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Back to the future - UiPath founder returns as CEO to create a "re-invigorated customer-centric approach"

Stuart Lauchlan Profile picture for user slauchlan May 30, 2024
Summary:
Daniel Dines is back in the top job at UiPath with a candid assessment of where things need to change for the firm.

Daniel Dines
Daniel Dines

All change at the top for UiPath after CEO Rob Enslin announced he’s stepping down as of tomorrow to be replaced by former CEO and company co-Founder Daniel Dines.

The announcement took Wall Street by surprise on the day that UiPath turned in Q1 numbers that saw revenues of $355 million, up 16% year-on-year, and net losses narrowing from $31.9 million a year ago to $28.7 million. Other stats of note:

  • UiPath ended Q1 with 10,800 customers.

  • New customers in the quarter included Boomi, Flexjet, Zen Business, True Consulting, and Calix.

  • Customers with $100,000 or more in ARR (Annual Recurring Revenue) total 2,092.

  • Customers with $1 million or more in ARR total 288.

Enslin was absent from the post-earnings analyst call, so it was left to Dines to provide commentary on the results, noting that the firm is not satisfied with its current performance. He pointed to a number of factors in play:

First, while we had a healthy start to the quarter, we saw the pace slow as we progressed through the second-half of March and into April. This was primarily due to the impact of a challenging macro-economic environment that we see persisting with mid-market customers, as well as a change in customer behavior particularly with large multi-year deals. As a result, several large expansion opportunities closed with a reduced size or pushed out of the quarter.

Second, we saw inconsistent execution, which included contract execution challenges on large deals and certain sales compensation changes which we are working to rectify. While customer behavior is often a function of the broader macro-economic environment, execution is something we can control and we recognize that we need to improve predictability on large multi-year deals.

Third, our growth products such as IDP and test automation are producing positive results. However there is a need to have a deeper execution strategy to scale these products to reach their full potential.

And lastly, the investments we have made to re-accelerate growth have fallen short of our expectations, made us less agile in responding to customer needs, and created short-term pressure on operating margins, all of which we are committed to rectifying.

What now? 

So, what happens now? Dines has spent the past year as Chief Innovation Officer at UiPath. He said:

During the past year, I had the privilege of immersing myself in our product and engineering efforts. This experience gave me invaluable clarity on our path forward. At a time when companies are looking to optimize costs and drive efficiencies without sacrificing innovation, especially around generative AI, our platform enables them to harness the power of AI to achieve actionable outcomes. As we look to the future of automation, our focus isn’t just on boosting productivity and efficiency, it’s also about redefining what’s possible with the breadth of our AI powered platform of capabilities.

The impact that the combination of generative AI and automation provides our customers is significant, and it’s expanding. From our early customers like SMBC and Orange, to customers that have grown and expanded significantly over the last year, like USDA and HCA, they continue to emphasize how the combination of automation and AI, delivered through our platform, is transforming their business and enabling them to thrive in today’s environment. We view generative AI as a secular tailwind that will continue to benefit our business, and a catalyst for continuing to innovate across our platform to expand our competitive moat.

He added:

I think we went to a distance to go and pitch our business to C-level, which is actually great. But the reality is that we have to increase our adoption by taking care of our traditional line-of-business customers within the C-suite, which, I think, will benefit a lot more for a new re-invigorated customer-centric approach. 

All of that means a shift in various ways, Dines stated:

As we look to the future, we are laser-focused on enhancing our execution including improved sales linearity and deal scrutiny, driving higher efficiency across sales and the broader organization, and driving a deeper and more execution oriented strategy for our growth products. We are also shifting the way we engage with customers to reinvigorate our line of business engagement with an industry-tailored approach.

Lastly, we plan to go back to our roots, building a truly customer-centric organization where co-innovating with our customers and partners is at the heart of everything we do. We believe that this foundational work will help us better address customer needs, accelerate adoption of our platform, and position us to drive market share gains over the medium and long-term.

My take

I was the CEO of this company since its inception for like 17-years, I drove the company from zero to $1 billion+ through a successful IPO. I'm happy to be fully back in.

Dines offered up a commendably candid assessment of where he thinks UiPath has issues to address. The most eye-catching moment for me was when he said:

There is something that is more maybe on the intangible side that I want to bring back in this company. And it's more on the joy of working together. I have a feeling that we've become maybe a little bit having the mentality of too big of a company, and we've become a bit siloed. So I want to bring back the ethos of how we won in the business, how we grew our business. And it was when all our functions collaborated really well. Everyone in this company was willing to help, we communicated to each other.

Enslin's sudden departure inevitably comes as a surprise and Wall Street's reaction wasn't a happy one. But Dines was quick to note: 

Rob is leaving for personal reasons. Rob and I are on good terms, and he will continue to be an adviser to the company. We were partners in many of our strategic decisions and in a way that makes it a bit easier for me to step back into day-to-day operational role.

All change! Onwards!

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