Conference Transcript - PATH 2026-09-08

Speaker 2

Thanks for attending to the UiPath session at our CityGlobal TMD conference. Day one, we are pleased to have Ashim Gupta, who used to be a CEO and CFO. He just recently focused more on the CEO role. Welcome. Thanks for coming.

Speaker 1

Thanks. Thank you for having me.

Speaker 2

Yeah, Ashim has been instrumental in driving a lot of the transition change at UiPath that's been going through. He's been here, I think, more than seven years in a row. Nine years. So it would be great for you to maybe start a background of your role, how you're transitioning, and the background of the company.

Speaker 1

Look, my role, I joined UiPath in 2018, and it's progressed. I've seen very different parts of the organization. I actually started in customer success because I was a customer of UiPath. It was the highest ROI software, and I really enjoyed it. I took the company public in 2019 as I got into the CFO job in 2021, sorry. And it has been a steady movement up. Two years ago, I took the COO role. And in addition to the finance organization, I led parts of go-to-market, different operational connectivity across the groups. And I'm super happy. He just walked in perfectly at that time. That's Hithash Ramani. Hitesh has been my chief accounting officer and then my deputy CFO for the last five years. And I just am thrilled to have him ascend to the CFO position and allow myself to focus and support the operations of the company, you know, in a more focused way.

Speaker 2

Interesting. Yeah, no, perfect timing. I guess maybe we can start with the transition there. Like what makes now is the right time for you to focus more slowly on COO and then for Hitesh to take over the CFO role?

Speaker 1

Well, you know, Hidesh gave me an interesting stat, I think, the other day, is the average CFO lifespan is two and a half years, and it's been seven plus years for me in the job. Look, I actually think this actually drives long-term stability from the company. You know, when you're with a company for nine years and Hidesh for five, you know, there needs to be continued growth for incredible talent like Hidesh. So I think that is really, you know, like one piece. It solidifies our leadership team and it strengthens us overall. There's things that, frankly, like he's much better at, in my opinion, than me, as we kind of move into these next chapters. The second piece is, look, I think I can use the cliche or the boilerplate line. It is kind of an unprecedented market with a lot of change. And I think that's the market, but it's also UiPath. You know, we've really transformed from an RPA company to a business automation and transformation company. And there's so much to do. Our product has expanded its surface area in an incredible way. We are structuring deals across the globe with the demand that we see coming in. And really helping Daniel and the team just connect the functions and move through is, you know, it's a moment that I think requires more focus.

Speaker 2

Interesting. Yeah, no, that's definitely provide a lot of opportunity for the employees that make happy to continue to see a growth trajectory. Maybe I'll grill you one more time on the financial stuff while you're the only one on stage right now. You guys just reported a relatively stable quarter that would be characterized in a way. But I think investors look at it a little bit from a different lens. Can you give us some of the put and takes that your recent quarter just reported?

Speaker 1

So I think delivering the sixth quarter where we beat and raised against consensus kind of continues to strengthen the credibility of our overall predictability and operating model as a company. You know, ARR is $1.938 billion. It's up 12.5%. Revenue is up 13%. Stock-based compensation is down 42%. We're gap profitable for the third straight quarter in a row. You know, we're on track to be gap profitable for the year, of course, when you just kind to chart the path forward in a meaningful way. We're generating $400 million plus of free cash flow. So I would say a stable quarter in an unstable time is a good quarter. And a lot of people had us continuing to decelerate. When you look at this quarter and you look at kind of how we ended last year, end of last year, we were 106% net dollar retention rate. Today, we're 109%. So I think when you look at it, we're really positive about our execution, the trajectory, the breadth of the platform that is getting in there, and the customer feedback. From my standpoint, when you look at the puts and takes of the quarter, I think we had a huge run-up in the software market leading up to this. We're still in good position. And I do think some of the questions that we get around customer count, I think those are some of the newer investors. people who know us can see that our million-dollar and $100,000-plus customers are really the focus and the engine of the business. Million-dollar-plus customers are up 21%. $100,000-plus customers are expanding. And actually, that net dollar expansion rate is increasing. So we actually feel the fundamental underlying parts of the business, both from a growth and an economic perspective, are there. And my last point is, we're not satisfied at 12.5%. We've stemmed the deceleration We are planning to re-accelerate the company. And we think that the platform strategy that we have, the vertical products and tests, you know, in terms of the motions that we have, those are real good fuels for what the future holds for us. And we're really optimistic.

Speaker 2

Yeah, I mean, there sounds like there's a lot of positive in the quarter based on the customer count, the growth in the large customers. I think one of the investor top questions is like, based on the implied RR, there seems to be a deceleration. I know there's a lot of noise in the net new ARR this quarter. Could you talk more about what is baked into the second half net new ARR guide and how should investors be looking at it?

Speaker 1

Look, I actually think this was a clean quarter, to be super clear. I know in first quarter, we had an acquisition and there's some questions. We increased our FX disclosure this quarter where we showed clearly kind of the impact of FX and it was actually a headwind for us this quarter and it's a headwind for the rest of the year. So from my standpoint, it was actually a very clean air or a quarter. As you look forward to the second half, I think people are comparing all those apples and oranges between actuals and guided. And I don't mind talking about that, right? When you look at it in terms of what that means, that means like in a world where Hitesh is calling the guide now and as we come together as a leadership team, we're calling to what's in front of us. And we see kind of a prudent case of stabilization in front of us, which means if we execute, you know, obviously there's the ability to re-accelerate the business. We're going to look at what's in front of us, and we're going to guide prudently to how we have been and continue that guidance philosophy as the way Hitesh wanted to run things. And at the same time, you look at the second half, it shows continued strength and expansion of our platform across our top accounts. It shows continued momentum in our core verticals, which is financial services, healthcare, and office of the CFO. And frankly, it continues to assume a variable environment. So those three things are what's baked into the second half. And we're really focused on continuing to execute a seventh stable quarter.

Speaker 2

I think you touched on a few growth trajectory that you see stabilization and then you expect it to grow. Can you talk about what has the trend been that you're seeing, either within the consumption, because you talk about deal count with AI? How has the trend been over the last couple of quarters versus the deceleration in that new era that you saw last year?

Speaker 1

It's positive. I think when you look at last year, everybody was coping with a ton of AI confusion. What we see is there's still AI confusion in the market, but our customers, You know, that confusion is less. So 18 out of 18 out of our 20 deals this quarter concluded, included broader parts of our platform, you know, in our AI areas, you know, those things are multiples time, you know, multiples of deal value up like four to six times higher than our, you know, our old typical deal values. You know, that feels really good from our standpoint. So we see that dynamic of customers understanding that they need both deterministic and probabilistic, that they need a broad platform, and that it is not competitive with frontier models. We are essentially going to solve enterprise-wide processes, which Frontier Models solve a piece of. We are really trying to go and orchestrate and run the long-running workflows of companies and moving from task to process. We see that across our top deal.

Speaker 2

Okay. Hopefully, we see a better trajectory that continues to improve in the business. I guess maybe now we can pivot a little bit over to more product questions. Now that you are focused on the CEO role, can you tell us what are your key priorities that also we have an upcoming investor that I'd love to get a little bit of flavor from Yeah, my priorities, one is to continue to support Hithash to have a really smooth and seamless transition.

Speaker 1

I think he's been the right hand for the last two years plus, so I'm not too worried about But I think we'll never take that for granted, neither Hithash nor myself nor Daniel. We want a really smooth transition for the investor community and for the business. The second piece is really connecting product sales, product go to market and our core functions to drive this reacceleration that we're talking about. And I think, you know, as I mentioned it earlier, as we get into a broader set of, you know, use cases as we're expanding our business, that requires that level of connectivity. That can be everything from driving the strategic priorities around how do we attach orchestration in all of our install base? What's the right strategy to expand and continue to drive tests? Continuing to help with that and maintain the operating rigor, that's really where my focus is going to be. In terms of Investor Day, I kind of say it flippantly. You've got to come to Investor Day to see Investor Day. There's no trailer. Um, but what I could tell you is I, what I, you know, if I could imagine you there and you walking out the room, you know, I really feel like there's going to be an optimistic sense of energy that goes, that gets to see a company that was a standalone RPA company and how far from that paradigm this company has grown and what the capability of the platform is. What is the level of detail we are in the right execution strategy and kind of what gives us confidence in a durable, you know, that we have a durable growth, you know, engine here as a company. And I think we're really looking forward to telling that story to everybody.

Speaker 2

Yeah, I know, like, we are still, I think a lot of the research out there is still, we have very early stages of agent take. I think UI path is like going towards agents, agent builders, like love to hear, like, how, what do you think of the cycle that enterprises is that how is enterprise grading us and what is UiPath really to participate in?

Speaker 1

I think we're ready to participate in the broadest transformation that is there. I think it's evidenced by some of the deals and the customers that we're talking about. We had, you know, we signed one of our largest new logos, Lance. It had some element of competitive replacement, but what they're asking us to do is competitors, you know, historical competitors cannot tackle the hardest problems that they're trying to solve. They need the breadth of our platform. And so we are already solving those problems. If you look at some of the leading healthcare institutions that we have as a company, we are in revenue cycle management. We are in prior authorization. We are in claims denials. Those are multi-billion dollar problems for these customers. And so we are talking more and more at the C-level, again, but without ignoring the grassroots. We have a really good balance of it. And I think we're eating the apple from both ends. We have some really good transformative projects where we're deploying our forward-deployed engineers, where we're experimenting with different outcome-based models. And at the same time, we have kind of the grassroots power of our platform that is continuing to generate ROI for our customers.

Speaker 2

Gotcha. I do want to touch on the outcome-based pricing a little bit later, but I guess at what inning that a customer could drive a potential inflection in their spend with UiPub, right? I think a lot of customers now, you have an NRR of like 109 that continue to improve. Is there an inflection point incoming anytime soon?

Speaker 1

Yeah. So I have the privilege of seeing our entire 10,000 plus customer base.

Speaker 1

The inflection point is there for many of those customers.

Speaker 1

When you look at some of the areas and the things that we're tackling, when you look at some of the funding bills that are out there in Congress for many of the agencies, when you look at the major, the top 10 banks, I see that inflection point. When you look at our $100,000 to $1 million plus customers, that net dollar retention rate is not just stronger, but it is uplifting. And so we see that. The question I would ask is, or that I would say is, when does the entire market inflect? And I would say, we're still in the early innings of that, which is exciting. Because if you take a $1.93 billion ARR company that's growing 13%, that has strong operating rigor, as that market begins to become clearer, that has nothing but goodness for us. And we're looking forward to that.

Speaker 2

Yeah, I think because UiPath has a strong penetration, especially within the Fortune 500 companies. How do you view the opportunity between your expansion with current customer versus opportunity of net new logos?

Speaker 1

Yeah, we are super selective of net new logo. So let me break it down. I think historically it's been 80-20 in terms of where that growth rate is, the contribution. I don't think I would say at this time that there's a change to that. Those are things that ebb and flow every quarter. But the reality is we have greater than 2,000 customers, greater than $100,000. We're approaching 400 customers, greater than $1 million. That is an engine that in itself can fuel where we want to go to. We're not a mid-market company. We are an enterprise company. We're winning our fair share in the mid-market, to be clear. New logos, we want to be super selective on. It's not, you know, like in the old days, you'd say, what's the cost of acquisition? There's also a cost of acquisition and a cost of maintenance, right? Like that you have that's in that area. So I think when you look at our last three earning scripts or five earning scripts, you're going to see federal credit unions. There are 5,000 federal, 4,000 federal credit unions in America. We love that business. We'll go after those types of businesses. There's, you know, X thousand hospitals. We love that business. We're going to go after it. we're not going to go after every bush that seems to wiggle and shake. We kind of let our distributors and our partners do that. And that is gravy to what we really need to drive for the overall company.

Speaker 2

Okay. Now I got it. Maybe dive in a little bit deeper on some of the products that, because orchestration is a brand layer where there's also a lot of competition out there. How do you view UI path going to tackle orchestration? And then there is AI agents and agent builder. Can you kind of break it out with the main pillars between these newer products?

Speaker 1

Yeah, I think orchestration is like saying liquid. So I think there's a lot of competition, but what is the liquid? Is it milk? Is it water? What is that? And so where people talk about orchestration and all the competition, they say agentic orchestration. Managing the swarm of agents is typically where it is. Where UiPath is playing is business process orchestration. And there's a difference between that. Like, we're not just the governance layer for agents. We really look at orchestration as a way to govern and drive the end-to-end workflow for enterprise processes. Invoice to cash. In invoice to cash on any major enterprise, you're going to have robots, agents, and humans. And you're going to have APIs and different technology and applications that are there. Putting that together, and if you ever get to Google Maestro, just Google UiPath Maestro, You're going to see visually the process in front of you. So it is not about an orchestration engine for agents. It is across the entire business process. That, for us, is actually pretty competitively unique. Very few people have the ability to manage third-party agents, manage third-party systems, have their own tokenless automation, which is our RPA platform and deterministic automation, and the ability to create agents on our platform and have coding agents be able to accelerate the productivity of building on our platform. Those are some of our differentiators in terms of where we are. And we feel really uniquely positioned actually from an orchestration perspective to be able to have both the breadth and depth of that offering for business process orchestration.

Speaker 2

Okay. I think that it's also like, because UiPath has a core in RPA, robotic, whether attended or unattended. But now it feels like you're venturing into a new space where you have other companies, smaller space in the private or the Frontier Labs or the data platform players like Microsoft, where you guys are a big partner with. Can you talk about how you can compete with some of these specific or bigger data platform players as we go forward?

Speaker 1

I'll give you two points of definition. One is I don't feel like we're competing against the Frontier Labs. Frontier Labs can generate code. They can't operate a business process end-to-end. And so we are that orchestration and governance layer to be able to do it. So I think that's one piece of it. The second is the breadth and the depth of our platform. So our platform has both deterministic, agentic, and orchestration capabilities, all three. If I go to many platforms, they don't have, some of them may have agentic capability, some of them do not. Some of them have RPA capability, some of them have not. Orchestration, et cetera. Nobody really has that end-to-end area. The third piece is what we're building on top of our horizontal platform is vertical depth. So nowadays, it's not enough just to be able to plug in a process. To really automate a process, you need to understand the flow of work and have expertise in those domains. That is why we've invested in WorkFusion. going after financial crimes to be able to solve those problems quickly, harnessing the full breadth of our platform, but also infused with expertise that's very hard to replicate, right? Exactly what are the compliance rules? How do you get certified with regulatory bodies for these regulated processes? Those are moats that we have. And then the last piece from our standpoint is the concept to Switzerland. We all joke, is it Claude or is it GPT? Claude, nobody's going to go and say I'm making a 10-year commitment to any one of them. The reality is there's a horse race amongst different models that are out there. We're not trying to compete with them.

Speaker 2

We're trying to give choice to our customers and make it have a vendor agnostic platform to harness their power and automate the processes that we're going after, which are these long-running enterprise workflows gotcha um i guess just going on like on your customer feedback conversation right if you go in obviously a lot of customers like city bank we have service now we have salesforce across different layers even legacy workflow like what are the top roi that they want to hear from you based on your customer conversation recently everybody is looking for tangible savings for AI.

Speaker 1

And what that means is operating costs coming down or quality going up at the similar or lower cost. That's there. That's kind of one. Two is they want stability and predictability and governance and trust. And so from an ROI perspective, if you look at some of our top customers, they're still generating $100 million, $200 million returns. Some of our smaller our enterprise customers, you can see a three to five X return for many of the processes that we're putting in. I think that is actually advantageous to UiPath. Whenever it has been a marketing discussion, like, hey, we need AI and you have these innovation funds, it's actually harder to compete against the hottest names that are out there into the market. But because it is an ROI discussion, I think that's what's leading also to what we feel in our pipeline and what we feel in terms of the wins that we are getting.

Speaker 2

Yeah, that's definitely an interesting way to kind of look at it because a lot of companies that are talking about how you're going to monetize AI as we go towards more outcome-based pricing. I think Daniel and you talk about optionality with outcome-based pricing. How is the market changing and how do you think about capturing more bigger piece of this ROI that you are seeing from your customer as we move forward here?

Speaker 1

Yeah. I think there's, look, there's different tiers of customer in our mind. Some of the customers are really looking to say, we can transform, give us the software. And I think in those cases, those software subscription will continue to be okay. Consumption-based pricing can also come into play. Then there are CEO and CFO discussions that, and COO discussions that we are getting into that are increasing in number that are saying, we need to get 20% out of finance. We need to get 20% out of operations. Cost. In those areas, that is an opportunity for us to use our core platform as a base, but kind of have that motion to be able to build around it. Now, we got challenged, like, you know, do you see progress on the execution for that? The answer is 100%. We are deploying our forward-deployed engineers in many processes that we did not have the right to play in a year and a half, two years ago, three years ago. We have engagements with some major parts of our customer base that we are attacking that. In terms of outcome-based pricing, we say that generically, but there's different ways to think about an outcome. There is a way to think about it of defining MBOs, and if we meet those MBOs, it's there. It's participating and sharing and reward. And I think that depends on the customer. What we don't want to do, I think the mistake that companies have made and even the market is over the last year, you always feel like you need to be certain about here is what's going to be there for the next three years. I think optionality is super important because the market continues to evolve. So we're not launching new pricing mechanisms every six months, but we give ourselves that optionality to capture things, especially for our top tier customers.

Speaker 2

Right. I guess just on like the outcome is opportunity. How do you view that kind of differentiation with it and then versus how you have like main model is like the unified pricing model consumption, right? Do you, what kind of uplift do you expect on the opportunity side?

Speaker 1

I mean, I think it will be significant, you know, as we land those opportunities and deliver against them. I think the hardest thing is getting in and beginning to land and execute, which we are, because the moment you get that first piece of credibility, you get the second opportunity that's there. So I would say, I think it's meaningful uplift. We don't publish metrics in terms of what that uplift is. Remember, 18 of our 20 deals, just on a subscription or consumption basis, we've talked about being three, four, five, six times higher than our average deal size, right? Depends on the quarter. I think there's a multiple on top of that, that outcome-based pricing can provide for us. I think it is really about quality for those areas. What I think is very unique to us that I'm seeing, we can move fast. We don't have a lot of bureaucracy where Daniel can make the call and say, I'm doing this deal. I think in other areas, they can't move as fast. They have more defined scopes that they're willing to take on or not take on. We are able to move faster and kind of expand into things and take risk as well.

Speaker 2

Okay. The other part is like the pricing model is kind of a little bit noise in there with 606 accounting, like licenses, because I think a lot of customers still own licenses, on-prem deals. Like how should the investor be thinking about just going up front with like how licenses kind of more on-premise deal versus cloud deals, how the company might get it?

Speaker 1

Look, I'm going to maintain something that we've said first from the beginning of the IPO, through good times, bad times, neutral times. Revenue is not the defining metric for our company. You'll see quarters where revenue is eight points higher than ARR growth or twirling 12 months is asymmetric. Whether a company takes on on-prem, whether they bundle something or whether they go to the cloud, ARR is really the defining metric for us, YC. Obviously, GAAP being an SEC-regulated metric, it's why we guide to it. It's important for us to be able to model and understand, and that's why we've given those assumptions and tried to continue to do so. But just to give you an example, if somebody decides that they want to run on-prem a public company – sorry, a public – a government entity or a bank or a health care institution, You know, that dollar is how it's accounted for is no different in our minds than the dollar that is accounted with 606, whether I take it up front licenses or not. We're getting the same cash flow. We have the same renewability that we have from that perspective. And that's kind of how we think about it. So I would tell investors, look at ARR. You'll see that very clearly. And when there is some disjoint that happens, we always answer questions and talk about it in terms of some of the drivers that we have. It could be also nothing to do with deployment. It could be just sheer duration of contracts as well.

Speaker 2

Right. I think companies like UI path still focus more driving to drive more cloud versus on-prem. Like, does some of the more recent security issues that we hear with models out there, what Astra or Cloud can do, like, does that change the conversation from going more hybrid on-premise that you're seeing from customer demand instead of going towards cloud?

Speaker 1

It ebbs and flows. You know, like, what's interesting is, I think a differentiator for us is the fact that we have a multi-deployment strategy. And I think depending on the environment, people use how fast they want to go. And anybody here in a bank, I'm assuming many, as yourself, banks are not full cloud at this time. And it's been around for 20 years. There's an entire process and comfort level that needs to get there. I think that on-prem is increasingly becoming a conversation again in many entities, but people always want a path to the cloud. I don't think somebody saying my long-term plan is to be on-prem, but I do think they say we want on-prem and we want the option to get to the cloud when we're there. So that is why I continue to focus on ARR. Right.

Speaker 2

I guess if more customer focus more on on-prem or hybrid, does this change the uplift narrative for UI path? No, actually it helps us.

Speaker 1

I mean, if you, there's not a lot of companies, can Salesforce really go on-prem? Not that we're competing in Salesforce, right? You have a lot of really cloud-only companies that are out there in terms of where they are and how they've deployed and how they support. The fact that we have a multi-deployment strategy is a really good moat for us as we go forward. Then you also have the question of sovereignty with AI models being in the cloud. right? We also have a multi-geographic data center map that allows us to continue to meet different markets expectations as well.

Speaker 2

Yeah. Sounds like we have more 606 accounting issue to come.

Speaker 1

I don't really call it 606 accounting issues. In all candor, I think if you look at the last four years, like this quarter, revenue is at 13% growth. ARR is 12.5% growth. I think that it'll move. It won't be perfectly together, but I think they generally correlate well over a period of time. Okay.

Speaker 2

Yeah, I know we have a few minutes left here. I'd love to see if there's any questions from the audience.

Speaker 4

Thanks for the time today. When you think about strategic execution and your shift from RPA to where you are now, how much of it are you thinking buy versus build in terms of M&A versus internal product development as you go further into orchestration?

Speaker 1

Yeah, Daniel's an engineer by trade, so there's a lot of build that's there. And if you like the boilerplate answer is we're going to keep we're going to keep our optionality open any time that we can accelerate our roadmap. We're not afraid to do in the tuck in acquisitions, as we've demonstrated. If you look at our M&A history and our build history, I think building out the horizontal platform and we've used M&A as a tool of deepening and doubling down on the vertical proposition is something that is evident with WorkFusion, with Peak, with the different things that we've done. That is not to say we wouldn't buy a horizontal capability if it had the right economic equation, it had the right time to value. And as Daniel balances the capability of the team and going across, the reality is Daniel, being an engineer, product quality is the most important thing to him. And so I think there's going to be a good balance there, but it's going to be more build versus buy. The buy is opportunistic, and I think we buy more than technology. You buy expertise when you're going after these vertical companies.

Operator

Thanks for taking my question. So last week from Astro, we saw some really significant improvements in AI's computer capabilities. So how do you think about the competitive landscape will change for UiPath going forward? Is the automation plus LLM narrative still intact, do you think?

Speaker 1

You know, we see the competitive landscape not to be impacted as much by the LLMs and the frontier models. Like, as I said, like, I think the frontier models continue to generate code. They do not, if I generate 20 applications within the company, you still need to orchestrate and automate across those applications. So I think what it does do is take the lower end of the automations and the simple automations. I think those get commoditized and have become commoditized, and we've already acknowledged that and talked about it, you know, together. But if you're automating, you know, prior authorization within a company, it's a 200-step process that spans across 30, 40 systems. You know, I look at using agentic and LLMs to be able to help in that process. it doesn't take the need to orchestrate across it. The second piece is, it's honestly become more of a common theme where people are using the cost, the risk-reward equation between token automation and tokenless automation. RPA is tokenless automation. It is not just UI automation. Our platform has API technology as well, but it is tokenless automation. And I think if you can do the same process with exactness and at a lower cost, what's your motivation to go and take something at a higher cost with higher risk, right? So I think frontier models have a place. AI models have a place, but so does our platform and so does Deterministic. And frankly, remember, we're using agent builder. We're using third-party software, sorry, third-party models, and we can integrate that into any workflow. People can bring their own models. we are essentially like a software, we are able to channel and harness those things to go after the workflow processes. So from our standpoint, I don't see much of a change from there. That happens, especially in the short term.

Speaker 2

Yeah. Thank you, Asim. I think with that, we are up on time here. Thank you so much for participating. Thanks so much, everybody.