UiPath: Comprehensive Breakdown Of The Leading Robotic Process Automation Player

 


Summary

UiPath is one of the fastest-growing software companies ever and has one of the best financial metrics within the SaaS Industry.

UiPath is a company on a mission to automate all forms of mundane tasks within the modern enterprise.

The company has a tremendous amount of potential as AI plays a bigger role in the future of work.

Automation is one of the fastest-growing industries in which UiPath is currently the leader with a 1% penetration.

This analysis takes a deeper look into UiPath, the history of automation and major highlights from their recent earnings report.

Thesis Overview

UiPath (NYSE:PATH) develops software that helps organizations discover and build automation tools across their organization. Their platform leverages the power of artificial intelligence and computer vision to enable software bots to perform a vast array of actions as a human would.

UiPath fits all the criteria for a high-quality SaaS company. First, on the financial aspect, the company is growing revenue at over 65% year-over-year, high gross margins at 88%, FCF and Operating margins have improved and grown over 100% over the last year. They have a dollar-based net retention rate of 145%, one of the highest within the SaaS industry.

UI Path is currently ranked 1st, a category leader amongst all the research advisory firms like Gartner on Robotic Process Automation (RPA). They have captured a significant amount of market share within a short period.

Their Total Addressable Market is over $60+Billion when you consider the vast potential opportunities available as companies aim to streamline and automate inefficient processes. The company faces some threats from emerging cloud-native disruptors that are targeting specific vertical niches within automation. However, UiPath has bolstered its hybrid cloud and AI offerings to ensure they stay ahead of the competition. The current high valuation reflects this vast potential.

This article is a comprehensive breakdown that discusses UiPath’s history, the robotic process automation industry, its financials, dissects the risk factors and the future of enterprise automation.


Source: UiPath Investor Relations

Introduction - The Problem

We have heard that cliché that robots will take over our jobs in the future. We know this is not entirely possible, but every day, we see that with the advancement of Artificial Intelligence, there are more and more tasks capable of being handled by intelligent machines.

Over the last decade, major large corporations have built up many bureaucratic processes. As a result, today’s enterprise is filled with many repetitive and mundane tasks for employees.

Some examples, though not limited to, include logging into multiple applications, extracting information from documents, moving folders, filling in forms, updating information fields and databases, running excel macro, etc. There are essentially so many rule-based tasks. As a result, there has been a 50% decline in productivity and hours lost.



All these data points combine with the fact that the modern-day worker is getting more unproductive in the workplace.

Source: Single Angle on UiPath

The Robotic Process Automation Solution

Building on our initial problem of productivity and an increase of mundane tasks. The solution to many of these inefficient processes was to hire consultants and eventually build RPA robot tools to automate tasks. I’ll clarify that RPA is an old industry and not entirely new.

The solution led to companies like UiPath which develop RPA solutions to automate tasks by emulating human behavior on computers - Literally, bots move the mouse, click on screens, access systems and type on keyboards virtually to complete tasks as humans would do.

Source: Investor Presentation filings

An example: Let’s say every Monday morning you have an email you have to check to make an invoice payment. It’s a static rules-based process that involves only Step 1 – 2 – 3 and Step 4.

UiPath has Bots that you set up on your desktop to record and learn from your steps on how you make those invoice payments. The computer learns to perform the task and executes it in the future. This same process can be applied for any other repetitive tasks and scaled across a company.

Below is an illustration of the invoice example:

    


Source: UiPath Products

Increasingly, in the future, UiPath is developing advanced AI solutions that can go beyond just filling steps 1-4 but can extract and analyze information from documents.

UiPath Product Overview

Let's look closely at the company's product line. As discussed, UiPath develops software that helps organizations discover and build automation tools across their organization.

They have three major RPA software category:

  1. UiPath Studio: This is an easy-to-use, drag-and-drop platform designed for RPA developers to build complex automation solutions. It includes API, allows easy machine learning integration, etc.
  2. UiPath Robots: These are the bots or software robots built-in Studio which imitate human behavior to execute processes and scripts. These robots can work with humans or nobody.
  3. UiPath Orchestrator: This is the coordinator that tracks and logs the robot activity to make sure the bots are working properly. The orchestrator ties into their marketplace, which we’ll discuss later.

UiPath Product Breakdown:


Source: Investor Presentation

The image above is a breakdown of UI Path’s end-to-end automation Products. I’ll explain each of them below:

  1. UiPath Discover – This product helps with discovering opportunities for automation. It uses desktop recording with AI and Process mining. UiPath acquired a company called process gold that enhanced its capabilities with this feature. Within Discover, UI Path offers task mining, process mining, and task capture – they have bots (Analyzer) that can record all your tasks or processes step-by-step and then figures out which task could be automated and provides an RPA scoring system. This scoring can be used to prioritize which tasks need to be automated.
  2. Build Robots: Next in the product line is UI Path Studio X. This “studio X” gives business users who don’t code an easy-to-implement platform and the “studio” product can be used by technical developers to build more complicated automation scripts.
  3. Manage Robots – This holds the UI Path Orchestrator. This platform allows you to track automation, coordinate different bots, and ensure automation deployment executes successfully without breaking down any system or applications within the organization.
  4. Run Robots – This product is focused on the execution of tasks and processes across the enterprise. Users can create either unattended (humans without robots) or attended automation (humans + robot) to manage the automation process.
  5. Engage – This product allows for collaboration giving users different ways to interact with their robots. For example, it allows companies to build simple interfaces on top of their automation scripts built in studios discussed earlier. This aspect of their product also has a) UI Path Assistant - It allows users to set reminders for automation. b) UI Path Chabot – This enables their customers to interface with various applications and extract vital information as needed.
  6. Measure & Growth: This is a dashboard product created by UI Path that shows insights into the ROI, cost savings, outputs, and how well the product is working. This product is heavily utilized by managers, senior leaders, and executives within the organization.

An observation is that UI Path has a comprehensive product strategy.

Additional Products:

Marketplace:

UI Path operates a marketplace that allows for collaboration amongst business users and developers within an organization or externally across industries. Users can utilize bots or processes built by others. There are over 1,200 assets available. For example: If JPM Analysts identify an automation opportunity within their modeling steps, they can go to the marketplace and find a past template utilized by Goldman Sachs and implement it.


Source: Investor Presentation

Automation Hub:

UI Path provides a communication platform for crowdsourcing automation ideas within an enterprise. Users can vote for the best ideas from anyone and those ideas could be implemented into automation opportunities for the organization.


This Article Source is From : https://seekingalpha.com/article/4435505-uipath-stock-path-breakdown-leading-robotic-process-automation-player

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