UiPath saw its share price rocket yesterday on the back of Q3 numbers that saw a 24% year-on-year jump in revenue to $325.9 million. License revenue was up 25.3% to $148.1 million, while subscription revenue rose 28.7% to $167.5 million. Meanwhile net losses fell from $57.7 million a year ago to $31.5 million.
For co-CEO Rob Enslin, that can surely be taken as vindication for the strategic shifts in direction seen in 2023:
At the beginning of this fiscal year we pivoted our go-to-market resources towards organizations that have a meaningful runway to invest in enterprise automation over the long-term. This investment has significantly increased our presence in the C-suite and helped raise our profile with partners of all sizes.
Industry verticalization is a strategic priority for the company, he adds, pointing to the Federal Government sector as a case in point:
Customer highlights included Veterans Affairs, Coast Guard, the IRS, and the Department of Homeland Security. We are also working with the United States Department of Agriculture (USDA) to support their Future of Work initiative, delivering a new era of citizen and employee experiences. Using our full platform, USDA is driving mission impactful enterprise automations across their HR, Finance, and IT departments. The program also features a digital assistant on every USDA employee desktop, driving personal productivity for approximately 100,000 employees.
Another powerful government use case comes from the UK’s Department of Work and Pensions, the largest public sector department in Britain. Enslin explains:
They have been using core RPA (Robotic Process Automation) since 2018 to help their most vulnerable citizens improve their quality of life by automating millions of service and support claims each year. Since their first deployment, they have scaled to over 1,000 robots in production and saved 3.1 million hours to date. During the quarter they expanded to the full platform as they look to harness AI and integrate Document Understanding, Process Mining, and Communications Mining into their automation program to improve citizen services, drive operational efficiency, and increase cost saving and capacity creation.
The healthcare sector is also a prime target for automation and Enslin cites the example of an unnamed large US non-profit health systems provider, one of UiPath’s top 25 customers:
Working closely with our account executives and global systems integrators, their journey started in 2018 with core RPA and, over the last several years, they have expanded to attended automation, Document Understanding, Test Suite, and Process Mining. To date, they have achieved a return on investment of over $250 million and this quarter, in one of our largest deals in company history, they expanded to the full platform as they work to create a centralized Enterprise Automation Service department with a mandate from their EVP sponsor to deliver automation across their entire enterprise. They are also in the process of developing use cases for Communications Mining and UiPath Apps.
While the wider macro-economic climate is still tough for everyone, the interest in AI and automation in 2023 can only have helped UiPath to make its case with enterprises. Enslin states:
With all the AI communication that's happening in the market, it allows us to have meaningful conversations with customers, they see why the platform is relevant…we believe that AI-powered automation is really helping digital transformation with our customer base and our larger customers.
Customers are early on [with AI], are very thoughtful in how they want to spend, where they want to spend and how they're going to fund it, which benefits us and benefits us in the way that we actually approach customers. I don't see a significant change in that spending. I do think that customers are going to look to see how AI and AI automation and gen AI can help them drive more efficiency and deeper levels of efficiency in the organization and look at different models when it comes to customers and our customers, how they communicate with customers, how they drive customer journeys as well. We are focused on helping our customers with that approach in a deep way.
And UiPath is picking up good quality companies as net new customers, he concludes:
These are good companies that will expand with us over time if we do the right stuff. And so we feel good about that, we feel good about how our industry focus is helping us change the game in this environment.
A strong end to the current calendar year - and there’s clearly a lot of runway ahead for UiPath in 2024. We’ll be watching closely.