UiPath, Inc.

Greetings and welcome to the UI Path First Quarter 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Alice Fruani, Senior Director of Investor Relations. Thank you, Alice. You may begin.

Good afternoon, and thank you for joining us today to review UiPath's first quarter fiscal 2025 financial results, which we announced in our earnings press release issued after the close of the market today. On the call with me are Daniel Dines, UiPath's Founder and Chief Innovation Officer, and Ashim Gupta, Chief Financial Officer, to deliver our prepared comments and answer questions. Our earnings press release and financial supplemental materials are posted on the UiPath Investor Relations website, ir.uipath.com. These materials include GAAP to non-GAAP reconciliations. We will be discussing non-GAAP metrics on today's call. This afternoon's call includes forward-looking statements about our ability to drive growth and operational efficiency and grow our platform, as well as our financial guidance for the second quarter and full fiscal year 2025. Actual results may differ materially from those expressed in the forward-looking statements due to many factors, and therefore, investors should not place undue reliance on these statements. For discussion of the material risks and uncertainties that could affect our actual results, please refer to our annual report on Form 10-K for the year ended January 31, 2024, and our subsequent reports filed with the SEC, including our quarterly report on Forum 10-Q for the period ended April 30, 2024, to be filed with the SEC. Forward-looking statements made on this call reflect our views as of today. We undertake no obligation to update them. I would like to highlight that this webcast is being accompanied by slides. We will post the slides and a copy of our prepared remarks to our Investor Relations website immediately following the conclusion of this call. In addition, please note that all comparisons are year-over-year unless otherwise indicated. Now, I would like to hand the call over to Daniel.

Thank you, Alice. Good afternoon, everyone. Thanks for joining us. I'd like to start today by addressing the announcements we made this afternoon, and then I'll give a quick summary of our first quarter results and revised outlook, including an update on our path forward. I will then walk through a few highlights from the quarter before I hand it over to Ashim to go through our financials and guidance in more detail. As you may have seen in our press release this afternoon, Rob Anstin is leaving the company and has also resigned as a member of the board. Rob played a significant role over the last two years, and I know I'm speaking for the entire company when I say that we are very grateful for his contribution to UiPath. With Rob leaving the company, I'm excited to step back into the CEO role and look forward to leading us through our next phase of profitable growth and innovation. During the past year, I had the privilege of immersing myself in our product and engineering efforts This experience gave me invaluable clarity on our path forward. At a time when companies are looking to optimize costs and drive efficiencies without sacrificing innovation, especially around generative AI, our platform enables them to harness the power of AI to achieve actionable outcomes. As we look to the future of automation, our focus isn't just on boosting productivity and efficiency. It's also about redefining what's possible with the breadth of our AI-powered platform of capabilities. The impact that the combination of generative AI and automation provides our customers is significant, and it's expanding. From our early customers like SMBC and Orange, To customers that have grown and expanded significantly over the last year, like USDA and ACA, they continue to emphasize how the combination of automation and AI delivered through our platform is transforming their business and enabling them to thrive in today's environment. We view generative AI as a secular tailwind that will continue to benefit our business and the catalyst for continuing to innovate across our platform to expand our competitive mode. Turning to our first quarter results, ARR grew 21% year-over-year to $1.508 billion, driven by first quarter net new ARR of $44 million, excluding the FX headwind of $3 million Net new ARR totaled $47 million. Revenue grew to $335 million, an increase of 16% year over year. Normalizing for the FX headwind of approximately $8 million, revenue grew 18% year over year. While our top line results were generally in line with our guidance range, we are not satisfied with our performance. And I'd like to give you more color on the few key factors that impacted first quarter results. First, while we had a healthy start to the quarter, we saw the pace slow as we progressed through the second half of March and into April. This was primarily due to the impact of a challenging macroeconomic environment that we see persisting with mid-market customers as well as a change in customer behavior, particularly with large multi-year deals. As a result, several large expansion opportunities closed with the reduced size were pushed out of the quarter. Second, we saw inconsistent execution, which included Contract execution challenges on large deals and certain sales compensation changes, which we are working to rectify. While customer behavior is often a function of the broader macroeconomic environment, execution is something we can control. And we recognize that we need to improve predictability on large multi-year deals. Third, our growth products such as IDP and test automation are producing positive results. However, there is a need to have a deeper execution strategy to scale these products to reach their full potential. And lastly, the investments we have made to re-accelerate growth have fallen short of our expectations, made us less agile in responding to customer needs and created short-term pressure on operating margins, all of which we are committed to rectifying. Now, let me address our outlook going forward. Our revised second quarter and fiscal 2025 guidance are not where we expect them to be. That being said, we don't expect the macroenvironment to improve materially in the near term. and we believe it is prudent to guide assuming variability we saw at the end of the first quarter will continue. It also takes into account the leadership transition, which can create some short-term disruption. As we look to the future, we have laser focused on enhancing our execution, including improved sales linearity and deal scrutiny, driving higher efficiency across sales and the broader organization, and driving a deeper and more execution-oriented strategy for our growth products. We are also shifting the way we engage with customers to reinvigorate our line of business engagement with an industry-tailored approach. Lastly, we plan to go back to our roots, building a truly customer-centric organization where co-innovating with our customers and partners is at the heart of everything we do. We believe that this foundational work will help us better address customer needs, accelerate adoption of our platform, and position us to drive market share gains over the medium and long term. I want to be clear. We are optimistic about the role of our business automation platform plays in digital transformations. The core foundation of our business remains strong and we are making progress on our long-term strategic plan, which includes releasing innovative new features and products like Autopilot, continuing to deepen our relationships with meaningful partners like SAP, and building a strong community of developers. Despite some of the top-line challenges, we are still expecting to generate 300 million of non-GAAP-adjusted free cash flow for the full fiscal year 2025. Turning to a few highlights from the quarter, I am energized by the incredible events we hosted, including our annual AI Summit, which once again proved to be a great success. With over 5,000 registered attendees, We introduced new innovations focused around the key factors that business leaders are looking for when they embed AI in their automation program. Business context, AI model flexibility, actionability, and trust. These innovations included our family of large language models, or LLMs, DocPath and ComPath, which combine the best of generative AI and specialized AI to empower our customers to understand and process any document and a huge variety of message types. By narrowing the focus but retaining the vast power of Gen-AI, our specialized LLMs significantly outperform the output accuracy of currently available out-of-the-box LLMs. We also introduce context grounding a new feature within the UiPath AI Trust layer that helps businesses improve the accuracy of GenAI models by extracting information from company-specific datasets. And lastly, we announced exciting new updates for Autopilot, including the release of Autopilot for developers and testers into general availability in June. We have seen tremendous interest from our customers across diverse industries, ranging from technology and automotive to pharmaceuticals and advertising, and including some of the largest companies in the world, such as Dentsu, Wesco, and Signity. While still in its early days, Autopilot has already garnered positive feedback and excitement among customers for its innovative use of generative AI to take action across application stacks, lowering barriers to entry and accelerating time to value. On the go-to-market front, momentum continued with our first UI Path on Tour event, AI at Work Public Sector in Washington, D.C., The energy and engagement in the room were palpable, with over 1,000 public sector leaders and implementation partners in attendance. It was truly inspiring to witness firsthand how our platform is empowering public sector agencies to modernize their IT infrastructure and navigate the cloud with confidence. We also had the opportunity to highlight our recently achieved FedRAMP authorization, This milestone creates opportunities for public sector organizations to elevate their operations through the transformative power of automation. And we are already seeing customer interest closing several deals in the first quarter, including an existing customer who expanded as they plan to leverage FedRAMP to move to the cloud while purchasing document understanding to drive efficiencies throughout their organization. Moving on to our partner ecosystem, partners continue to be a core pillar of our go-to-market strategy and GSIs are building long-term differentiated businesses with us. During the quarter, we had a great partner supported expansion with WEK Energy Group with consolidating their automation efforts onto our end-to-end platform. With Accenture's continued strategic support, they are now planning to leverage our AI-enabled capabilities, including document understanding aimed at enhancing customer care and agent productivity and driving additional operational efficiencies and insights. Partners are also driving new logo wins, including VHI Group, the largest private health insurer in Ireland. With the help of EY, we develop a plan to drive long-term digital transformation across their organization. They are in the process of leveraging document understanding to automate elements of their claims journey and core automation to drive the digitalization across their organization. Strategic partnerships are an important element of our strategy, and we continue to strengthen our relationship with SAP, which provides us with access to large transformation budgets, new buying centers, and the SAP enterprise sales machine. During the quarter, we saw continued success, including an expansion with an Italian eyewear conglomerate who will be leveraging our platform capabilities to support their migration to SAP S4 HANA. They are also in the process of expanding their usage of document understanding to optimize invoice and payments processing. From a technical partnership perspective, Just last week, we announced our expanded partnership with Microsoft, launching a powerful integration with Copilot for Microsoft 365. This integration enables joint customers to automate end-to-end business processes and enhance the end-user experience with UiPath. Our focus on innovation is consistently recognized by third-party research analysts. And over the last several months, we received multiple industry awards. This has included a recognition in Everest Group's Intelligent Document Processing Products Peak Matrix Assessment 2024, where we were named a leader for the second year in a row, being recognized for our vision, capabilities, and market impact. Our leadership position in IDP is driving demand across our customer base. For example, Schaeffler Technologies, a customer since 2018, expanded to communications mining and document understanding in the quarter as they look to automate invoice processing, quality control documents, shipping documents, and maintenance records. Our continuous discovery capabilities are also fueling our momentum, and we were recently recognized as a leader in the 2024 Gartner Magic Quadrant for Process Mining Platforms Research Report. Customers recognize the transformational outcomes they can achieve when they combine our discovery capabilities with our automation products, including a new logo this quarter with one of the largest pharmaceutical companies in North America. The customer had been using Salonis, but realized they needed a tool that not only identifies bottlenecks, but also give them the ability to take action. Our outcome-focused messaging and full platform of capabilities resonated with the customer, resulting in competitive displacement. We see an opportunity to share our experience and passion for fostering the next generation of innovative technology solutions. And this includes our recent investment in the H company, founded by leading AI scientists and researchers. Their vision is to reach full artificial general intelligence as they commercially deploy foundational action models. In addition to our investment, we are collaborating with them on a commercial partnership. We believe what the H company is building goes beyond the capabilities of LLMs. and will be helpful as we drive a new era of agentic process automation, where AI agents collaborate with workers dynamically to reinvent business processes. Personally, I am thrilled to be working with such an exceptional founding team on their journey. Before I turn it over to Ashim, I'd like to extend a warm welcome to Raghu Malpani, our new appointed Chief Technology Officer. Raghu comes to us with a wealth of experience in fostering and guiding forward-thinking, collaborative and customer-focused engineering teams. We are incredibly excited to have him on board and we are confident that his expertise will further elevate our team while delivering best-in-class innovative solutions to our customers. I am proud of the advancements we have made over the last year, including the great talent we've added to our P&E team, and it gives me great confidence in their ability to drive our long-term product strategy while I am transitioning back to the CEO role. As I said several times, we are not satisfied with our results and outlook. As the founder of UiPath, I am energized to step back into the CEO role, improve execution, and refocus the company on our customers and partners. We remain committed to driving durable growth while maintaining strong profitability. With that, I'll turn the call over to Ashim.