UiPath is a growth company that specializes in enterprise automation software, known as robotic process automation (RPA). The UiPath innovative software technology allows programmers to easily build, install, deploy, and manage software as robots (“bots”) that emulate human behavior and actions.
RPA works with artificial intelligence (AI) to create digital worker bots. UiPath licenses this disruptive technology to enterprises. UniPath’s RPA dramatically increases the speed of business processes previously accomplished by human workers.
UiPath makes money by providing a Software as a Service (SaaS) robotic process automation solution for rapid integration, development, and deployment into enterprise systems. It offers enterprise clients a set of automation software with the most advanced features to drive efficiency and speed for their business, as well as fulfill their critical testing requirements for shortening projects delivery time and upscaling development.
The company earns revenue by selling licenses of its four main products each with its own price models.
- UiPath Studio License (Annual): $2,000 – $3,000
- Orchestrator License (Annual): $20,000
- Attended Robot (Annual): $1,200 – $1,800 Each
- Unattended Robot (Annual): $3,000 – $5,000 Each
UiPath, the pioneer in robotic process automation (RPA), went through a $750 million funding round early this year. Before that, it had raised $1.2 billion in funding from investors such as Accel, Kleiner Perkins, CapitalG, and Sequoia Capital. UiPath’s valuation has hit a gargantuan $35 billion.
The platform enables enterprises to drive innovation and growth by eliminating repetitive, time-consuming tasks by executing them using artificial intelligence (AI) and machine learning. It allows automating some of the routine tasks, like software testing, application monitoring, data management, or reporting.
However, many are still confused about how UiPath makes money. In this article, we are going to answer exactly that. We’ll look into the business model of UiPath and understand its various revenue streams.
How Does UiPath Make Money?
UiPath licenses its RPA for annual reoccurring revenues (ARR). In June 2021, UiPath reported its first-quarter fiscal year 2022 financial results. ARR grew 64% year-over-year to $653 million from over 8,500 global customers, with 104 creating ARR over $1 million and 1,105 creating ARR of over $100,000.
In the press release for the quarterly financial report, the company’s CEO and founder, Daniel Dines, estimates that the market for RPA is over $60 billion.
He explains the goal of UiPath is to empower a fully automated enterprise with an innovative combination of user interface (UI) automation, application programming interface (API) management, and artificial intelligence (AI) using machine learning (ML) to improve performance results continuously.
Let’s explore some of the applications for RPA, which are compelling and expansive.
Applications of Robotic Process Automation
Think about the vast number of human office workers stuck in boring, dead-end jobs doing the same work process routines.
These repetitive tasks are excellent opportunities for automation. The pandemic sent many of these workers home. Yet, it is just as inefficient, perhaps even more so, to perform such tasks in a remote environment.
RPA allows a company to emulate human workers with automated worker bots on an enterprise-wide basis, thereby freeing up the human workers to make more productive use of their time and efforts.
Enterprise-Wide Workflow Mapping
UiPath offers Task Capture to map and document workflow. This tool can uncover process inefficiencies and redundancies. A senior executive can create a complete map of the entire organization’s workflow.
Routine Task Automation
UiPath designs RPA software to automate archiving and search of text-based Big Data for analysis and forecasting. The solution can automate desktop functions and work with virtual desktops, IT processes, and web-based interactions.
For example, a UiPath bot can open emails, respond appropriately, and forward an email to the proper person if needed.
UiPath’s Document Understanding teaches bots to process documents using AI and ML intelligently. For example, these intelligent, document-processing bots could examine applications for loans, apartment rentals, or jobs.
The analysis can be based on criteria that reject incomplete applications or non-qualified applicants. The bots can request further information, where needed, for proper processing.
UiPath claims that in performance testing, these intelligent processing bots decreased errors by up to 52%, reduced manual processing costs by up to 35%, and decreased time spent by humans on any tasks related to document processing by up to 17%.
Attended Robots from UiPath increase human worker productivity and employee satisfaction.
UiPath’s Attended Robots do not replace humans. Instead, the human employees work with the bots. The bots perform the routine tasks for their human counterpart who controls what they do. Human workers get much more work accomplished with less stress. This increases job satisfaction.
When deployed well, RPA solutions allow humans to have more time to engage in more productive interactions with other human workers and focus on work requiring sophisticated thinking while making fewer errors on routine tasks.
UiPath makes bots that work with Amazon cloud offerings, Citrix, Google, Microsoft Azure software, Oracle database products, Salesforce, SAP, Service Now, and many others.
UiPath allows an enterprise manager to manage deployed bots centrally. A manager with a secured remote connection can manage UiPath bots at any worldwide office of a global organization. The UiPath platform and the partner integrations enable companies to build vast automated systems that perform many of the company’s tasks.
The UiPath Cloud RPA is extremely flexible. It helps companies install UiPath bots in their clouds in configurations that include software as a service (SaaS), platform as a service (PaaS), and infrastructure as a service (IaaS).
The UiPath Platform allows an enterprise to become fully automated with these features:
- Automation Analysis: AI-driven solutions to analyze business processes that are best to automate.
- User Empowerment: Solutions range from no-code-required chatbots to expert-level interaction applications.
- Bots: Analyze documents, understand speech, and work with ML models.
- Corporate Governance: Enterprise-wide management of automation in compliance with IT security and policies.
The Advantages of Robotic Process Automation
Automation is already here and represents an almost irresistible force. Automation is no longer restricted to manufacturing processes or blue-collar labor. It is also being used more frequently in white-collar labor occupations such as human resources, accounting, finance, and legal.
The possible benefits of RPA include:
- Improved efficiency.
- Reduced manual efforts.
- Improved customer service.
- Lower customer turnover.
- Better data quality.
- Increased employee engagement.
- Cost reduction.
- Fraud reduction.
- Reduced workforce requirements.
- Reduced human access to sensitive information.
Online Retail Application Example
A chatbot, using natural language processing, can respond to customer inquiries, take an order, suggest other items that are relevant as an upsell for an order, place the order, process the payment, and then send the order information to the worker bots at the fulfillment center for shipping.
The bot can inquire about customer satisfaction with the process and previous customer experiences with the company. In this entire process, human interaction is completely unnecessary for most transactions.
Chatbots do not have to look like silly two-dimensional drawings or use an ugly user interface. Advancements in chatbot technology can now use realistic human avatars that closely resemble a real person.
Consumers appreciate the customized, personalized assistance from such an advanced chatbot. There is less resistance to deploying advanced chatbots in the online retail space because the experience is already defined by an online interface. What about other work environments?
The Downside of Robotic Process Automation
For UiPath to continue to acquire customers at the current growth rate, the acceptance of process automation at the enterprise level in businesses needs to continue to increase.
UiPath commissioned a study on the impact of RPA on employee engagement. If you are willing to give your contact information, you can download a copy of the Forrester report. The key points are summarized here.
An RPA initiative can stall or fail if employees are threatened by the change and fear working with bots or losing their jobs. Firms have difficulty scaling up RPA deployment due to a lack of trained personnel. Proper change management is critical for RPA deployment success.
Workers who are accustomed to performing daily routine tasks will be displaced as robotic software takes over the processing of mundane tasks. New opportunities will emerge, which require new employees with special skills or retraining displaced employees.
Forrester predicts 14.9 million new jobs will be created in the U.S. by 2027. These highly skilled jobs will be robot monitoring specialists, data scientists, critical thinkers, system designers, and content curators.
RPA Deployment Risks
Poorly planned RPA deployment may create serious negative feedback if the tool does not function as promised. There is quite a bit of confusion about understanding RPA architecture best and determining the most effective deployment options.
Governance issues and cybersecurity are major issues for any software deployed on an enterprise-wide scale. There is concern that the return on investment for RPA will not be sufficient for the total deployment costs.
Stock Market Reaction to UiPath
Despite the downside risk for RPA, the stock market had a chance to weigh in on the value of UiPath when the company recently went public with its initial public offering (IPO) on April 21, 2021.
The IPO for UiPath (NYSE: PATH) was 23.9 million shares at $56 per share. The company raised $1.34 billion. This valued UiPath at $35.8 billion.
During the first day of trading, the shares went up 23% to close at $69 per share. The stock is currently trading at around $62 per share (July 2021).
At the time of the IPO, investors reacted to the positive news of UiPath revenues being up by 81% year-over-year to $607.6 million. The company also reduced its operating loss from $519.9 million in 2019 to$92.4 million in 2020.
Although UiPath is losing less money than the previous year, it is not profitable. UiPath is a growth company that uses all of its capital and earnings to increase business expansion. The business model is to dominate the marketplace for RPA and build a technological moat that once an enterprise customer comes on board to use UiPath solutions, they have very little incentive to change vendors.
Just before the IPO, UiPath had an outstanding dollar-based net customer retention rate of 145%. This means that the ARR from existing customers increased 45%. Combine this with the gross profit margin of 89%, reported by CNBC as one of the highest in the software industry, and you can see why investors got excited about the growth potential and market value of UiPath.
Conclusion: How Does UiPath Make Money?
There you have it! You now have a better understanding of the full business model of UiPath and also the future prospects of UiPath in the robotic process automation space. We’ve talked about all its services and how they offer an enormous amount of value to their clients.
You learned that UiPath is a software company that is on the verge of becoming a giant in the automation industry. With their expanding market and huge competitors, they have several different ways to monetize their business. These include payments or licensing revenue, training costs, subscriptions, and support contracts.
At this moment in time, it seems the subscription-based model is working well for them but with businesses moving towards automation companies like UiPath it will be interesting to see how they adapt to new areas for making money.
They have also spread their wings globally and this has won them a large customer base. Furthermore, their strategy is clear: expansion through enhanced services, more tools with better integration of human and machine interaction.
Thanks for taking the time to read this article. It has been an absolute pleasure writing this article. We’d also like to thank you for the opportunity to share our knowledge, expertise, and experience with you guys.