UiPath and its investors raised over US$1.34 billion in the company’s IPO on 21 April. It priced its shares at US$56 a piece and witnessed a dramatic 23% increase in share price to US$69 on its stock market debut. Today, UiPath’s shares are currently trading at US$65.40 (as of 10 May).
This also makes UiPath the third-largest U.S. IPO for a software company, behind Snowflake and Qualtrics. So, what exactly does this company do, and how did it become so big?
Robotics Process Automation (RPA): Something We Will Hear More Of
As technology in robotics improves, manual and repetitive human jobs are being replaced by robots. This has been commonplace for years — just think of car manufacturing.
But have you heard of digital robots?
UiPath makes software robots to help companies streamline repetitive tasks, using Robotic Process Automation (RPA) to automate tasks that are repetitive yet labour-intensive, such as document processing, evaluating resumes and customer service.
RPA is a software technology that makes it easy to build, deploy, and manage software robots that emulate humans actions interacting with digital systems and software.
Just like people, software robots can do things like understand what’s on a screen, complete the right keystrokes, navigate systems, identify and extract data, and perform a wide range of defined actions. But software robots can do it faster and more consistently than people, without the need to get up and stretch or take a coffee break.
From Obscure Origins To Gigantic Growth
Daniel Dines, the company’s co-founder, launched the business with Marius Tirca in 2005 in Bucharest, Romania. He had just left Microsoft after working in the U.S. for 5 years.
He was the son of a teacher and engineer in Romania, initially wanting to grow up to be a writer but finding hidden talent in math instead. Dines then taught himself C++ and launched a jobs website, before landing a role at Microsoft in 2001 and moving to Seattle despite not being able to speak much English.
In 2005, he returned to Romania to start UiPath (originally named Deskover). The firm struggled to gain momentum as a tech outsourcing firm over the first few years and almost collapsed when they lost their largest customer. To stay afloat, they sold RPA software.
The main turning point came in 2012, when an Indian company voted Deskover as the best RPA technology company after undertaking a pilot project. This came despite UiPath not tailoring their software entirely to RPA yet.
After further research, Dines found out that RPA (a term coined by competitor BluePrism) was where the business needed to pivot towards in order to help more businesses outsource repetitive work into the hands of software robots.
Fast forward to 2014, and the company made US$500,000 in revenue through their desktop automation product based on Microsoft Workflow Designer.
One of the great growth hacks that UiPath managed to pull off was partnering up with big consulting firms like McKinsey and Accenture instead of competing with them, and this was made available because of the relationships they had with existing businesses who wanted to integrate RPA into their workflow processes.
Not only were these big consulting firms able to automate their own work, they were also able to introduce UiPath to their clients, effectively working as the UiPath sales force.
UiPath was also recognised by Forrester Wave, a leading research and advisory company for the technology marketplace, as one of the leaders of RPA in 2017, ahead of its UK rival BluePrism. This showed that their product was indeed at the forefront of the software robotics industry.
Today, UiPath has a wide range of MNCs for clients, including the likes of BMW, Toyota, Allianz and GE (General Electric), helping to save hundreds of thousands of manhours per year.
What Are The Business Benefits Of RPA?
Robotic process automation streamlines workflows, which makes organisations more profitable, flexible, and responsive. It also increases employee satisfaction, engagement, and productivity by removing mundane tasks from their workdays.
RPA is non-invasive and can be rapidly implemented to accelerate digital transformation. And it’s ideal for automating workflows that involve legacy systems that lack APIs, virtual desktop infrastructures (VDIs), or database access.
Aflush With Cash Even Before UiPath’s IPO
Big investors took notice of UiPath’s impact and scale, and invested heavily in its pre-IPO funding rounds. Alphabet’s capital growth fund CapitalG joined its US$153m Series B funding round in 2018 which valued the firm at US$1.1bn. The firm also saw interest from Softbank’s Vision fund, but ultimately went with Sequoia and CapitalG instead.
In 2019, a further round of funding valued the company at US$7bn, after its revenue grew by 620% between 2015 to 2018.
Revenue surged 81% last year to $607.6 million, and the company’s loss narrowed to $92.4 million from $519.9 million in 2019. UiPath’s gross margin of 89% is among the highest in software.
One of UiPath’s greatest strengths is its ability to keep customers and encourage them to increase spending over time. In its last fiscal year, UiPath reported net revenue retention of 145%, meaning the average existing customer increased spending by 45% from the prior year.
As The RPA Market Keeps Marching Forward, UiPath Seems To Be Paving The Way
UiPath has proven itself to be an industry leader in RPA, helping big companies automate workflow processes and creating more opportunities for employees to focus on value-generating tasks. Soon, SMEs and startups will have to consider RPA to stay ahead of the competition as well.
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