What I Like
Management
Company’s culture is centered around Humility. <—Skip to 30:18 in this video
Founder has extremely high Skin-in-the-game, worth $6.9B w/ more than 80% voting power. [ Class A: 27,057,582 | Class B: 82,452,748 ]
Each Class B shares have 35x more voting power than Class A shares.
Simple, Inspiring, & Optionable mission statement
Glassdoor reviews
Product
UiPath is rated #1 twice in a row on Gartner’s Magic Quadrant.
UiPath is rated #1 on G2.com, which is based on real-time data from verified user reviews.
UiPath 4.6/5 stars with 4,722 reviews
Automation Anywhere 4.5/5 stars with 4,310 reviews
Blue Prism 4.4/5 stars with 158 reviews
UiPath has a solid reputation as the leader in RPA and is becoming the go-to partner for enterprises. They claim that 8 out of Fortune 10 use their software.
UiPath is also subtly gaining Top-of-Mind market share.
My University (NUS), also teaches RPA using UiPath. This signifies to me that they are becoming the industry standard for RPA and its a social arbitrage opportunity I will take.
Industry Agnostic - every industry has processes to be automated.
UiPath is available On-Premises, Public or Private Cloud, or Hybrid Environment. This allows companies in all stages of digital transformation to tap into the power of RPA.
Easy to use - UiPath requires no coding experience whereas their top 2 competitors:
Automation Anywhere (Beginner level programming skills )
Blue Prism (Moderate level programming skills)
Comparison - UiPath vs Blue Prism vs Automation Anywhere
Features:
Task Mining - UiPath runs quietly on the background of every worker in an organization and then uses AI to identify the most repetitive tasks to automate.
Automation Hub - A repository of automation programs developed by users. (Similar to GitHub for developers)
AI Computer Vision - Enables users to use UiPath to target tasks virtual machines or in certain document types where data fields are unrecognizable.
Financials / Metrics
High ARR Growth :
$169M (2018) | $351M (2019) | $580M (2020) | $850M (2021E)
Expanding Gross Margins :
71.5% (2018) | 82% (2019) | 89% (2020)
Strong Balance Sheet :
Cash: $1.9B | Debt: $19.3M <— As of Q1 2021
DCF Valuation:
Growth : 30% (Yr 1 - 5) | 15% (Yr 6 - 10) | 8% (Yr 11 - 20)
Operating Cash Flow as a % of Gross Profits in the long-term: 40% (Conservative for SaaS companies)
For context :
Servicenow - 55% | Crowdstrike - 55% | Zoom - 81%
Shares Outstanding : 215.352M
Net Cash : $1.88B
Intrinsic Value : $65.5 (+/- 10%)
As of this post, 23 Jun 2021, UiPath is trading at ~$70 which is within my conservative intrinsic value.
What I Dislike
Competition :
UiPath is competing in a market with 80+ competitors. However, ~75% market share is dominated by the top 3 players - UiPath, Blue Prism, & Automation Anywhere.
Decelerating ARR Growth :
107.7% (2019) | 65.2% (2020) | 46.6% (2021E)