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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 April 30, 2022
OR
| | | | | |
☐ | 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.) |
452 5th Avenue, 22nd Floor New York, New York | 10018 |
(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 May 31, 2022, the registrant had 462,279,484 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
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 (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (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 ("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, integrate new team members, and execute management transitions;
•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 and the war in Ukraine, on our business, industry, and the global economy including inflation and currency fluctuations;
•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, and in the section titled "Risk Factors" and elsewhere in our Annual Report on Form 10-K for the fiscal year ended January 31, 2022 filed with the Securities and Exchange Commission ("SEC") on April 4, 2022 (the "2022 Form 10-K"). 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 inquiry into, or review of, all relevant information. Such 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.
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
UiPath, Inc.
Condensed Consolidated Balance Sheets
Amounts in thousands except per share data
(unaudited) | | | | | | | | | | | |
| As of |
| April 30, 2022 | | January 31, 2022 |
ASSETS | | | |
Current assets | | | |
Cash and cash equivalents | $ | 1,679,217 | | | $ | 1,768,723 | |
Marketable securities | 114,749 | | | 96,417 | |
Accounts receivable, net of allowance for doubtful accounts of $3,217 and $2,566, respectively | 169,061 | | | 251,988 | |
Contract assets | 88,427 | | | 74,831 | |
Deferred contract acquisition costs | 32,492 | | | 29,926 | |
Prepaid expenses and other current assets | 61,072 | | | 55,416 | |
Total current assets | 2,145,018 | | | 2,277,301 | |
Marketable securities, non-current | 7,364 | | | 19,523 | |
Contract assets, non-current | 5,469 | | | 2,730 | |
Deferred contract acquisition costs, non-current | 103,520 | | | 100,224 | |
Property and equipment, net | 21,776 | | | 17,176 | |
Operating lease right-of-use assets | 44,895 | | | 48,953 | |
Intangible assets, net | 15,078 | | | 16,817 | |
Goodwill | 52,123 | | | 53,564 | |
Deferred tax asset | 8,170 | | | 10,628 | |
Other assets, non-current | 21,307 | | | 25,534 | |
Total assets | $ | 2,424,720 | | | $ | 2,572,450 | |
LIABILITIES AND STOCKHOLDERS' EQUITY | | | |
Current liabilities | | | |
Accounts payable | $ | 17,442 | | | $ | 11,515 | |
Accrued expenses and other current liabilities | 75,590 | | | 87,958 | |
Accrued compensation and employee benefits | 62,948 | | | 130,673 | |
Deferred revenue | 282,263 | | | 297,355 | |
Total current liabilities | 438,243 | | | 527,501 | |
Deferred revenue, non-current | 56,832 | | | 68,665 | |
Operating lease liabilities, non-current | 46,346 | | | 49,843 | |
Other liabilities, non-current | 3,105 | | | 4,524 | |
Total liabilities | 544,526 | | | 650,533 | |
Commitments and contingencies (Note 11) | | | |
Stockholders' equity | | | |
Preferred stock, $0.00001 par value per share, 20,000 shares authorized as of April 30, 2022 and January 31, 2022; 0 shares issued and outstanding as of April 30, 2022 and January 31, 2022 | — | | | — | |
Class A common stock, $0.00001 par value per share, 2,000,000 shares authorized as of April 30, 2022 and January 31, 2022; 462,430 and 458,773 shares issued and outstanding as of April 30, 2022 and January 31, 2022, respectively | 4 | | | 4 | |
Class B common stock, $0.00001 par value per share, 115,741 shares authorized as of April 30, 2022 and January 31, 2022; 82,453 shares issued and outstanding as of April 30, 2022 and January 31, 2022 | 1 | | | 1 | |
Additional paid-in capital | 3,488,255 | | | 3,406,959 | |
Accumulated other comprehensive income | 10,441 | | | 10,899 | |
Accumulated deficit | (1,618,507) | | | (1,495,946) | |
Total stockholders’ equity | 1,880,194 | | | 1,921,917 | |
Total liabilities and stockholders’ equity | $ | 2,424,720 | | | $ | 2,572,450 | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
UiPath, Inc.
Condensed Consolidated Statements of Operations
Amounts in thousands except per share data
(unaudited)
| | | | | | | | | | | | | | | |
| Three Months Ended April 30, | | |
| 2022 | | 2021 | | | | |
Revenue: | | | | | | | |
Licenses | $ | 117,004 | | | $ | 100,216 | | | | | |
Subscription services | 115,494 | | | 77,642 | | | | | |
Professional services and other | 12,568 | | | 8,359 | | | | | |
Total revenue | 245,066 | | | 186,217 | | | | | |
Cost of revenue: | | | | | | | |
Licenses | 2,537 | | | 2,454 | | | | | |
Subscription services | 21,045 | | | 14,179 | | | | | |
Professional services and other | 21,434 | | | 32,377 | | | | | |
Total cost of revenue | 45,016 | | | 49,010 | | | | | |
Gross profit | 200,050 | | | 137,207 | | | | | |
Operating expenses: | | | | | | | |
Sales and marketing | 189,782 | | | 205,751 | | | | | |
Research and development | 68,690 | | | 93,040 | | | | | |
General and administrative | 57,530 | | | 74,415 | | | | | |
Total operating expenses | 316,002 | | | 373,206 | | | | | |
Operating loss | (115,952) | | | (235,999) | | | | | |
Interest income | 991 | | | 941 | | | | | |
Other expense, net | (2,811) | | | (3,218) | | | | | |
Loss before income taxes | (117,772) | | | (238,276) | | | | | |
Provision for income taxes | 4,789 | | | 1,387 | | | | | |
Net loss | $ | (122,561) | | | $ | (239,663) | | | | | |
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Net loss per share attributable to common stockholders, basic and diluted | $ | (0.23) | | | $ | (1.11) | | | | | |
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted | 541,902 | | | 215,352 | | | | | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
UiPath, Inc.
Condensed Consolidated Statements of Comprehensive Loss
Amounts in thousands
(unaudited)
| | | | | | | | | | | | | | | |
| Three Months Ended April 30, | | |
| 2022 | | 2021 | | | | |
Net loss | $ | (122,561) | | | $ | (239,663) | | | | | |
Other comprehensive (loss) income, net of tax: | | | | | | | |
Unrealized loss on available-for-sale marketable securities, net | (460) | | | (27) | | | | | |
Foreign currency translation adjustments | 2 | | | 4,254 | | | | | |
Other comprehensive (loss) income, net | (458) | | | 4,227 | | | | | |
Comprehensive loss | $ | (123,019) | | | $ | (235,436) | | | | | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
UiPath, Inc.
Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit)
Amounts in thousands
(unaudited)
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| Convertible Preferred Stock | | | Common 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 | — | | | — | | | | 1,283 | | | — | | | — | | | — | | | 2,683 | | | — | | | — | | | 2,683 | |
Vesting of early exercised stock options | — | | | — | | | | — | | | — | | | — | | | — | | | 1,355 | | | — | | | — | | | 1,355 | |
Issuance of common stock upon settlement of restricted stock units | — | | | — | | | | 3,499 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
Tax withholdings on settlement of restricted stock units | — | | | — | | | | (1,125) | | | — | | | — | | | — | | | (24,827) | | | — | | | — | | | (24,827) | |
Stock-based compensation expense | — | | | — | | | | — | | | — | | | — | | | — | | | 102,085 | | | — | | | — | | | 102,085 | |
Other comprehensive loss, net of tax | — | | | — | | | | — | | | — | | | — | | | — | | | — | | | (458) | | | — | | | (458) | |
Net loss | — | | | — | | | | — | | | — | | | — | | | — | | | — | | | — | | | (122,561) | | | (122,561) | |
Balance as of April 30, 2022 | — | | | $ | — | | | | 462,430 | | | $ | 4 | | | 82,453 | | | $ | 1 | | | $ | 3,488,255 | | | $ | 10,441 | | | $ | (1,618,507) | | | $ | 1,880,194 | |
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| Convertible Preferred Stock | | | Common Stock | | Additional Paid-in Capital | | Accumulated Other Comprehensive Income (Loss) | | Accumulated Deficit | | Total Stockholders (Deficit) Equity |
| | | Class A | | Class B | | | | |
| Shares | | Amount | | | Shares | | Amount | | Shares | | Amount | | Amount | | Amount | | Amount | | 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 | |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
UiPath, Inc.
Condensed Consolidated Statements of Cash Flows
Amounts in thousands
(unaudited) | | | | | | | | | | | |
| Three Months Ended April 30, |
| 2022 | | 2021 |
Cash flows from operating activities | | | |
Net loss | $ | (122,561) | | | $ | (239,663) | |
Adjustments to reconcile net loss to net cash used in operating activities: | | | |
Depreciation and amortization | 4,039 | | | 3,172 | |
Amortization of deferred contract acquisition costs | 10,822 | | | 4,920 | |
Net amortization of premium on marketable securities | 473 | | | 558 | |
Stock-based compensation expense | 101,454 | | | 250,835 | |
Amortization of operating lease right-of-use assets | 2,759 | | | 1,734 | |
Deferred income taxes | 1,594 | | | 21 | |
Other non-cash charges (credits), net (1) | 2,849 | | | (643) | |
Changes in operating assets and liabilities: | | | |
Accounts receivable | 76,864 | | | 35,973 | |
Contract assets | (18,523) | | | (8,148) | |
Deferred contract acquisition costs | (20,761) | | | (20,205) | |
Prepaid expenses and other assets | (5,231) | | | 7,666 | |
Accounts payable | 7,554 | | | (528) | |
Accrued expense and other liabilities | (12,894) | | | 4,573 | |
Accrued compensation and employee benefits | (65,083) | | | (60,433) | |
Operating lease liabilities, net | (1,950) | | | (1,807) | |
Deferred revenue | (14,289) | | | 4,453 | |
Net cash used in operating activities | (52,884) | | | (17,522) | |
Cash flows from investing activities | | | |
Purchases of marketable securities | (21,918) | | | (94,157) | |
Sales of marketable securities | — | | | 89,383 | |
Maturities of marketable securities | 14,813 | | | 23,755 | |
Purchases of property and equipment | (9,692) | | | (2,200) | |
Capitalization of software development costs | — | | | (410) | |
Payment related to business acquisition, net of cash acquired | — | | | (5,498) | |
Other investing | 1,100 | | | — | |
Net cash (used in) provided by investing activities | (15,697) | | | 10,873 | |
Cash flows from financing activities | | | |
Proceeds from initial public offering, net of underwriting discounts and commissions | — | | | 692,369 | |
Payments of initial public offering costs | — | | | (2,406) | |
Proceeds from issuance of convertible preferred stock | — | | | 750,000 | |
Payments of issuance costs for convertible preferred stock | — | | | (164) | |
Proceeds from exercise of stock options | 2,823 | | | 3,114 | |
Payments of tax withholdings on net settlement of equity awards | (17,329) | | | — | |
Net payments of tax withholdings on sell-to-cover equity award transactions | (10,037) | | | — | |
Proceeds from employee stock purchase plan contributions | 6,356 | | | — | |
Net cash (used in) provided by financing activities | (18,187) | | | 1,442,913 | |
Effect of exchange rate changes | (2,738) | | | 2,313 | |
Net (decrease) increase in cash, cash equivalents and restricted cash | (89,506) | | | 1,438,577 | |
Cash, cash equivalents, and restricted cash - beginning of period | 1,768,723 | | | 371,190 | |
Cash, cash equivalents, and restricted cash - end of period | $ | 1,679,217 | | | $ | 1,809,767 | |
Supplemental disclosure of cash flow information | | | |
Cash paid for interest | $ | 277 | | | $ | 214 | |
Cash paid for income taxes | 2,782 | | | 3,076 | |
Supplemental disclosure of non-cash investing and financing activities | | | |
Stock-based compensation capitalized for software development | $ | — | | | $ | 2,151 | |
Value of shares issued in payment of business acquisition | — | | | 30,446 | |
Reduction in accrued expenses and other liabilities for vesting of early exercised stock options | 1,355 | | | 1,646 | |
Property and equipment included in accounts payable | 779 | | | — | |
Deferred offering costs, accrued but not yet paid | — | | | 1,328 | |
Tax withholdings on net settlement of restricted stock units, accrued but not yet paid | 7,599 | | | 9,218 | |
(1) Prior period amounts have been combined to conform to current presentation | | | |
The accompanying notes are an integral part of these consolidated financial statements.
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 founded in Bucharest, Romania in 2005, 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 that allow our customers to discover automation opportunities and to build, manage, run, engage, measure, and govern automations across departments within an organization.
We derive revenue primarily from the sale of: (1) software licenses for use of our proprietary software and
related maintenance and support; (2) the right to access certain software products we host (i.e., software as a
service, or "SaaS"); (3) hybrid solutions (which are comprised of three performance obligations, consisting of a term
license, maintenance and support, and SaaS); and (4) professional services.
We have legal presence in 32 countries, with our principal operations in the United States, Romania, and Japan.
UiPath, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
(unaudited)
2. Summary of Significant Accounting Policies
Our significant accounting policies are discussed in Note 2, Summary of Significant Accounting Policies, in the Notes to Consolidated Financial Statements included in the 2022 Form 10-K. There have been no significant changes to these policies during the three months ended April 30, 2022.
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. As permitted under those rules, certain footnotes or other financial information that are normally required by U.S. GAAP may be condensed or omitted. The accompanying unaudited condensed consolidated financial statements and related financial information should be read in conjunction with the audited consolidated financial statements and the accompanying notes thereto for the fiscal year ended January 31, 2022, which are included in the 2022 Form 10-K.
The unaudited condensed consolidated financial statements have been prepared on the same basis as the Company’s audited consolidated financial statements and, in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments, that are necessary for the fair presentation of the Company’s financial information. The unaudited condensed consolidated financial statements include the financial statements of UiPath, Inc. and its wholly owned subsidiaries in which we hold a controlling financial interest. Intercompany transactions and accounts have been eliminated in consolidation.
The results of operations for the three months ended April 30, 2022 and 2021 are not necessarily indicative of the results to be expected for the fiscal year ending January 31, 2023 or for any other future interim or annual period.
Fiscal Year
Our fiscal year ends on January 31. References to fiscal year 2023, for example, refer to the fiscal year ending January 31, 2023.
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 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, revenue recognition, estimated expected benefit period for deferred contract acquisition costs, allowance for doubtful accounts, fair value of financial assets, 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 our initial public offering ("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 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 expense, net in the condensed consolidated statements of operations. For the three months ended April 30, 2022 and 2021, we recognized transaction losses of $1.4 million and $2.9 million, respectively.
UiPath, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
(unaudited)
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 Federal Deposit Insurance Corporation (“FDIC”) limits. As of April 30, 2022 and January 31, 2022, 98% and 96%, respectively, of our cash and cash equivalents 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 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 the three months ended April 30, 2022 and 2021, no single customer accounted for 10% or more of our total revenue. As of April 30, 2022 and January 31, 2022, no single customer accounted for 10% or more of our accounts receivable.
Internal-Use Software
Pursuant to Accounting Standards Codification ("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.
Costs incurred to develop our SaaS products 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 subscription services 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 SaaS products. These capitalized costs are included in other assets, non-current on the condensed consolidated balance sheets. Gross capitalized internal-use software development costs were $8.2 million and $10.1 million as of April 30, 2022 and January 31, 2022, respectively. Related amortization expense was $0.3 million and $0.2 million for the three months ended April 30, 2022 and 2021, respectively. Accumulated amortization was $2.0 million and $1.7 million as of April 30, 2022 and January 31, 2022, respectively.
Beginning in the fourth quarter of fiscal 2022, we began to broadly market on-premises versions of certain of our SaaS products, thereby establishing a pattern of deciding to market 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."
Capitalized costs related to the implementation of cloud computing arrangements that are service contracts are amortized on a straight-line basis over the terms of the associated hosting arrangements and are recorded under operating expenses in the same line item on the condensed consolidated statements of operations as the associated hosting arrangement fees. These gross capitalized costs were $2.2 million and $2.3 million as of April 30, 2022 and January 31, 2022, respectively, and are recorded in other assets, non-current on our consolidated balance sheets. Related amortization expense was $0.2 million and $0.2 million for the three months ended April 30, 2022 and 2021, respectively. Accumulated amortization was $1.4 million and $1.2 million as of April 30, 2022 and January 31, 2022, respectively.
UiPath, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
(unaudited)
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. This guidance requires that all costs incurred 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. Capitalized costs are included in other assets, non-current on the condensed consolidated balance sheets. These costs are amortized over the estimated useful life of the software, which is five years, on a straight-line basis, and are included in cost of licenses revenue or cost of subscription services revenue in the condensed consolidated statements of operations, based on the nature of the underlying product. 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 the recoverability of these assets. Gross capitalized software development costs were $4.2 million and $4.3 million as of April 30, 2022 and January 31, 2022, respectively, and amortization expenses were $0.2 million and $0.1 million for the three months ended April 30, 2022 and 2021, respectively. Accumulated amortization was $1.4 million and $1.2 million as of April 30, 2022 and January 31, 2022, respectively.
Recently Adopted Accounting Pronouncements
As an emerging growth company, the Jumpstart Our Business Startups Act (the “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 October 2021, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("ASU). No. 2021-08, Business Combinations (Topic 805)—Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, to amend the current accounting guidance in ASC 805 to require entities to apply ASC 606 to recognize and measure contract assets and contract liabilities acquired in a business combination. We early adopted ASU No. 2021-08 on a prospective basis on February 1, 2022, and the adoption did not have a material impact on our 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 removes certain exceptions associated with (1) intraperiod tax allocations, (2) recognition of deferred tax liabilities for equity method investments of foreign subsidiaries, and (3) the calculation of income taxes in an interim period when in a loss position within the framework of ASC 740. ASU No. 2019-12 also clarifies and amends existing guidance to improve consistent application. ASU No. 2019-12 will be effective for us for annual periods beginning February 1, 2022 and for interim periods in fiscal 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.
UiPath, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
(unaudited)
3. Revenue Recognition
Disaggregation of Revenue
The following table summarizes revenue by geographical region (dollars in thousands):
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended April 30, |
| 2022 | | 2021 |
| Amount | | Percentage of Revenue | | Amount | | Percentage of Revenue |
Americas (1) | $ | 114,151 | | | 47 | % | | $ | 84,626 | | | 45 | % |
Europe, Middle East, and Africa | 69,603 | | | 28 | % | | 50,084 | | | 27 | % |
Asia-Pacific (2) | 61,312 | | | 25 | % | | 51,507 | | | 28 | % |
Total revenue | $ | 245,066 | | | 100 | % | | $ | 186,217 | | | 100 | % |
(1)Revenue from the United States represented 42% and 40% of our total revenues for the three months ended April 30, 2022 and 2021, respectively.
(2)Revenue from Japan represented 14% and 15% of our total revenues for the three months ended April 30, 2022 and 2021, respectively.
Deferred Revenue
During the three months ended April 30, 2022 and 2021, we recognized $124.9 million and $81.9 million of revenue that was included in the deferred revenue balance as of January 31, 2022 and 2021, respectively.
Remaining Performance Obligations
Our remaining performance obligations are comprised of licenses, subscription services, and professional services and other revenue not yet delivered. As of April 30, 2022, the aggregate amount of the transaction price allocated to remaining performance obligations was $675.6 million, which consists of $339.0 million of billed consideration and $336.6 million of unbilled consideration. We expect to recognize 63% of our remaining performance obligations as revenue over the next 12 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. Amortization of deferred contract acquisition costs was $10.8 million and $4.9 million for the three months ended April 30, 2022 and 2021, respectively.
4. Marketable Securities
The following is a summary of our marketable securities (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | |
| As of April 30, 2022 |
| Amortized Cost | | Gross Unrealized Gains | | Gross Unrealized Losses | | Estimated Fair Value |
Commercial paper | $ | 15,359 | | | $ | — | | | $ | — | | | $ | 15,359 | |
Corporate bonds | 94,315 | | | — | | | (705) | | | 93,610 | |
Municipal bonds | 13,234 | | | — | | | (90) | | | 13,144 | |
Total marketable securities | $ | 122,908 | | | $ | — | | | $ | (795) | | | $ | 122,113 | |
UiPath, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | |
| As of January 31, 2022 |
| Amortized Cost | | Gross Unrealized Gains | | Gross Unrealized Losses | | Estimated Fair Value |
Commercial paper | $ | 15,343 | | | $ | — | | | $ | — | | | $ | 15,343 | |
Corporate bonds | 91,735 | | | — | | | (303) | | | 91,432 | |
Municipal bonds | 9,197 | | | — | | | (32) | | | 9,165 | |
Total marketable securities | $ | 116,275 | | | $ | — | | | $ | (335) | | | $ | 115,940 | |
As of April 30, 2022 and January 31, 2022, respectively $7.4 million and $19.5 million of our marketable securities had remaining contractual maturities of one year or more, and the remainder had contractual maturities of less than one year. To determine whether any decline in the fair value of our marketable securities is other-than temporary, we evaluate, among other factors, the duration and extent to which the fair value has been less than the carrying value and our intent and ability to retain the marketable securities for a period of time sufficient to allow for any anticipated recovery in fair value. Based on available evidence, we concluded that the gross unrealized losses on our marketable securities as of April 30, 2022 and January 31, 2022 are temporary in nature.
5. Fair Value Measurement
The following tables present the fair value hierarchy of our financial assets measured at fair value on a recurring basis as of April 30, 2022 and January 31, 2022 (in thousands):
| | | | | | | | | | | | | | | | | |
| As of April 30, 2022 |
| Level 1 | | Level 2 | | Total |
Financial assets: | | | | | |
Money market | $ | 1,050,171 | | | $ | — | | | $ | 1,050,171 | |
Total cash equivalents | 1,050,171 | | | — | | | 1,050,171 | |
Commercial paper | — | | | 15,359 | | | 15,359 | |
Corporate bonds | — | | | 93,610 | | | 93,610 | |
Municipal bonds | — | | | 13,144 | | | 13,144 | |
Total marketable securities | — | | | 122,113 | | | 122,113 | |
Total | $ | 1,050,171 | | | $ | 122,113 | | | $ | 1,172,284 | |
| | | | | |
| | | | | |
| | | | | |
| | | | | | | | | | | | | | | | | |
| As of January 31, 2022 |
| Level 1 | | Level 2 | | Total |
Financial assets: | | | | | |
Money market | $ | 1,056,555 | | | $ | — | | | $ | 1,056,555 | |
Total cash equivalents | 1,056,555 | | | — | | | 1,056,555 | |
Commercial paper | — | | | 15,343 | | | 15,343 | |
Corporate bonds | — | | | 91,432 | | | 91,432 | |
Municipal bonds | — | | | 9,165 | | | 9,165 | |
Total marketable securities | — | | | 115,940 | | | 115,940 | |
Total | $ | 1,056,555 | | | $ | 115,940 | | | $ | 1,172,495 | |
Our money market funds are classified within Level 1 of the fair value hierarchy because they are valued based on quoted market prices in active markets. We classify commercial paper, corporate bonds, and municipal bonds within Level 2 because they are valued using inputs other than quoted prices which are directly or indirectly observable in the market, including readily available pricing sources for the identical underlying security which may not be actively traded. None of our financial instruments were classified in the Level 3 category as of April 30, 2022 or January 31, 2022.
UiPath, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
(unaudited)
6. Business Acquisition
On March 19, 2021, we acquired all of the outstanding capital stock of Cloud Elements Inc. (“Cloud Elements”), provider of an application programming interface ("API") integration platform for SaaS application providers and the digital enterprise. The acquisition of Cloud Elements brings technology and an experienced team which we believe accelerate our technology roadmap in areas such as native integrations and system event automation triggers.
The total purchase consideration for the acquisition of Cloud Elements was $36.1 million, which consisted of the following (in thousands):
| | | | | |
| Amount |
Cash | $ | 5,660 | |
Fair value of common stock | 30,467 | |
Total | $ | 36,127 | |
The following table summarizes the final allocation of the purchase price to assets acquired and liabilities assumed as of the acquisition date (in thousands):
| | | | | |
| March 19, 2021 |
Cash | $ | 162 | |
Accounts receivable | 743 | |
Other assets | 1,996 | |
Intangible assets | 11,200 | |
Goodwill | 27,686 | |
Total assets acquired | 41,787 | |
Total liabilities assumed | (5,660) | |
Total | $ | 36,127 | |
The following table sets forth the identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition:
| | | | | | | | | | | |
| Fair Value (in thousands) | | Estimated Useful Life (in years) |
Developed technology | $ | 6,600 | | | 5.0 |
Customer relationships | 4,500 | | | 3.0 |
Trade name | 100 | | | 3.0 |
Total | $ | 11,200 | | | |
The acquisition of Cloud Elements generated $27.7 million in goodwill due to the synergies expected and the skilled workforce acquired. None of this goodwill is deductible for tax purposes.
UiPath, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
(unaudited)
7. Intangible Assets and Goodwill
Intangible Assets, Net
Acquired intangible assets, net consisted of the following as of April 30, 2022 (dollars in thousands):
| | | | | | | | | | | | | | | | | | | | | | | |
| Intangible Assets, Gross | | Accumulated Amortization | | Intangible Assets, Net | | Weighted- Average Remaining Useful Life (in years) |
Developed technology | $ | 17,956 | | | $ | (7,176) | | | $ | 10,780 | | | 3.2 |
Customer relationships | 4,982 | | | (1,866) | | | 3,116 | | | 2.0 |
Trade names and trademarks | 270 | | | (196) | | | 74 | | | 1.7 |
Other intangibles | 1,231 | | | (123) | | | 1,108 | | | 8.2 |
Total | $ | 24,439 | | | $ | (9,361) | | | $ | 15,078 | | | |
Acquired intangible assets, net consisted of the following as of January 31, 2022 (dollars in thousands):
| | | | | | | | | | | | | | | | | | | | | | | |
| Intangible Assets, Gross | | Accumulated Amortization | | Intangible Assets, Net | | Weighted- Average Remaining Useful Life (in years) |
Developed technology | $ | 18,627 | | | $ | (6,584) | | | $ | 12,043 | | | 3.4 |
Customer relationships | 5,010 | | | (1,479) | | | 3,531 | | | 2.2 |
Trade names and trademarks | 274 | | | (185) | | | 89 | | | 1.9 |
Other intangibles | 1,231 | | | (77) | | | 1,154 | | | 8.3 |
Total | $ | 25,142 | | | $ | (8,325) | | | $ | 16,817 | | | |
We record amortization expense associated with acquired developed technology in cost of licenses revenue and cost of subscription services revenue, trade names and trademarks in sales and marketing expense, customer relationships in sales and marketing expense, and other intangibles in general and administrative expense in the condensed consolidated statements of operations. Amortization of acquired intangible assets for the three months ended April 30, 2022 and 2021 was $1.4 million and $0.9 million, respectively.
Expected future amortization expense related to intangible assets was as follows as of April 30, 2022 (in thousands):
| | | | | |
| Amount |
Remainder of year ending January 31, 2023 | $ | 4,058 | |
Year ending January 31, | |
2024 | 5,385 | |
2025 | 3,438 | |
2026 | 1,449 | |
2027 | 338 | |
Thereafter | 410 | |
Total | $ | 15,078 | |
UiPath, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
(unaudited)
Goodwill
Changes in the carrying amount of goodwill during the three months ended April 30, 2022 were as follows (in thousands):
| | | | | |
| Carrying Amount |
Balance as of January 31, 2022 | $ | 53,564 | |
Effect of foreign currency translation | (1,441) | |
Balance as of April 30, 2022 | $ | 52,123 | |
8. Operating Leases
Our operating leases consist of real estate and vehicles and have remaining lease terms of one year to 16 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.
Lease costs are presented below (in thousands):
| | | | | | | | | | | | | | | |
| Three Months Ended April 30, | | |
| 2022 | | 2021 | | | | |
Operating lease cost | $ | 2,759 | | | $ | 1,734 | | | | | |
Short-term lease cost | 1,508 | | | 925 | | | | | |
Variable lease cost | 207 | | | 125 | | | | | |
Sublease income (1) | (532) | | | — | | | | | |
Total | $ | 3,942 | | | $ | 2,784 | | | | | |
(1) Included in other expense, net in the condensed consolidated statements of operations.
The following table represents the weighted-average remaining lease term and discount rate as of the periods presented:
| | | | | | | | | | | |
| As of |
| April 30, 2022 | | January 31, 2022 |
Weighted-average remaining lease term (years) | 14.1 | | 13.7 |
Weighted-average discount rate | 6.3 | % | | 6.5 | % |
Future undiscounted lease payments for our operating lease liabilities as of April 30, 2022 were as follows (in thousands):
| | | | | |
| Amount |
Remainder of year ending January 31, 2023 | $ | 285 | |
Year ending January 31, | |
2024 | 9,452 | |
2025 | 7,466 | |
2026 | 5,010 | |
2027 | 4,030 | |
Thereafter | 48,123 | |
Total operating lease payments | 74,366 | |
Less: imputed interest | (26,671) | |
Total operating lease liabilities | $ | 47,695 | |
UiPath, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
(unaudited)
Current operating lease liabilities of $1.3 million and $1.6 million were included in accrued expenses and other current liabilities on our condensed consolidated balance sheets as of April 30, 2022 and January 31, 2022, respectively.
Supplemental cash flow information related to leases for the three months ended April 30, 2022 and 2021 was as follows (in thousands):
| | | | | | | | | | | | | | | |
| Three Months Ended April 30, | | |
| 2022 | | 2021 | | | | |
Cash paid for amounts included in the measurement of operating lease liabilities | $ | 2,064 | | | $ | 1,898 | | | | | |
Operating lease ROU assets obtained in exchange for new operating lease liabilities | $ | 770 | | | $ | 710 | | | | | |
9. Condensed Consolidated Balance Sheet Components
Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consisted of the following (in thousands):
| | | | | | | | | | | |
| As of |
| April 30, 2022 | | January 31, 2022 |
Prepaid expenses | $ | 42,928 | | | $ | 29,451 | |
Value-added taxes receivable | 3,932 | | | 3,313 | |
Other receivables | 4,986 | | | 6,762 | |
Supplier advances | 9,226 | | | 15,890 | |
Prepaid expenses and other current assets | $ | 61,072 | | | $ | 55,416 | |
Property and Equipment, Net
Property and equipment, net consisted of the following (in thousands):
| | | | | | | | | | | |
| As of |
| April 30, 2022 | | January 31, 2022 |
Computers and equipment | $ | |