Sursa foto: Facebook/UiPath
UiPath, the first Romanian unicorn, and leader of the RPA (Robotic Process Automation) market is facing a sharp decline in its shares on the American stock exchange, which have lost more than 40% of their value in the last 6 months, says Bogdan Maioreanu, analyst and market commentator at eToro.
Even after beating analysts’ expectations when it reported its third-quarter 2022 financials, the company’s shares have continued to fall, currently trading 15% below the $56 per share price from its initial public offering in April. One reason is related to analysts’ expectations that competition will tighten in the future as giants such as Microsoft enter the RPA market.
UiPath Inc. on Wednesday night reported better-than-expected results in the latest quarter as more companies turned to the firm to help them with automation efforts. Revenue totaled $220.8 million, up from $147.3 million a year earlier, beating analysts’ expectations of $208.3 million. The company reported a net loss of $122.8 million in the third quarter, up from a loss of $70.8 million a year earlier. UiPath posted a loss of 23 cents per share, but was break-even on an adjusted basis, again beating analysts’ expectations for an adjusted loss of 4 cents per share. Recurring annual revenue was $818.4 million, up 58% from a year earlier. Analysts were expecting this metric to be $797.9 million. Total operating expenses were $294 million, up from $192.9 million a year earlier, as the company spent more on sales and marketing and research and development – R&D.
Daniel Dines, CEO of UiPath Inc said the company’s R&D efforts will continue as part of the company’s overall investment strategy designed to keep it at the forefront of the market. “I can tell you that our R&D hiring strategy has been to hire like the end of the world. We joke internally that we don’t have an R&D budget. And I’m very happy to tell you that, despite the market pressure, the third quarter was one of the best quarters for us in terms of R&D hiring,” Dines said.
Despite financial results that exceeded analysts’ expectations, the company’s shares continued their decline from a high of $90 per share to around $47, due to investor concerns about the market crowding with new, more integrated, and stronger competitors. In the Magic Quadrant, UiPath was placed in the Leaders section by consulting firm Gartner. But in an adjacent quadrant, the Visionaries quadrant is Microsoft. A huge company with big budgets, Microsoft is already introducing RPA services to its customers, largely tied to its own ecosystem and using Azure as the cloud backbone, at very low prices. According to Gartner, “this could disrupt the broader RPA market, forcing many vendors to offer equally competitive pricing.” And that could be a threat to UiPath.
Dines isn’t worried, however. “Our own data, if we look at bidding processes that Microsoft participates in versus those that Microsoft does not participate in, shows no significant change in our success rate. So, at this point, I can say that Microsoft is not having a significant impact on our ability to win customers.” In the future, Dines doesn’t see Microsoft “derailing” UiPath from its growth trajectory. But, as we warned three months ago, the market is crowding with other big names, such as ServiceNow, Salesforce, IBM and SAP, looking to offer RPA services integrated into their platforms. Still, the RPA market is big, according to analyst Keith Weiss of Morgan Stanley, worth about $2 billion at present, but could be worth as much as $56 billion, making UiPath, with its 32% market share (according to IDC), an interesting company for investors.