UiPath is one of the most amazing not-really-an-overnight success stories in Cloud, SaaS, and software. It was founded way back in 2005 as an outsourcing company, then developed Windows software to automate scripts and more, and turned this into a powerhouse for automating complex functions integrating Cloud and on-prem. Even ten years on, in 2015, it still had just 10 full-time employees. And then after a decade … it started to come together.
Revenue grew nicely at first from $1m to $3.5m from 2015 to 2016 … and then exploded:
UIPath History 🚀
2005: Started as a tech outsourcing company
2014: $500k rev. $1.6m seed round
2015: $1m rev.
2016: $3.5m rev
2017: $30m rev.
2018: $155m rev.
2019: $336m rev
2020: $607m rev
One of the fastest-growing SaaS companies ever 🔥
— Jon Ma (@jonbma) March 27, 2021
While it went on to become one of the fastest-growing software companies of all times, it took its time to figure out its place and get there.
Is it really SaaS? We can debate that. UiPath really only started to offer its own product as a Cloud solution this past year. But it’s definitely a Cloud company that benefitted from the dramatic growth in Cloud of the past 5+ years.
5 Interesting Learnings:
#1. NPS of 71 and 145% NRR. Yes, NPS can be a bit subjective. And yes, it seems like everyone has a high NPS these days. But having 145% NRR and 71 NPS go together like milk and cookies. They build on each other, into something powerful.
#2. Customer count growing 33%, revenue growing 65% — the “Golden Ratio” for future growth. UiPath grew from 6,009 customers last year to 7,968 at January 2021, or 33% growth. Fast, but revenue grew much faster (65%). This is sort of what you’d expect with 145% NRR, that revenue would be growing faster than new customers. If you can grow new customer bookings and upsell bookings at about a 1:1 ratio, like UiPath, that’s the golden ratio for future growth. That means both halves of the revenue engine are humming.
The math can be a bit hard to do, but UiPath, fortunately, has done it for us, and 75% of UiPath’s new revenue / bookings are from existing customers.
#3. Technology partners and SIs are key to growth. 3,700 total partners, with 50 key elite ones. This is an important piece of the UiPath story many miss. Much of its growth has been fueled by huge Cloud migration initiatives Deloitte, Cognizant, Accenture, Capgemini, etc. have. They buy UiPath licenses and in essence charge 3x-10x more for the end deployment at Big Customers.
#4. UiPath uses the term “ARR” loosely. ARR used to mean true recurring revenues. Today, its definition has … loosened. Merely to revenue that generally recurs. Much of UiPath’s revenue is in annual and multi-year software licenses and maintenance, somewhat more “old school” enterprise software revenue. True cloud revenues are actually quite small. But since the effective NRR is still 145%, ARR-style metrics still work. Even if a lot of the revenue isn’t truly recurring SaaS revenue.
“We define ARR as annualized invoiced amounts per solution sku from subscription licenses and maintenance obligations assuming no increases or reductions in their subscriptions.”
#5. Top 50 customers grew bookings 81x since 2016, and all 2016 customers together grew 57x. Wow. Now that’s the power of high NRR, when you see it this way. 140%+ NRR compounds to something truly awesome 5+ years out:
Bet big on your early customers, especially. These 2016 customers really leaned in on UiPath. Do the same yourself, and don’t take them for granted. Their first $400k of customers now pay $22.7 million! Think about that.
And a few bonus learnings:
6. 89 $1m+ ACV customers — up from 21 in 2019. And they account for 35% of all revenue. UiPath has gotten very good at closing larger deals. And growing accounts from a smaller initial base has been an important way to get there:
7. Gross revenue retention of 97%. This is even more impressive than 145% NRR in many ways. The gross churn is only 3% a year, before upsells. Customers stay. ServiceNow has 99% retention, which is incredible, but it also only has huge customers. UiPath has mostly huge customers, but a lot more $100k and “smaller” deals.
8. 38% of its revenue from maintenance and support — but margins are just as high here. This makes sense given its more traditional software model, but still a rarity to see these days.
9. U.S. is only 36% of their ARR. So not really a U.S. story. UiPath was originally founded in Romania and a decade later set up HQ in New York. But interesting, the U.S. is still a minority of their revenue. Today, the company still only has 122 employees in New York, vs. 727 in Romania.
10. 1,409 employees in sales and marketing, out of 2,863 total. So that’s an interesting ratio for a $600m ARR business growing shortly to $1B in ARR.
11. Only 4 patents, but 129 patent applications. UiPath is in a competitive space. It was slow to file patents, but has dramatically accelerated that recently.
12. CEO controls 91% of voting stock and still owns 30% of the company. Yes, Accel is the largest investor with 28% ownership. But CEO Daniel Dines gave up zero control, with 91% of voting shares and 30% total ownership. Whoa.
Key shareholders in UiPath, which could be worth $60B+ shortly:
CEO: owns 30%, and 90% of voting shares
Accel: owns 30%
Well that's all you need to know really
— Jason ✨BeKind✨ Lemkin ⚫️ (@jasonlk) March 29, 2021