10-Q: Quarterly report pursuant to Section 13 or 15(d)
Published on June 2, 2023
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, 2023
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
___________________________________________
(Exact Name of Registrant as Specified in its Charter)
___________________________________________
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
||||
|
|||||
(Address of principal executive offices) | (Zip Code) | ||||
Registrant’s telephone number, including area code: ( |
___________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) |
Name of each exchange on which registered | ||||||||||||
$0.00001 per share |
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.
☒ | 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 30, 2023, the registrant had 478,709,485 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 | ||||||||
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 fact 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, forward-looking statements can be identified because they contain words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “possible,” “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;
•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 evolve and enhance our brand;
•our growth strategies;
•the estimated addressable market opportunity for our platform and for automation in general;
•our reliance on key personnel and our ability to attract, integrate, and retain highly-qualified personnel and execute management transitions;
•our ability to obtain, maintain, and enforce our intellectual property rights and any costs associated therewith;
•the effect of global events, such as the Russian military operation in Ukraine, 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.
These forward-looking statements should not be unduly relied upon or regarded as predictions of future events. The forward-looking statements contained in this Quarterly Report on Form 10-Q are based 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 in the section titled "Risk Factors" and elsewhere in our Annual Report on Form 10-K for the fiscal year ended January 31, 2023 filed with the Securities and Exchange Commission ("SEC") on March 24, 2023 (the "2023 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, based on information available to us as of the date of this Quarterly Report on Form 10-Q. While we believe such 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. 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, 2023 | January 31, 2023 | ||||||||||
ASSETS | |||||||||||
Current assets | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Marketable securities | |||||||||||
Accounts receivable, net of allowance for credit losses of $ |
|||||||||||
Contract assets | |||||||||||
Deferred contract acquisition costs | |||||||||||
Prepaid expenses and other current assets | |||||||||||
Total current assets | |||||||||||
Marketable securities, non-current | |||||||||||
Contract assets, non-current | |||||||||||
Deferred contract acquisition costs, non-current | |||||||||||
Property and equipment, net | |||||||||||
Operating lease right-of-use assets | |||||||||||
Intangible assets, net | |||||||||||
Goodwill | |||||||||||
Deferred tax asset | |||||||||||
Other assets, non-current | |||||||||||
Total assets | $ | $ | |||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||
Current liabilities | |||||||||||
Accounts payable | $ | $ | |||||||||
Accrued expenses and other current liabilities | |||||||||||
Accrued compensation and employee benefits | |||||||||||
Deferred revenue | |||||||||||
Total current liabilities | |||||||||||
Deferred revenue, non-current | |||||||||||
Operating lease liabilities, non-current | |||||||||||
Other liabilities, non-current | |||||||||||
Total liabilities | |||||||||||
Commitments and contingencies (Note 11) | |||||||||||
Stockholders' equity | |||||||||||
Preferred stock, $ |
|||||||||||
Class A common stock, $ |
|||||||||||
Class B common stock, $ |
|||||||||||
Additional paid-in capital | |||||||||||
Accumulated other comprehensive income | |||||||||||
Accumulated deficit | ( |
( |
|||||||||
Total stockholders’ equity | |||||||||||
Total liabilities and stockholders’ equity | $ | $ |
The accompanying notes are an integral part of these condensed consolidated financial statements.
1
UiPath, Inc.
Condensed Consolidated Statements of Operations
Amounts in thousands except per share data
(unaudited)
Three Months Ended April 30, | |||||||||||
2023 | 2022 | ||||||||||
Revenue: | |||||||||||
Licenses | $ | $ | |||||||||
Subscription services | |||||||||||
Professional services and other | |||||||||||
Total revenue | |||||||||||
Cost of revenue: | |||||||||||
Licenses | |||||||||||
Subscription services | |||||||||||
Professional services and other | |||||||||||
Total cost of revenue | |||||||||||
Gross profit | |||||||||||
Operating expenses: | |||||||||||
Sales and marketing | |||||||||||
Research and development | |||||||||||
General and administrative | |||||||||||
Total operating expenses | |||||||||||
Operating loss | ( |
( |
|||||||||
Interest income | |||||||||||
Other income (expense), net | ( |
||||||||||
Loss before income taxes | ( |
( |
|||||||||
Provision for income taxes | |||||||||||
Net loss | $ | ( |
$ | ( |
|||||||
Net loss per share attributable to common stockholders, basic and diluted | $ | ( |
$ | ( |
|||||||
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted |
The accompanying notes are an integral part of these condensed consolidated financial statements.
2
UiPath, Inc.
Condensed Consolidated Statements of Comprehensive Loss
Amounts in thousands
(unaudited)
Three Months Ended April 30, | |||||||||||
2023 | 2022 | ||||||||||
Net loss | $ | ( |
$ | ( |
|||||||
Other comprehensive income (loss), net of tax: | |||||||||||
Unrealized gain (loss) on available-for-sale marketable securities, net | ( |
||||||||||
Foreign currency translation adjustments | |||||||||||
Other comprehensive income (loss), net | ( |
||||||||||
Comprehensive loss | $ | ( |
$ | ( |
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
UiPath, Inc.
Condensed Consolidated Statements of Stockholders’ Equity
Amounts in thousands
(unaudited)
Common Stock | Additional Paid-in Capital |
Accumulated Other Comprehensive Income |
Accumulated Deficit |
Total Stockholders’ Equity |
|||||||||||||||||||||||||||||||||||||||||||
Class A | Class B | ||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Amount | Amount | Amount | Amount | ||||||||||||||||||||||||||||||||||||||||
Balance as of January 31, 2023 | $ | $ | $ | $ | $ | ( |
$ | ||||||||||||||||||||||||||||||||||||||||
Issuance of common stock upon exercise of stock options | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock upon settlement of restricted stock units | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
Tax withholdings on settlement of restricted stock units | ( |
— | — | — | ( |
— | — | ( |
|||||||||||||||||||||||||||||||||||||||
Charitable donation of Class A common stock | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Other comprehensive income, net | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | ( |
( |
|||||||||||||||||||||||||||||||||||||||
Balance as of April 30, 2023 | $ | $ | $ | $ | $ | ( |
$ |
Common Stock | Additional Paid-in Capital |
Accumulated Other Comprehensive Income (Loss) |
Accumulated Deficit |
Total Stockholders’ Equity |
||||||||||||||||||||||||||||||||||||||||||||||
Class A | Class B | |||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Amount | Amount | Amount | Amount | |||||||||||||||||||||||||||||||||||||||||||
Balance as of January 31, 2022 | $ | $ | $ | $ | $ | ( |
$ | |||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock upon exercise of stock options | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
Vesting of early exercised stock options | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock upon settlement of restricted stock units | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Tax withholdings on settlement of restricted stock units | ( |
— | — | — | ( |
— | — | ( |
||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive loss, net | — | — | — | — | — | ( |
— | ( |
||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | ( |
( |
||||||||||||||||||||||||||||||||||||||||||
Balance as of April 30, 2022 | $ | $ | $ | $ | $ | ( |
$ | |||||||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
UiPath, Inc.
Condensed Consolidated Statements of Cash Flows
Amounts in thousands
(unaudited)
Three Months Ended April 30, | |||||||||||
2023 | 2022 | ||||||||||
Cash flows from operating activities | |||||||||||
Net loss | $ | ( |
$ | ( |
|||||||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |||||||||||
Depreciation and amortization | |||||||||||
Amortization of deferred contract acquisition costs | |||||||||||
Net amortization on marketable securities | ( |
||||||||||
Stock-based compensation expense | |||||||||||
Charitable donation of Class A common stock | |||||||||||
Amortization of operating lease right-of-use assets | |||||||||||
Provision for deferred income taxes | ( |
||||||||||
Other non-cash charges, net | |||||||||||
Changes in operating assets and liabilities: | |||||||||||
Accounts receivable | |||||||||||
Contract assets | ( |
||||||||||
Deferred contract acquisition costs | ( |
( |
|||||||||
Prepaid expenses and other assets | ( |
( |
|||||||||
Accounts payable | ( |
||||||||||
Accrued expenses and other liabilities | ( |
( |
|||||||||
Accrued compensation and employee benefits | ( |
( |
|||||||||
Operating lease liabilities, net | ( |
( |
|||||||||
Deferred revenue | ( |
( |
|||||||||
Net cash provided by (used in) operating activities | ( |
||||||||||
Cash flows from investing activities | |||||||||||
Purchases of marketable securities | ( |
( |
|||||||||
Maturities of marketable securities | |||||||||||
Purchases of property and equipment | ( |
( |
|||||||||
Other investing, net | |||||||||||
Net cash used in investing activities | ( |
( |
|||||||||
Cash flows from financing activities | |||||||||||
Proceeds from exercise of stock options | |||||||||||
Payments of tax withholdings on net settlement of equity awards | ( |
( |
|||||||||
Net payments of tax withholdings on sell-to-cover equity award transactions | ( |
( |
|||||||||
Proceeds from employee stock purchase plan contributions | |||||||||||
Net cash used in financing activities | ( |
( |
|||||||||
Effect of exchange rate changes | ( |
( |
|||||||||
Net decrease in cash and cash equivalents | ( |
( |
|||||||||
Cash and cash equivalents - beginning of period | |||||||||||
Cash and cash equivalents - end of period | $ | $ | |||||||||
Supplemental disclosure of cash flow information | |||||||||||
Cash paid for interest | $ | $ | |||||||||
Cash paid for income taxes | |||||||||||
Supplemental disclosure of non-cash investing and financing activities | |||||||||||
Reduction in accrued expenses and other liabilities for vesting of early exercised stock options | |||||||||||
Property and equipment purchases included in accounts payable | |||||||||||
Receivable from maturities of marketable securities included in prepaid expense and other current assets | |||||||||||
Tax withholdings on net settlement of restricted stock units, accrued but not yet paid |
The accompanying notes are an integral part of these consolidated financial statements.
5
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, New York. Our end-to-end automation platform, the UiPath Business Automation Platform, offers a robust set of capabilities that allows our customers to discover opportunities for automation, automate using a digital workforce that seamlessly collaborates with humans, and operate a mission critical automation program at scale.
2. Summary of Significant Accounting Policies
Our significant accounting policies are discussed in greater scope and detail in Note 2, Summary of Significant Accounting Policies, in the notes to consolidated financial statements included in the 2023 Form 10-K. There have been no significant changes to such policies during the three months ended April 30, 2023.
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, 2023, which are included in the 2023 Form 10-K.
The unaudited condensed consolidated financial statements have been prepared on the same basis as our 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 our financial information. The unaudited condensed consolidated financial statements include the financial statements of UiPath, Inc. and its subsidiaries in which we hold a controlling financial interest. Intercompany transactions and accounts have been eliminated in consolidation.
The results of operations for the three months ended April 30, 2023 are not necessarily indicative of the results to be expected for the fiscal year ending January 31, 2024 or for any other future interim or annual period.
Fiscal Year
Our fiscal year ends on January 31. References to fiscal year 2024, for example, refer to the fiscal year ending January 31, 2024.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts of assets and liabilities at the balance sheet date and the amounts of revenue and expenses reported during the period. We evaluate estimates based on historical and anticipated results, trends, and various other assumptions. Such estimates include, but are not limited to, certain aspects of revenue recognition including changes in variable consideration, expected period of benefit for deferred contract acquisition costs, allowance for credit losses, fair value of financial assets and liabilities, fair value of acquired assets and assumed liabilities, useful lives of long-lived assets, capitalized software development costs, carrying value of operating lease right-of-use (“ROU”) assets and operating lease liabilities, incremental borrowing rates for operating leases, amount of stock-based compensation expense, timing and amount of contingencies, costs related to our restructuring actions, uncertain tax positions, and valuation allowance for deferred income taxes. Actual results could differ from these estimates and assumptions.
6
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, 2023 and January 31, 2023, 97 % and 98 %, 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.
3. Revenue Recognition
Disaggregation of Revenue
The following tables summarize revenue by geographical region (dollars in thousands):
Three Months Ended April 30, | |||||||||||||||||||||||
2023 | 2022 | ||||||||||||||||||||||
Amount | Percentage of Revenue |
Amount | Percentage of Revenue |
||||||||||||||||||||
Americas (1)
|
$ | % | $ | % | |||||||||||||||||||
Europe, Middle East, and Africa | % | % | |||||||||||||||||||||
Asia-Pacific (2)
|
% | % | |||||||||||||||||||||
Total revenue | $ | % | $ | % |
(1)Revenue from the United States represented 38 % and 42 % of total revenue for the three months ended April 30, 2023 and 2022, respectively.
(2)Revenue from Japan represented 13 % and 14 % of total revenue for the three months ended April 30, 2023 and 2022, respectively.
Deferred Revenue
During the three months ended April 30, 2023 and 2022, we recognized $150.6 million and $124.9 million of revenue that was included in the deferred revenue balance as of January 31, 2023 and 2022, respectively.
7
UiPath, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
(unaudited)
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, 2023, the aggregate amount of the transaction price allocated to remaining performance obligations was $903.9 million, which consists of $499.1 million of billed consideration and $404.8 million of unbilled consideration. We expect to recognize 62 % 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 $14.1 million and $10.8 million for the three months ended April 30, 2023 and 2022, respectively, and is recorded in sales and marketing expense in the condensed consolidated statements of operations.
4. Marketable Securities
The following is a summary of our marketable securities (in thousands):
As of April 30, 2023 | |||||||||||||||||||||||
Amortized Cost | Gross Unrealized Gains |
Gross Unrealized Losses |
Estimated Fair Value | ||||||||||||||||||||
Commercial paper | $ | $ | $ | $ | |||||||||||||||||||
Treasury bills and U.S. government securities | ( |
||||||||||||||||||||||
Corporate bonds | ( |
||||||||||||||||||||||
Municipal bonds | ( |
||||||||||||||||||||||
Agency bonds | ( |
||||||||||||||||||||||
Total marketable securities | $ | $ | $ | ( |
$ |
As of January 31, 2023 | |||||||||||||||||||||||
Amortized Cost | Gross Unrealized Gains |
Gross Unrealized Losses |
Estimated Fair Value | ||||||||||||||||||||
Commercial paper | $ | $ | $ | $ | |||||||||||||||||||
Treasury bills and U.S. government securities (1)
|
( |
||||||||||||||||||||||
Corporate bonds | ( |
||||||||||||||||||||||
Municipal bonds | ( |
||||||||||||||||||||||
Agency bonds | ( |
||||||||||||||||||||||
Total marketable securities | $ | $ | $ | ( |
$ | ||||||||||||||||||
(1) Treasury bills with both amortized cost and estimated fair value of $ |
As of April 30, 2023 and January 31, 2023, respectively $5.7 million and $2.9 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.
As of April 30, 2023 and January 31, 2023, $2.8 million and $3.5 million of interest receivable was included in prepaid expenses and other current assets on the condensed consolidated balance sheets. We did not recognize an allowance for credit losses against interest receivable as of April 30, 2023 and January 31, 2023.
Unrealized losses during the periods presented are a result of changes in market conditions. We do not believe that any unrealized losses are attributable to credit-related factors based on our evaluation of available evidence. To determine whether a decline in value is related to credit loss, we evaluate, among other factors, the
8
UiPath, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
(unaudited)
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, 2023 and January 31, 2023 (in thousands):
As of April 30, 2023 | |||||||||||||||||
Level 1 | Level 2 | Total | |||||||||||||||
Financial assets: | |||||||||||||||||
Money market | $ | $ | $ | ||||||||||||||
Corporate bonds | |||||||||||||||||
Commercial paper | |||||||||||||||||
Agency bonds | |||||||||||||||||
Total cash equivalents | |||||||||||||||||
Commercial paper | |||||||||||||||||
Treasury bills and U.S. government securities | |||||||||||||||||
Corporate bonds | |||||||||||||||||
Municipal bonds | |||||||||||||||||
Agency bonds | |||||||||||||||||
Total marketable securities | |||||||||||||||||
Total | $ | $ | $ | ||||||||||||||
As of January 31, 2023 | |||||||||||||||||
Level 1 | Level 2 | Total | |||||||||||||||
Financial assets: | |||||||||||||||||
Money market | $ | $ | $ | ||||||||||||||
Treasury bills | |||||||||||||||||
Total cash equivalents | |||||||||||||||||
Commercial paper | |||||||||||||||||
Treasury bills and U.S. government securities | |||||||||||||||||
Corporate bonds | |||||||||||||||||
Municipal bonds | |||||||||||||||||
Agency bonds | |||||||||||||||||
Total marketable securities | |||||||||||||||||
Total | $ | $ | $ |
Our money market funds, treasury bills and U.S. government securities, and agency bonds are classified within Level 1 of the fair value hierarchy because they are valued based on quoted market prices in active markets. We classify commercial paper, corporate bonds, and municipal bonds as Level 2 because they are valued using inputs other than quoted prices which are directly or indirectly observable in the market, including readily-available pricing sources for the identical underlying security which may not be actively traded. None of our financial instruments were classified in the Level 3 category as of April 30, 2023 or January 31, 2023.
6. Business Acquisitions
Re:infer
On July 29, 2022, we acquired all of the outstanding capital stock of Re:infer LTD. (“Re:infer”), a natural language processing company focused on unstructured documents and communications. Re:infer uses machine learning technology to mine context from communication messages and transform them into actionable data. With this acquisition, we gained technology and an experienced team which we believe will accelerate our technology
9
UiPath, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
(unaudited)
roadmap, expand the breadth of our current AI-powered automation capabilities, and unlock new automation opportunities for our customers. The Re:infer acquisition was accounted for as a business combination.
The total purchase consideration for the acquisition of Re:infer was $44.6 million, consisting of the following (in thousands):
Cash paid at closing | $ | ||||
Fair value of Class A common stock issued at closing ( |
|||||
Loan note to be paid on first anniversary of closing (included in accrued expenses and other current liabilities) | |||||
Loan note to be paid on second anniversary of closing (included in other liabilities, non-current) | |||||
Working capital adjustment | |||||
Total | $ |
At closing, we also issued an additional 0.4 million shares of Class A common stock that will be released to sellers in equal installments on the first, second, and third anniversaries of the closing date, subject to certain employment-related clawback provisions. The aggregate fair value of these shares totaled $7.6 million and will be expensed as compensation for post-acquisition services over the three years following the acquisition date.
The following table summarizes the fair values of the assets acquired and liabilities assumed as of the acquisition date (in thousands):
July 29, 2022 | |||||
Net tangible assets | $ | ||||
Intangible assets | |||||
Goodwill | |||||
Total assets acquired | |||||
Deferred tax liabilities assumed | ( |
||||
Total | $ |
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 | $ | ||||||||||
Customer relationships | |||||||||||
Total | $ |
The acquisition of Re:infer generated goodwill of $34.4 million representing expected synergies and acquired skilled workforce. None of this goodwill is deductible for tax purposes.
10
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, 2023 (dollars in thousands):
Intangible Assets, Gross |
Accumulated Amortization |
Intangible Assets, Net |
Weighted- Average Remaining Useful Life (in years) |
||||||||||||||||||||
Developed technology | $ | $ | ( |
$ | |||||||||||||||||||
Customer relationships | ( |
||||||||||||||||||||||
Trade names and trademarks | ( |
||||||||||||||||||||||
Other intangibles | ( |
||||||||||||||||||||||
Total | $ | $ | ( |
$ |
Acquired intangible assets, net consisted of the following as of January 31, 2023 (dollars in thousands):
Intangible Assets, Gross |
Accumulated Amortization |
Intangible Assets, Net |
Weighted- Average Remaining Useful Life (in years) |
||||||||||||||||||||
Developed technology | $ | $ | ( |
$ | |||||||||||||||||||
Customer relationships | ( |
||||||||||||||||||||||
Trade names and trademarks | ( |
||||||||||||||||||||||
Other intangibles | ( |
||||||||||||||||||||||
Total | $ | $ | ( |
$ |
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, 2023 and 2022 was $2.1 million and $1.4 million, respectively.
Expected future amortization expense related to intangible assets was as follows as of April 30, 2023 (in thousands):
Amount | |||||
Remainder of year ending January 31, 2024 | $ | ||||
Year ending January 31, | |||||
2025 | |||||
2026 | |||||
2027 | |||||
2028 | |||||
Thereafter | |||||
Total | $ |
11
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, 2023 were as follows (in thousands):
Carrying Amount |
|||||
Balance as of January 31, 2023 | $ | ||||
Effect of foreign currency translation | |||||
Balance as of April 30, 2023 | $ |
8. Operating Leases
Our operating leases consist of real estate and vehicles and have remaining lease terms of one year to 15 years. For purposes of calculating operating lease liabilities, lease terms may be deemed to include options to extend the lease when it is reasonably certain that we will exercise those options. Our operating lease arrangements do not contain any material restrictive covenants or residual value guarantees.
Lease costs are presented below (in thousands):
Three Months Ended April 30, | |||||||||||
2023 | 2022 | ||||||||||
Operating lease cost | $ | $ | |||||||||
Short-term lease cost | |||||||||||
Variable lease cost | |||||||||||
Sublease income (1)
|
( |
( |
|||||||||
Total | $ | $ |
(1) Included in other income (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, 2023 | January 31, 2023 | ||||||||||
Weighted-average remaining lease term (years) | |||||||||||
Weighted-average discount rate | % | % |
Future undiscounted lease payments for our operating lease liabilities as of April 30, 2023 were as follows (in thousands):
Amount | |||||
Remainder of year ending January 31, 2024 |
$ | ||||
Year ending January 31, | |||||
2025 | |||||
2026 | |||||
2027 | |||||
2028 | |||||
Thereafter | |||||
Total operating lease payments | |||||
Less: imputed interest | ( |
||||
Total operating lease liabilities | $ |
12
UiPath, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
(unaudited)
As of April 30, 2023, we had non-cancellable commitments in the amount of $4.9 million related to operating leases of real estate facilities that have not yet commenced.
Current operating lease liabilities of $7.3 million and $7.0 million were included in on our condensed consolidated balance sheets as of April 30, 2023 and January 31, 2023, respectively.
Three Months Ended April 30, | |||||||||||
2023 | 2022 | ||||||||||
Cash paid for amounts included in the measurement of operating lease liabilities | $ | $ | |||||||||
Operating lease ROU assets obtained in exchange for new operating lease liabilities |
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, 2023 | January 31, 2023 | ||||||||||
Prepaid expenses and service credits | $ | $ | |||||||||
Other current assets | |||||||||||
Prepaid expenses and other current assets | $ | $ |
Property and Equipment, Net
Property and equipment, net consisted of the following (in thousands):
As of | |||||||||||
April 30, 2023 | January 31, 2023 | ||||||||||
Computers and equipment | $ | $ | |||||||||
Leasehold improvements | |||||||||||
Furniture and fixtures | |||||||||||
Construction in progress | |||||||||||
Property and equipment, gross | |||||||||||
Less: accumulated depreciation | ( |
( |
|||||||||
Property and equipment, net | $ | $ |
Depreciation expense for the three months ended April 30, 2023 and 2022 was $3.0 million and $1.9 million, respectively.
13
UiPath, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
(unaudited)
Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consisted of the following (in thousands):
As of | |||||||||||
April 30, 2023 | January 31, 2023 | ||||||||||
Accrued expenses | $ | $ | |||||||||
Withholding tax from employee equity transactions | |||||||||||
Employee stock purchase plan withholdings | |||||||||||
Payroll taxes and other benefits payable | |||||||||||
Income tax payable | |||||||||||
Value-added taxes payable | |||||||||||
Operating lease liabilities, current | |||||||||||
Deferred consideration for business acquisition, current | |||||||||||
Other | |||||||||||
Accrued expenses and other current liabilities | $ | $ |
10. Credit Facility
On October 30, 2020, we entered into a $200.0 million senior secured revolving credit facility (the “Credit Facility”) with HSBC Ventures USA Inc., Silicon Valley Bridge Bank, N.A. (as successor to Silicon Valley Bank), Sumitomo Mitsui Banking Corporation, and Mizuho Bank, LTD, maturing October 30, 2023. The Credit Facility contains certain customary covenants, including, but not limited to, those relating to additional indebtedness, liens, asset divestitures, and affiliate transactions. We may use the proceeds of future borrowings under the Credit Facility for refinancing other indebtedness, working capital, capital expenditures and other general corporate purposes, including permitted business acquisitions. Our obligations under the Credit Facility are secured by substantially all of our assets, except for our intellectual property.
As of April 30, 2023 and January 31, 2023, there were no amounts outstanding under the Credit Facility.
11. Commitments and Contingencies
Letters of Credit
We had a total of $5.6 million and $4.3 million in letters of credit outstanding in favor of certain landlords for office space and for credit line facilities as of April 30, 2023 and January 31, 2023, respectively. These letters of credit renew annually and expire on various dates through fiscal year 2025.
Indemnification
In the ordinary course of business, we may provide indemnification of varying scope and terms to customers, vendors, directors, and officers with respect to certain matters, including, but not limited to, losses arising out of our breach of such agreements, services to be provided by us, or from intellectual property infringement claims made by third parties.
These indemnification provisions may survive termination of the underlying agreement and the potential amount of future payments we could be required to make under these indemnification provisions may not be subject to maximum loss clauses. The maximum potential amount of future payments we could be required to make under these indemnification provisions is indeterminable. As of April 30, 2023 and January 31, 2023, we have not accrued a liability for these indemnification arrangements because the likelihood of incurring a payment obligation, if any, in connection with these indemnification arrangements was remote.
14
UiPath, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
(unaudited)
Restructuring
On June 24, 2022, our board of directors approved restructuring actions to manage our operating expenses by reducing our global workforce by approximately