This past week UIPath held its annual customer event in Las Vegas; it’s one we watched with interest as 2022 is a pivotal year for the company. It’s a crucial year for several reasons, in as much as UIPath has not had the best of times with investors since its IPO in 2021. We are in a recession, and though automation technologies typically fare well in tough times, these are still tough times with, at a minimum, more convoluted and drawn-out procurement cycles. And if that were not enough, UIPath has been on a journey to reinvent itself and move away from pure-play RPA (Robotic Process Automation) to becoming a genuine end-to-end automation alternative to the likes of Pega and Appian. Hence this year’s conference, if nothing else, was an opportunity for UIPath to set the record straight and clarify where they are today and where they hope to be in the coming years.
To take the financial angle first, there is nothing UIPath, or anyone else, can do about a recession; it is what it is. There is still a substantial market for automation (see our recent market forecast), but closing deals will take longer. As for UIPath’s investors, we first have to note that Deep Analysis is not a Financial Analyst firm; instead, we are an Industry Analyst firm and view things from a different perspective. Financial Analysts dinged and downgraded UIPath stock this past month for falling short of its market guidance expectations. Yet from our broader market perspective, it is nothing less than remarkable that UIPath now has around $1B in revenue and expects to grow to $1.2B in the coming year. Much of the negativity regarding UIPath in the investment community is a result of UIPaths own negativity, making it clear that it expects to find it harder to close deals for the foreseeable future. We find the $1B figure remarkable because, from its brief moment in the sun (circa 2019-2020), RPA as a market has been under pressure. Firstly from new low and no-cost competition and then from the scales falling from buyers’ eyes regarding the actual value of RPA bots. RPA was heralded as a modern replacement for BPM; it’s clear now that it is not; rather, it’s a technology that plays alongside BPM.
Hence, UIPath has been rightly working hard to pivot away from the pure play RPA market. Many of the announcements at Forward5 gave credence to progress made over the past couple of years, delivering on what it labels the “UIPath Business Automation Platform.” From an architectural standpoint, at least, with discovery, automation, and operating layers to the stack, it is starting to look like a full-blown enterprise automation stack. More importantly, the UIPath is also beginning to differentiate itself and forge a distinctive path. The most obvious example of this is in its discovery layer. In addition to Process and Task Mining, it has added the Re:Infer acquisition to add Communication Mining. From a functional viewpoint, that layer is robust, and one that we would recommend buyers look at closely. Of course, the Re:Infer deal is still new, and few buyers even know what their tech does, but in our estimation, at least, it was a smart buy and one that can help to separate UIPath from the crowd. In short, UIPath is proposing a ‘continuous discovery’ approach to automation, using these tools for initial design and planning and ongoing monitoring, adjustment, and management utilizing its Automation Hub and orchestration capabilities. In addition, it is worth noting that UIPath, in common with other automation vendors, is also giving much more focus to IDP (Intelligent Document Processing) and document understanding technology, another parallel solid growth market. (We plan to write more about the Document Understanding aspects of UIPath at a later date). In summary, this is starting to emerge as a pretty impressive, low-code automation platform to build and integrate with business applications.
So what to make of UIPath at this point in their early public days? From an industry analyst’s perspective, they have come a long way in a short time. What they have today and propose for tomorrow is impressive, but there is still a lot of work, particularly in its go-to-market and sales approach. These are difficult recessionary times, but there is a strong global appetite for automation and the products that UIPath provides. It is a market many other tech vendors would love to be a part of, and UIPath has at least an opportunity to make the most of it.
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