UiPath Inc at Needham Growth Conference Summary

The following is excerpted from the question-and-answer section of the transcript.

Question: Scott Berg - Needham & Company, LLC - Analyst : So talking about your products actually one of my favorite things lately right now, we'll get to that question next. But the first question is really around kind of management changes at the company. I mentioned last year, I had Rob on stage. The year before that was Daniel. Daniel moved back into the CEO realm about nine months ago. As we think about the business over the last nine months is has anything changed from an operational perspective? My guess is there's been some differences, but has there been anything significant that you would call out?

Question: Scott Berg - Needham & Company, LLC - Analyst : So we're going to focus a lot here on product. I'm sure some of the other go-to-market changes and whatnot. But the part that gets me fired up is around the AI Agenetic theme a little bit. My background is in internal IT management, did that before I got my MBA, I've been doing this almost 20 years now. So I've been in those product kind of environments. Enterprise businesses for the last 20 years have really gotten out of the business of developing applications, right? They brought in SaaS applications for a variety of reasons. We can debate if they overbought certain SaaS solutions, but companies have really gotten out of the business of trying to develop applications themselves. Fast forward to today, you have these AI models, these genetic platforms that are out there. And I think the average investor I tend to debate what believes that companies are going to ditch these software applications to some extent and try to develop them internally. I still don't know why a company would want to numbers to do that because they're not product experts, models change and then you got to blow it all up at 6 to 12 months. Your conference though, helps solidify that from some of the customers that we spoke with and how you talked about your new Agenetic strategy. Tell us why these AI technologies aren't going to usurp what this RPA space is. And this is really about bringing kind of a full suite of automation together, pairing two complementary technologies.

Question: Scott Berg - Needham & Company, LLC - Analyst : To your point, I kind of touched on it earlier, the changing models, I think, has been the biggest difference in this space over the last year, at least the questions I get. It seemed easy quote-unquote to develop against name your model, right, OpenAI, et cetera. But we're seeing more vendors like yourself and customer conversations say, hey, I want this orchestration and workflow that's here. But I want to be able to plug-and-play model. Take it out today because today, it's the right model, but six months from now, it's not probably in a different model if just find something else works better there. Are you starting to see that from your customers want that flexibility actually?

Question: Scott Berg - Needham & Company, LLC - Analyst : A subtle part of your innovation with these GenAI technologies actually came out a year ago with your autopilot functionality. I thought it was almost ingenious because it could help with adoption of the platform because while I know the platform is developed for the end business user, I still think the average user needs a little bit of SQL scripting experience to really kind of understand it properly. Has that actually helped with the adoption of really kind of pushing the platform out to more employees?

Question: Scott Berg - Needham & Company, LLC - Analyst : When you think of the Agentic functionality in the platform, whether it's today over the next, I don't know, one to two years, how do you think about monetization? Is it going to be a separate SKU that you charge for? Is it really just kind of built into the base product? Just trying to maybe help us understand how that may change the P&L.

Question: Scott Berg - Needham & Company, LLC - Analyst : This question has come up a couple of times kind of historically is, how do you think about trying to report on your usage or metrics around customers using your Agentic platform. You're clearly not there yet. It's too early. But do you think we can get to a period of REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 14, 2025 / 2:30PM, PATH.N - UiPath Inc at Needham Growth Conference time, I don't know, a year from now, two years from now, whatever it looks like that you can actually kind of report around what the impact looks like because I think the narrative in the RPA space, as I mentioned, is these GenAI technologies are going to usurp, which I'm not a believer of, but do you think you can get to a point where you can actually have something reportable that really shows your impact in this.

Question: Scott Berg - Needham & Company, LLC - Analyst : So interesting, I'm going down a slightly different route here, if you haven't noticed. But are you seeing customers actually make the migration to the cloud or have that conversation because they want to get to these technologies?

Question: Scott Berg - Needham & Company, LLC - Analyst : Okay. Just moving to general go-to-market a little bit. I think if you look at the results, the company's results last three quarters, net new ARR has actually been down each of the last three quarters after having a little bit of a bounce back in the back half of last year. What's happening in the environment to kind of drive that right now? Is it macro? Is it execution? Is it something else? And what kind of -- what do you think changes that here going forward?

Question: Scott Berg - Needham & Company, LLC - Analyst : Good. As you think about that growth algo, you guys have kind of talked about focusing more on your largest customers a little bit. Is that being able to drive more expansion within those customers or maybe just landing more of those large customers that can drive that expansion?

Question: Scott Berg - Needham & Company, LLC - Analyst : Makes a lot of sense. Last question on the go-to-market side is, the company announced a pretty tight partnership with SAP. I think it was your customer conference at FORWARD a year ago in '23 kind of the unveiling of it at least is, I guess, how has that trended right now? And what are your expectations on that? I found it interesting, given what they're going with their S/4HANA upgrade and how this can benefit, obviously, that migration for them. But does that should that, I guess, be a key partnership as we start thinking about calendar, I don't know, '25 and '26?

Question: Scott Berg - Needham & Company, LLC - Analyst : Natural follow-up to that was going to be, you just talked about getting closer to the customer, partners don't always help you get close to the customer, but it sounds like you're trying to bridge that gap to be more of a unified or joint sales process with.

Question: Scott Berg - Needham & Company, LLC - Analyst : We have about six minutes left, and then I'll open the Q&A to the audience. I guess as we start with financials, you also kind of talked about your expanded role as COO here. How do we think about the impact of those customers moving to your cloud model a little bit more? It's different than your typical perpetual to cloud migration. Your customers might not even see that much of a -- end users might not even see a difference because your perpetual is just your cloud product anyways, just behind the firewall. But from a financial impact perspective, will we see much difference in the next couple of years? Just didn't know if there's ebbs and flows to --

Question: Scott Berg - Needham & Company, LLC - Analyst : Well, you talked about the 606 aspects, which I still get -- it's been almost four years since the IPO. I still get all those questions.

Question: Scott Berg - Needham & Company, LLC - Analyst : I'm sure you do. Remember, when you're talking all the analysts pre-IPO because I think 606 was half of the conversation almost. But obviously, moving to the cloud should reduce the long-term kind of difference between ARR growth and revenue growth because they're more tightly tied together. Do you think in the interim though, that could actually create more volatility around some of those contracts?

Question: Scott Berg - Needham & Company, LLC - Analyst : Sure. Never thought I'd get into this business to be a 606 expert, but the last few years I have been actually started with Taleo back about probably 8 years ago or 10 years ago, whatever it was. Anyways, the company's growth rate today different than when you went public three years ago. It has for every company in my coverage universe for a variety of reasons, but how do you think about the balance between growth versus profitability today? And how do we set that model up maybe over the next couple of years?

Question: Scott Berg - Needham & Company, LLC - Analyst : Last question for me and then happy to open it up is we published some checks and companies all the time. But we published some, I don't know, I think it was a month or so ago, is my takeaway from a specific customer we talked about is how the -- our partner, excuse me, has talked about how the use cases are expanding out of the office of the CFO. I think the space has historically been tagged as great for the office of the CFO, but where do the expand these cases come from is -- when you reflect today versus three years ago, my guess is, is you're going to say, yes, you're seeing much more usage out there. But how do these AI or Agentic models really kind of help that expansion cadence in those other functional areas?