17% of our total revenues for the six months ended July 31, 2021 and 2020, respectively.

Deferred Revenue

During the six months ended July 31, 2021 and 2020, we recognized $137.8 million and $82.0 million of revenue that was included in the deferred revenue balance as of January 31, 2021 and 2020, respectively.

Remaining Performance Obligations

Our remaining performance obligations are comprised of licenses, maintenance and support, and services and other revenue not yet delivered. As of July 31, 2021, the aggregate amount of transaction price allocated to remaining performance obligations was $519.9 million, which consists of $289.9 million of billed consideration and $230.0 million of unbilled consideration. Of this aggregate amount, we expect to recognize 62% as revenue over the next 12 months, and the remainder thereafter.

Table of Contents

UiPath, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

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. Amortization of deferred contract acquisition costs was $6.1 million and $11.0 million for the three months ended July 31, 2021 and 2020, respectively, and $11.0 million and $19.0 million for the six months ended July 31, 2021 and 2020, respectively.

4. Marketable Securities

The following is a summary of our marketable securities (in thousands):


	As of July 31, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Commercial paper	$	23,738	$	—	$	—	$	23,738
Corporate bonds	46,410		—		(8)		46,402
Total marketable securities	$	70,148	$	—	$	(8)	$	70,140

As of January 31, 2021

Amortized Cost