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What changed in UiPath, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of UiPath, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+565 added−613 removedSource: 10-K (2023-03-24) vs 10-K (2022-04-04)

Top changes in UiPath, Inc.'s 2023 10-K

565 paragraphs added · 613 removed · 392 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeOur Solution Our platform is purpose-built to be responsive to these challenges and to advance the next generation of automation with several key strengths: • Our open ecosystem is architecture agnostic, which allows organizations to automate existing infrastructure and accelerate digital innovation without the need to replace or make large investments in their existing infrastructure. • Our platform’s embedded AI and machine learning ("ML") capabilities improve decisioning and information processing by adapting to constantly changing variables. • Our robots’ ability to emulate human behavior allows organizations to leverage our platform to address a myriad of use cases, from the simple to the complex, and makes automation accessible to employees throughout an organization. • Our multi-tenant platform is built for enterprise deployment, with security and governance at its core, and can be deployed on-premises, in a public or private cloud, or in a hybrid environment.
Biggest changeWhat We Offer Our platform is purpose-built to be responsive to these challenges and to advance the next generation of automation with several key strengths: • Our platform’s embedded AI, ML , and NLP capabilities improve decisioning and information processing by adapting to constantly changing variables. • Our software robots’ ability to emulate human behavior allows organizations to address a myriad of use cases, from simple to complex, across levels and departments. • Our platform allows users to seamlessly design and combine UI automations, API integrations, and AI-based document understanding in a single workflow. • Our multi-tenant platform is built for enterprise deployment, with security and governance at its core, and can be deployed on-premises, in a public or private cloud, or in a hybrid environment.
We increase job candidate pipeline diversity through external organizations such as Jobwel, NPower, Inroad, as well as outreach to Historically Black Colleges, Black Girls Who Code, and Women Impact Tech, and have increased focus on recruiting women into leadership roles and to our Board of Directors.
We increase job candidate pipeline diversity through external organizations such as Jobwel, NPower, and Inroad, as well as outreach to Historically Black Colleges, Black Girls Who Code, and Women Impact Tech, and have increased focus on recruiting women into leadership roles and to our Board of Directors.
In addition, we offer a managed, multi-tenant SaaS version called Automation Cloud, which enables our customers to begin automating without the need to provision infrastructure, install applications, or perform additional configurations. • Our intuitive interface and low-code, drag-and-drop functionality is easy for employees to learn regardless of their technical acumen; built-in, customizable, and shareable components serve as building blocks for users to quickly and easily build and deploy automations. • Our platform tracks, measures, and forecasts the performance of automations, enabling customers to gain powerful insights and generate key performance indicators with actionable metrics. • Our technology democratizes automation, empowering employees and resulting in greater professional fulfillment and job satisfaction. • Our platform was designed to enable people and robots to work together in harmony, with each focusing on the processes they execute best, to improve business outcomes.
In addition, we offer a managed, multi-tenant SaaS version called Automation Cloud, which enables our customers to begin automating without the need to provision infrastructure, install applications, or perform additional configurations. • Our intuitive interface and low-code, drag-and-drop functionality is easy for employees to learn regardless of their technical acumen; built-in, customizable, and shareable components serve as building blocks for users to quickly and easily build and deploy automations. • Our platform tracks, measures, and forecasts the performance of automations, enabling customers to gain powerful insights and generate key performance indicators with actionable metrics. • Our technology democratizes automation, empowering employees and resulting in greater professional fulfillment and job satisfaction. • Our platform was designed to enable people and software robots to work together in harmony, with each focusing on the processes they execute best, to improve business outcomes.
Through our global Automation for Good initiatives, we have worked with governments during the COVID-19 pandemic to deploy our technology to assist government entities, hospitals, and non-profit organizations to improve citizen response, free health care workers to spend more time with patients, and accelerate mission objectives.
Through our global Automation for Good initiatives, we worked with governments during the COVID-19 pandemic to deploy our technology to assist government entities, hospitals, and non-profit organizations to improve citizen response, free health care workers to spend more time with patients, and accelerate mission objectives.
As a result of our international operations, we must comply with a multitude of data security and privacy laws that may vary significantly from jurisdiction to jurisdiction. Virtually every jurisdiction in which we operate has established or is in the process of establishing data security and privacy legal frameworks with which we or our customers must comply.
As a result of our international operations, we must comply with many data security and privacy laws that may vary significantly from jurisdiction to jurisdiction. Virtually every jurisdiction in which we operate has established or is in the process of establishing data security and privacy legal frameworks with which we or our customers must comply.
We have added dedicated diversity, equity, and belonging roles to our human resources organization and seek to create an environment where employees are valued, respected, and empowered. We are committed to challenging inequities internally and in our communities and invest in education to create equity.
We have added dedicated diversity, equity, and belonging roles to our human resources organization and seek to create an environment where employees are valued, respected, and empowered. We are committed to challenging and seeking to address inequities internally and in our communities and we invest in education to create equity.
We control access to and use of our proprietary technology and other confidential information through the use of internal and external controls, including contractual protections with employees, contractors, customers, and partners.
We restrict access to and use of our proprietary technology and other confidential information through the use of internal and external controls, including contractual protections with employees, contractors, customers, and partners.
For a discussion of the various risks we face from regulation and compliance matters, see the sections titled “ Risk Factors —Risks Related to Data Privacy and Cybersecurity” and “ Risk Factors —Risks Related to Regulatory Compliance and Governmental Matters” included in Item 1A of this Annual Report on Form 10-K.
For a discussion of the various risks we face from regulation and compliance matters, see the sections titled “ Risk Factors —Risks Related to Data Privacy and Cybersecurity ” and “ Risk Factors —Risks Related to Regulatory Compliance and Governmental Matters ” included in Item 1A of this Annual Report on Form 10-K.
See the section titled “ Risk Factors —Risks Related to Our Intellectual Property,” included in Item 1A of this Annual Report on Form 10-K, for a description of risks related to our intellectual property.
See the section titled 11 Table of Contents “ Risk Factors —Risks Related to Our Intellectual Property ,” included in Item 1A of this Annual Report on Form 10-K, for a description of risks related to our intellectual property.
We file electronically with the U.S. Securities and Exchange Commission ("SEC") our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act.
We file electronically with the SEC our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act .
Examples of integrations available to our customers include integrations with offerings from Amazon Web Services Inc., Alteryx, Inc., Atlassian Corp Plc, Box, Inc., CrowdStrike, Inc., DocuSign Inc., Microsoft Corporation, Oracle Corporation, Qlik Technologies Inc., Salesforce.com, Inc., SAP SE, ServiceNow, Inc., Snowflake Inc., and Workday, Inc.
Examples of integrations available to our customers include integrations with offerings from Amazon Web Services Inc., Adobe Inc., Alteryx, Inc., Atlassian Corp Plc, Box, Inc., CrowdStrike, Inc., DocuSign Inc., Microsoft Corporation, Oracle Corporation, OutSystems, Qlik Technologies Inc., Salesforce.com, Inc., SAP SE, ServiceNow, Inc., Snowflake Inc., Tableau Software, LLC, and Workday, Inc.
We require our employees, consultants, and certain other third parties to enter into confidentiality and 10 Table of Contents proprietary rights agreements, and we control and monitor access to our software, documentation, and other confidential information.
We require our employees, consultants, and certain other third parties to enter into confidentiality and proprietary rights agreements, and we control and monitor access to our software, documentation, and other confidential information.
Our technology partners bring specialized capabilities to our platform. They collaborate with us to develop integrations that simplify the interoperability of our platform with their technology, resulting in faster time-to-value.
They collaborate with us to develop integrations that simplify the interoperability of our platform with their technology, resulting in faster time-to-value.
In the United States, we are subject to data security and privacy rules and regulations promulgated under the authority of the Federal Trade Commission, the Electronic Communications Privacy Act, the Computer Fraud and Abuse Act, the California Consumer Privacy Act of 2018, ("CCPA"), and other state and federal laws relating to privacy and data security.
In the U.S., we are subject to data security and privacy rules and regulations promulgated under the authority of the Federal Trade Commission, the Electronic Communications Privacy Act, the Computer Fraud and Abuse Act, the CCPA , and other state and federal laws relating to privacy and data security.
We also drive innovation with leading AI technology partners that specialize in optical character recognition ("OCR"), natural language processing ("NLP"), and custom ML and AI algorithms that are additive to our platform and can enhance the long-term business outcomes for our customers’ automations.
We also drive innovation with leading AI technology partners that specialize in OCR , NLP, and custom ML and AI algorithms that are additive to our platform and can enhance the long-term business outcomes of our customers’ automations.
The principal purposes of our equity and other incentive plans are to attract, retain, and motivate selected employees, consultants, and directors through the granting of stock-based compensation awards and cash-based performance bonus awards. 11 Table of Contents As of January 31, 2022, we had a total of 4,013 full-time employees, geographically distributed as follows: *Includes 1% in Russia, Ukraine, and Belarus combined The following chart presents our full-time employees by financial statement line as of January 31, 2022: We are subject to, and comply with, local labor law requirements in all countries in which we operate.
The principal purposes of our equity and other incentive plans are to attract, retain, and motivate selected employees, consultants, and directors through the granting of stock-based compensation awards and cash-based performance bonus awards. 12 Table of Contents As of January 31, 2023, we had a total of 3,833 full-time employees, geographically distributed as follows: The following chart presents our full-time employees by financial statement line as of January 31, 2023: We are subject to local labor law requirements in all countries in which we operate.
We must also comply with sanctions that are issued by countries in which we do business. As of March 2022, in response to Russia’s military operations in Ukraine, the U.S., the European Union ("EU"), the United Kingdom ("U.K."), Australia, Japan and other countries imposed sanctions on Russia. Russia has also started to impose sanctions.
We must also comply with sanctions that are issued by countries in which we do business. In response to Russia’s military operations in Ukraine, the U.S., the EU , the U.K. , Australia, Japan and other countries have imposed sanctions on Russia. Russia has also imposed sanctions.
However, these existing offerings are challenged by a number of inherent limitations, including: • lack of an end-to-end platform; • overreliance on application programming interfaces ("APIs"); • inability to automate across applications; • challenges in linking AI capabilities to real-world execution; • immature user interface ("UI") automation capabilities; • need for changes to an enterprise's underlying infrastructure; • unsuitability for organization-wide use; • lack of governance capabilities at scale; • onerous deployment; • lack of openness and interoperability; and • lack of an engaged user community.
However, these existing offerings are challenged by a number of inherent limitations, including: • lack of an end-to-end platform; • immature UI automation capabilities; • challenges in linking AI capabilities to real-world execution; • need for changes to an enterprise's underlying infrastructure; • unsuitability for organization-wide use; • lack of governance capabilities at scale; and • lack of an engaged user community.
As a result, enterprises have transitioned from managing a handful of multi-purpose, largely on-premises applications to managing hundreds and even thousands of specialized point solutions deployed across on-premises, cloud, and hybrid environments. These applications, which were generally not designed for interoperability, run in tandem with long-running, legacy technologies.
Enterprises have transitioned from managing a handful of multi-purpose, largely on-premises applications to managing hundreds or thousands of point solutions deployed across on-premises, cloud, and hybrid environments. These applications, which were generally not designed for interoperability, run in tandem with legacy technologies, relying on humans to act as the connective tissue in the performance of business processes.
The ability of our robots to replicate steps performed by humans in executing business processes drives continuous improvements in operational efficiencies and enables companies to deliver on key digital initiatives with greater speed, agility, and accuracy. Our platform interacts with and automates processes across a company’s existing enterprise stack.
The ability of our software robots to replicate steps performed by humans in executing business processes drives operational efficiencies and enables companies to deliver on key digital initiatives with greater speed, agility, and accuracy.
Our customers frequently see rapid time-to-value with our products, and we are able to quickly expand sales within organizations as customers add features, expand use cases, and increase the number of software robots beyond their initial deployment. The potential for broad applicability of the UiPath platform enables us to sell across all levels and departments of an organization.
Our customers frequently see rapid time-to-value with our products, and we are able to quickly expand sales within organizations as customers add features, expand use cases, and increase the number of software robots beyond their initial deployment.
Diversity, Equity, and Belonging We believe that diversity, equity, and belonging is a business priority and a moral imperative, driving value for our employees, communities, and customers. We are strong because we welcome diverse perspectives, experiences, and approaches.
Bold Challenge. Experiment. Explore. Immersed Consider. Reflect. Imagine. Fast Take Action. Preempt. Transform. Diversity, Equity, and Belonging We believe that diversity, equity, and belonging is a business priority and a moral imperative, driving value for our employees, communities, and customers. We are strong because we welcome diverse perspectives, experiences, and approaches.
We believe our competitors primarily exist across the following three categories: • RPA software providers that offer RPA platforms, but lack end-to-end automation capabilities. • Adjacent automation and integration platform companies, such as low-code, intelligent business process management suite ("iBPMS"), integration platform as a service ("iPaaS"), process mining, and test automation vendors, that provide additional features that can be useful for automations.
We believe our competitors primarily fall into the following three categories: • Enterprise platform vendors that are acquiring, building, or investing in automation functionality or partnering with automation providers. • RPA software providers that offer RPA platforms, but lack end-to-end automation capabilities. • Adjacent automation and integration platform companies, such as low-code, iBPMS , iPaaS , process mining, IDP , and test automation vendors, that provide additional features that can be useful for automations.
We continually review our development efforts to assess and identify the existence and patentability of new intellectual property. The terms of individual patents extend for varying periods of time, depending upon the date of filing of the patent application, the date of patent issuance, and the legal term of patents in the countries in which they are obtained.
The terms of individual patents extend for varying periods of time, depending upon the date of filing of the patent application, the date of patent issuance, and the legal term of patents in the countries in which they are obtained.
Employees and Human Capital Resources Workforce Human capital is our most important asset. We were recognized as one of Inc.’s Best Workplaces for 2020 and won six Best Company awards from Comparably in 2020, including awards for Happiness, Professional Development, and Leadership.
Human Capital Workforce Human capital is our most important asset. We were recognized as one of Inc.’s Best Workplaces for 2022 and won eight Best Company awards from Comparably in 2022, including awards for Global Culture, Happiness, Perks and Benefits, Leadership, and Best Places to Work in New York.
A number of technology companies have attempted to address the automation needs of organizations through the application of business process management, application development platform offerings, RPA tools, and AI point offerings, as well as other horizontal software applications.
We have alliances and integrations with key vendors in each of these groups, but they often develop and market automation capabilities as extensions of their core platforms. 6 Table of Contents A number of technology companies have attempted to address the automation needs of organizations through the application of business process management, application development platform offerings, RPA tools, and AI point offerings, as well as other horizontal software applications.
We rely on a combination of patent, copyright, trademark, and trade secret laws in the United States ("U.S") and other jurisdictions, as well as license agreements, confidentiality procedures, non-disclosure agreements with third parties, and other contractual protections, to protect our intellectual property rights, including our proprietary technology, software, know-how, and brand.
We rely on a combination of patent, copyright, trademark, and trade secret laws in the U.S. and other jurisdictions, as well as license agreements, confidentiality procedures, non-disclosure agreements with third parties, and other contractual protections, to protect our intellectual property rights, including our proprietary technology, software, know-how, and brand. 10 Table of Contents As of January 31, 2023, we held 114 issued patents which are scheduled to expire between October 2039 and February 2043, across several jurisdictions: As of January 31, 2023, we also had 171 pending patent applications in the U.S., including 5 allowed U.S. patent applications, 124 pending Patent Cooperation Treaty applications, and 410 pending and 10 allowed patent applications in other jurisdictions.
Any other trade names, trademarks and service marks used in this Annual Report on Form 10-K are the property of their respective owners. 13 Table of Contents Available Information Our website address is www.uipath.com. Information found on, or accessible through, our website is not a part of, and is not incorporated into, this Annual Report on Form 10-K.
The UiPath logo, “UiPath,” “Automation Cloud,” "The Foundation of Innovation," and our other registered and common law trade names, trademarks, and service marks are the property of UiPath, Inc. or our subsidiaries. Any other trade names, trademarks and service marks used in this Annual Report on Form 10-K are the property of their respective owners. Our website address is www.uipath.com.
Our marketing team drives brand awareness, cultivates a large and growing community, and drives demand through a combination of global and local campaigns. We employ a variety of marketing tactics to reach prospective customers, including community evangelism, in-person and digital events, content marketing, digital advertising, search optimization, partner marketing, social media, and public relations.
We employ a variety of approaches to reach prospective customers, including community evangelism, in-person and digital events, content marketing, digital advertising, search optimization, partner marketing, social media, and public relations. We host and present regularly at regional and global events, including our own Forward and Together conferences.
Our platform leverages the power of artificial intelligence ("AI") based computer vision to enable our software robots to perform a vast array of actions as a human would when executing business processes. These actions include, but are not limited to, logging into applications, extracting information from documents, moving folders, filling in forms, and updating information fields and databases.
Our platform enables employees to quickly build automations for both existing and new processes and to utilize software robots to perform a vast array of actions including, but not limited to, logging into applications, extracting information from documents, moving folders, filling in forms, and updating information fields and databases.
While this represents, at present, a small percentage of our business, it is a complex and rapidly evolving area.
While Russia, Belarus, and Ukraine represent an immaterial percentage of our business, this is a complex and evolving area.
We had over 10,100 and over 7,900 customers as of January 31, 2022 and 2021, respectively. 9 Table of Contents Partnerships We develop and maintain business and technology partnerships that help us to seamlessly integrate the latest technology into our platform and market and deliver our platform to our customers around the world.
The following chart illustrates the growth of our customer base over the past five years*: Partners We develop and maintain business and technology partnerships that help us to integrate the latest technology into our platform and to market and deliver our platform to our customers around the world.
Our sales organization is supported by a team of pre-sales engineers and our professional services organization that offer technical expertise to help customers speed adoption and return on investment. We sell to organizations of all sizes across a broad range of industries, with a focus on enterprise customers.
We sell our platform through a direct sales team, supported by a team of pre-sales engineers and our professional services organization, who offer technical expertise to help customers accelerate adoption and time-to-value.
The SEC maintains an internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC at www.sec.gov. 14 Table of Contents
The SEC maintains an internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC at www.sec.gov. We may use our website as a distribution channel for material company information. Financial and other important information regarding UiPath is routinely posted on and accessible through our website at www.uipath.com.
Culture and Values We believe our culture and values are critical to our success and have helped us deliver tangible financial and operational benefits to our customers, employee s, and stockholders. Early on in our company’s history, we decided 12 Table of Contents to make humility the center of our values.
We consider our employee relations to be good and have not experienced any work stoppages. 13 Table of Contents Culture and Values We believe that our culture and values are critical to our success and help us to deliver tangible financial and operational benefits to our customers, employee s, and stockholders. Our core values are: Humble Listen. Learn. Help Others.
Furthermore, we have supported initiatives and opportunities dedicated to improving automation skills and technology access and creating social good, having reached more than one million learners worldwide on our free online platform, UiPath Academy. Working with our partners to develop accessible paths towards fulfilling careers and foster meaningful employment opportunities remains a key priority for UiPath.
Furthermore, we have supported initiatives and opportunities dedicated to improving automation skills and technology access and creating social good with ou r free online learning platform, UiPath Academy.
Traditional automation solutions intended to reduce this friction have generally been designed to be used by developers and engineers, rather than the employees directly involved in executing the actual work being automated. As a result, employees are limited by the lack of flexibility of these traditional automation technologies, and employee productivity, innovation, and satisfaction suffer.
While traditional automation solutions have attempted to address this friction, they frequently fall short of expectations because they have been designed for use by developers and engineers, rather than the employees who are directly involved in and familiar with the work being automated.
Our issued patents are scheduled to expire between October 2039 and February 2040. As of January 31, 2022, we held 11 registered U.S. trademarks, 11 pending U.S. trademark applications, and more than 670 active foreign trademark filings. As of January 31, 2022, we also held 54 internet domain names.
We held 10 registered U.S. trademarks, 11 pending U.S. trademark applications, and more than 500 active foreign trademark filings. We also held over 45 internet domain names. We continually review our development efforts to assess and identify the existence and patentability of new intellectual property.
Community Edition is offered for free to small businesses, university students, and individuals. Enterprise Trial provides prospective customers with full functionality of our platform for a limited time. Customers We have a large and diversified customer base across a broad range of industry sectors.
(Community Edition is a limited version of our platform that is offered for free to small businesses, university students, and individuals, whereas Enterprise Trial provides full functionality for a limited time.) The result is a global network of automation professionals who are actively building and sharing automations and transforming the way work gets done.
In April 2021, we joined the Pledge 1% movement, and reserved 2.8 million shares of our Class A common stock to fund our social impact and environmental, social, and governance initiatives, to be distributed over ten years. Corporate Information We were founded in Bucharest, Romania in 2005 and incorporated in Delaware on June 9, 2015.
In April 2021, we joined the Pledge 1% movement; as of January 31, 2023, we have donated 0.3 million shares of our Class A common stock to fund projects related to our environmental, social, and governance initiatives, with an additional 2.5 million shares of our Class A common stock reserved for distribution by April 2031.
Our business partners include more than 5,100 global and regional system integrators, value-added resellers, and business consultants. We provide tiering recognition through Diamond, Gold, Silver, and Registered levels for partners that meet competency requirements and deliver and maintain a specified number of satisfied customers. These partnerships enhance our market presence and drive greater sales efficiencies.
Our business partners include regional system integrators, value-added resellers, and business consultants that enhance our market presence and drive greater sales efficiencies. In fiscal year 2023, we closed deals with a select number of partners that will offer our technology as managed services to their customers.
We have made and will continue to make significant investments in research and development to enhance our technology. Foster the Next Generation of Work and Grow Our Community — We have built an extensive ecosystem through our Community and UiPath Academy initiatives, which support and train individuals working with our platform.
Community Engagement— We have built an extensive ecosystem through our Community, UiPath Academy and Academic Alliance initiatives, which support and train individuals working with our platform. Additionally, we offer free access via our Community Edition and Enterprise Trial, both available online.
In 2021 we expanded our network of partner organizations to equip students and workers with automation skills as part of our UiPath Academic Alliance program. The UiPath Foundation, a Romanian charity, aims to provide children living in poverty with the skills and tools necessary to reach their potential.
Workin g with 14 Table of Contents our partners to develop accessible paths toward fulfilling careers and foster meaningful employment opportunities remains a key priority for UiPath, and we have expanded our network of partner organizations to equip students and workers with automation skills as part of our UiPath Academic Alliance program.
As a result, activities performed by many employees today are still manual, mundane, and administrative, taking their focus away from higher-value activities that can directly improve business performance. Manual and repetitive tasks have a negative impact on employee experience. Employees must navigate an ever-increasing number of systems and applications to perform their day-to-day work.
Employees must navigate an ever-increasing number of systems and applications and execute many manual and repetitive tasks in the performance of their day-to-day work, leading to frustration and lost productivity.
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Item 1. Business Overview Our automation platform is designed to transform the way humans work. We provide our customers with a robust set of capabilities that allow them to discover automation opportunities and to build, manage, run, engage, measure, and govern automations across departments within an organization.
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Item 1. Business Overview First established in a Bucharest, Romania apartment in 2005, UiPath was incorporated in Delaware in 2015 as a company principally focused on building and managing automations and developing computer vision technology, which remains the foundation of our platform today.
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As a result, our customers can leverage the power of our platform without the need to replace or change existing business applications, resulting in lower overall information technology ("IT") infrastructure cost. Our platform enables employees to quickly build automations for both existing and new processes.
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Since that time, we have evolved from our beginnings in RPA into an end-to-end A I -powered automation platform through development and acquisitions, launched new products, and expanded our operations across the globe. Our vision is to enable automation across all knowledge work to accelerate human achievement.
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Employees can seamlessly maintain and scale automations across multiple deployment options, constantly improve and evolve automations, and continuously track and measure the performance of automations, all without substantial technical experience.
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The UiPath Business Automation Platform is The Foundation of Innovation™ because it can be used everywhere, by everyone, for everything, to benefit every business.
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At the core of our automation platform is a set of capabilities that emulates human behavior and provides our customers with the ability to automate both simple and complex use cases. Automations can be built, consumed, managed, and governed by any employee who interacts with computers, resulting in the potential for broad applicability across departments within an organization.
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We provide our customers with a robust set of capabilities that allow them to discover opportunities for automation, automate using a digital workforce that seamlessly collaborates with humans, and operate a mission critical automation program at scale.
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Many of our customers expand the scope and size of use cases across their organizations as they quickly realize the power of our platform. We believe that the success of our land-and-expand business model is centered on our ability to deliver significant value in a short time.
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Enterprise automation is here, and its momentum is growing as organizations around the world begin to understand the power of automation to drive efficiency and business outcomes.
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We grow with our customers as they identify and expand the number of business processes to automate, which increases the number of robots deployed and the number of users interacting with robots.
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We aspire to be the defining company, advancing the evolution of automation as not just a tool, but as a way of operating and innovating. 5 Table of Contents Trends Shaping Our Industry A fragmented application landscape complicates business processes and hinders digital transformation.
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We have an efficient go-to-market model, which consists primarily of an enterprise field sales force supplemented by a high velocity inside sales team focused on small and mid-sized customers, as well as a global strategic sales team focused on the largest global customers.
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Businesses worldwide have spent billions of dollars on software in an attempt to drive efficiency and competitive advantages. A proliferation of applications has resulted in a shift from traditional software suites to specialized point solutions.
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Our mission is to unlock human creativity and ingenuity by enabling the fully automated enterprise and empowering employees through automation. Our society is at a turning point in how organizations execute work, and we believe that the ability to leverage software to enrich the employee experience will unlock tremendous value and efficiency opportunities.
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As a result, employees lose valuable time navigating a fragmented application landscape and attention is diverted away from more cognitive activities that could directly improve business outcomes. Automation of personal workflows can lead to a democratization of automation.
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While we are still in the early days of a multi-year journey, momentum is growing as organizations across the world are only now beginning to understand the power of automation.
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By contrast, low-code solutions require little technical expertise and empower employees to use their firsthand knowledge of business processes to easily automate their personal workflows, resulting in personal and organizational benefits. Resource constraints require organizations to maximize workforce productivity. Enterprises are under pressure to maximize the productivity of their employees. This is even more critical in the current macroeconomic climate.
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We believe that we are disrupting a significant and fast-growing market and that the largely untapped opportunity ahead of us has the potential to be one of the biggest ever in enterprise software. Trends Shaping Our Industry Explosive growth of cloud-based applications is creating a new era of IT complexity.
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Inflationary tensions have caused resource constraints for organizations, driving them to become more cost-conscious and seek new opportunities for efficiency and savings. Investment in automation allows organizations to devote human capital resources to the highest value tasks that humans do best, such as abstract thinking, innovation, relationship building, and dealing with ambiguity.
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Businesses around the world are spending billions of dollars to adopt applications that help advance digital transformation and drive competitive advantages. With the proliferation of cloud technologies and software-as-a-service ("SaaS"), traditional software suites have been disaggregated into point solutions. For example, human capital management software has been segregated across recruiting, payroll, benefits administration, and other key business functions.
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Recent advancements in AI are enabling automation of sophisticated business processes and broader use cases. While RPA can easily capture data and manipulate applications like a person would, automation of certain more complex and cognitive tasks has historically been out of reach.
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The increasing volume of applications has a compounding effect on the complexity of business processes and the IT environments that support them. 4 Table of Contents The benefits of digital transformation have yet to make their way to the workforce .
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The evolution of AI , which refers to decision-making capabilities demonstrated by computer programs, has now enabled the automation of processes with characteristics—such as high variability, inherent uncertainty, and unstructured data—that would have been impossible to automate with RPA alone.
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Modern enterprise applications enable deep and nuanced functionalities, such as conducting personalized marketing campaigns, predictive service delivery, and real time visibility of goods movement across the supply chain. However, despite massive functional advancement, the true promise and potential of digital transformation—reallocating human capital towards cognitive, higher-value activities—remains elusive, which limits improvements in productivity.
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AI expands capabilities by enabling software robots to learn how to read, write, listen, recognize patterns, and make complex decisions, bringing automation to a new level by opening a world of new opportunities for business growth, cost reduction, and improved productivity. Competition The market for automation is one of the fastest growing enterprise software markets and is increasingly competitive.
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Individual business processes rely on multiple business applications, and humans to orchestrate them. While specialized applications deliver extensive functionality, they do not account for the full spectrum of how work gets done.
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The UiPath Business Automation Platform Our platform is built to span the full automation spectrum.
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The proliferation of specialized applications has resulted in humans being the connective tissue in an enterprise, working across a wide range of applications that individually are not built to address the needs of the actual processes they are supporting.
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We recently updated its name to reflect our belief that our platform, the UiPath Business Automation Platform, is now at the center of the way our customers run their businesses—sitting between their application landscape, their processes, and their people—allowing their processes and people to move forward at the rate that they need to, by delivering resilient and robust automations and applications. 7 Table of Contents Discover Continuously uncovers opportunities for process and task improvements, helping to identify the highest-ROI areas Process Mining enables complete transparency into business processes and transforms them with automation and improvements that drive continuous operational efficiency.
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This dynamic forces them to constantly execute manual, time-consuming, and repetitive tasks to get their work done. The friction faced by employees often results in lost productivity that can have a direct impact on a company’s bottom line.
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Task Mining provides an objective, data-driven picture of desktop processes quicker and with fewer resources required, allowing organizations to act on gained insight through automation. Communications Mining lets users mine, monitor, and automate service conversations to scale operations efficiently and improve the experience of their customers.
Removed
Empowering employees to automate their personal workflows is leading to a democratization of automation. The emerging workforce is developing increasingly advanced technical skills and training in automation. Individuals are entering the workforce with higher expectations related to job impact, satisfaction, and efficiency, and view software as a driving force in realizing those expectations.
Added
Idea Capture & Management enables organizations to centrally capture and manage automation ideas and process improvements, prioritized by impact and ROI. Automate Gets more done with a digital workforce that seamlessly collaborates with people and automates work via UI and API, powered with native-integrated AI Low-code development empowers employees to build business apps and automations rapidly with low-code, visual tools.
Removed
As a result, organizations are seeking to empower employees with tools that optimize the more tedious parts of their jobs.
Added
UI and API automation are combined for maximum scale and speed across the broadest range of systems. Process orchestration enables users to create smarter decision-making and collaboration between people and software robots. Intelligent Document Processing removes the work from paperwork with semantic understanding of a wide range of documents—accurately and quickly.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAny disruption in the operations of these third-party providers, limitations on capacity, or interference with our use could adversely affect our business, financial condition, and results of operations. 15 Table of Contents • We expect fluctuations in our financial results, making it difficult to project future results, and if we fail to meet the expectations of securities analysts or investors with respect to our results of operations, our stock price could decline. • If we fail to maintain and enhance our brand, our ability to expand our customer base will be impaired and our business, financial condition, and results of operations may suffer. • Any failure to obtain, maintain, protect, or enforce our intellectual property and proprietary rights could impair our ability to protect our proprietary technology and our brand. • We may become subject to intellectual property disputes, which are costly and may subject us to significant liability and increased costs of doing business. • Our current operations are international in scope, and we plan further geographic expansion, creating a variety of operational challenges. • The Russian military operation in Ukraine may produce near and longer term economic and geopolitical disruption which may harm our business. • The dual class structure of our common stock has the effect of concentrating voting control with our Chief Executive Officer, Co-Founder, and Chairman, which will limit your ability to influence the outcome of important decisions.
Biggest changeOur actual or perceived failure to comply with such obligations could lead to regulatory investigations or actions; litigation; fines and penalties; disruptions of our business operations; reputational harm; loss of revenue or profits; loss of customers or sales; and other adverse business consequences. • If our information technology systems or data, or those of third parties upon which we rely, are or were compromised, we could experience adverse consequences resulting from such compromise, including but not limited to regulatory investigations or actions; litigation; fines and penalties; disruptions of our business operations; reputational harm; loss of revenue or profits; loss of customers or sales; and other adverse consequences. • Any failure to obtain, maintain, protect, or enforce our intellectual property and proprietary rights could impair our ability to protect our proprietary technology and our brand. • We may become subject to intellectual property disputes, which are costly and may subject us to significant liability and increased costs of doing business. • Our current operations are international in scope, and we plan further geographic expansion, creating a variety of operational challenges. • The Russian military action in Ukraine may produce near and longer term economic and geopolitical disruption which may harm our business. • The dual class structure of our common stock has the effect of concentrating voting control with Daniel Dines, our Co-CEO , Co-Founder, and Chairman, which will limit your ability to influence the outcome of important decisions.
Our success and future growth depend largely upon the continued services of our executive officers, particularly Daniel Dines, our Chief Executive Officer, Co-Founder, and Chairman, as well as our other key employees in the areas of research and development and sales and marketing.
Our success and future growth depend largely upon the continued services of our executive officers, particularly Daniel Dines, our Co-Chief Executive Officer, Co-Founder, and Chairman, as well as our other key employees in the areas of research and development and sales and marketing.
While we have experienced significant revenue growth in recent periods, and have not been profitable in prior fiscal years, we are not certain whether we will obtain a high enough volume of sales to sustain or increase our growth or reach and maintain profitability in the future.
While we have experienced significant revenue growth in recent periods, we have not been profitable in prior fiscal years, and we are not certain whether we will obtain a high enough volume of sales to sustain or increase our growth, or whether we will reach and maintain profitability in the future.
We currently sell, and anticipate continuing to sell, to U.S. federal, state, and local, as well as foreign, governmental agency customers, as well as to customers in highly regulated industries such as financial services and healthcare. Sales to such customers are subject to a number of challenges and risks.
We currently sell, and anticipate continuing to sell, to U.S. federal, state, and local, and foreign governmental agency customers, as well as to customers in highly regulated industries such as financial services and healthcare. Sales to such customers are subject to a number of challenges and risks.
Further, governmental and highly regulated entities may demand contract terms that differ from our standard arrangements and are less favorable than terms agreed with private sector customers, including preferential pricing or “most favored nation” terms and conditions or are contract provisions that are otherwise time-consuming and expensive to satisfy.
Further, governmental and highly regulated entities may demand contract terms that differ from our standard arrangements and are less favorable than terms agreed with private sector customers, including preferential pricing or “most favored nation” terms and conditions or contract provisions that are otherwise time-consuming and expensive to satisfy.
Because our Chief Executive Officer, Co-Founder, and Chairman, Daniel Dines, who, collectively with his controlled entities, holds all our outstanding shares of Class B common stock, and beneficially owns shares representing in excess of 50% of the voting power of our outstanding capital stock, we are eligible to elect the “controlled company” exemption to the corporate governance rules for publicly-listed companies.
Because our Co-Chief Executive Officer, Co-Founder, and Chairman, Daniel Dines, who, collectively with his controlled entities, holds all our outstanding shares of Class B common stock, and beneficially owns shares representing in excess of 50% of the voting power of our outstanding capital stock, we are eligible to elect the “controlled company” exemption to the corporate governance rules for publicly-listed companies.
We have registered all of the shares of Class A common stock issuable upon exercise of outstanding options, the vesting and settlement of outstanding restricted stock units, and other equity incentives we may grant in the future, for public resale under the Securities Act.
We have registered all of the shares of Class A common stock issuable upon exercise of outstanding options, vesting and settlement of outstanding restricted stock units, and other equity incentives we may grant in the future, for public resale under the Securities Act .
If we fail to retain these customers, our revenue and ARR could decline significantly. • We rely on our channel partners and our strategic alliances to generate a substantial amount of our revenue, and if we fail to expand and manage our distribution channels, or fulfill our future service obligations, our revenue could decline and our growth prospects could suffer. • If we are not able to introduce new features or services successfully and to make enhancements to our platform or products, our business and results of operations could be adversely affected. • Real or perceived errors, failures, or bugs in our platform and products could adversely affect our business, results of operations, financial condition, and growth prospects. • Incorrect or improper implementation or use of our platform and products could result in customer dissatisfaction and harm our business, results of operations, financial condition, and growth prospects. • We rely upon third-party providers of cloud-based infrastructure to host our cloud-based products.
If we fail to retain these customers, our revenue and ARR could decline significantly. • We rely on our channel partners, including our strategic alliances, to generate a substantial amount of our revenue, and if we fail to expand and manage our distribution channels or fulfill our future service obligations, our revenue could decline and our growth prospects could suffer. • If we are not able to introduce new features or services successfully and to make enhancements to our platform or products, our business and results of operations could be adversely affected. • Real or perceived errors, failures, or bugs in our platform and products could adversely affect our business, results of operations, financial condition, and growth prospects. • Incorrect or improper implementation or use of our platform and products could result in customer dissatisfaction and harm our business, results of operations, financial condition, and growth prospects. • We rely upon third-party providers of cloud-based infrastructure to host our cloud-based products.
We and the third parties upon which we rely may be subject to a variety of evolving threats, including but not limited to social- engineering attacks (including through phishing attacks), malicious code (such as viruses and worms), malware (including as a result of advanced persistent threat intrusions), denial-of-service attacks (such as credential stuffing), personnel misconduct or error, ransomware attacks, supply-chain attacks, software bugs, server malfunctions, software or hardware failures, loss of data or other information technology assets, adware, telecommunications failures, and other similar threats.
We and the third parties upon which we rely may be subject to a variety of evolving threats, including but not limited to social-engineering attacks (including through phishing attacks), malicious code (such as viruses and worms), malware (including as a result of advanced persistent threat intrusions), denial-of-service attacks (such as credential stuffing), credential harvesting, personnel misconduct or error, ransomware attacks, supply-chain attacks, software bugs, server malfunctions, software or hardware failures, loss of data or other information technology assets, adware, telecommunications failures, and other similar threats.
The success of new products, enhancements, and developments depends on several factors including, but not limited to: our anticipation of market changes and demands for product features, including successful product design and timely product introduction and conclusion, sufficient customer demand, cost effectiveness in our product development efforts, and the proliferation of new technologies that are able to deliver competitive products and services at lower prices, more efficiently, more conveniently, or more securely.
The success of new products, enhancements, and developments depends on several factors including, but not limited to: our anticipation of market changes and demands for product features, including successful product design and timely product introduction, sufficient customer demand, cost effectiveness in our product development efforts, and the proliferation of new technologies that are able to deliver competitive products and services at lower prices, more efficiently, more conveniently, or more securely.
However, such licenses may not be available on acceptable terms or at all. The licensing or acquisition of third-party intellectual property rights is a competitive area, and several more established companies may pursue strategies to license or acquire third-party intellectual property rights that we may consider attractive or necessary.
However, such licenses may not be available on acceptable terms or at all. The licensing or acquisition of third-party intellectual property rights is a competitive area, and more established companies may pursue strategies to license or acquire third-party intellectual property rights that we may consider attractive or necessary.
A lack of education as to how our automation platform and products operate may cause potential customers to prefer more traditional methodologies or their limited, internally-developed automated processes, to be cautious about investing in our platform and products, or to have difficulty integrating our platform and products into their business architecture.
A lack of education as to how our automation platform and solutions operate may cause potential customers to prefer more traditional methodologies or their limited, internally-developed automated processes, to be cautious about investing in our platform and products, or to have difficulty integrating our platform and products into their business architecture.
In addition, during the course of litigation there could be public announcements of the results of hearings, motions, or other interim proceedings or developments. If securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our common stock.
In addition, during the course of litigation there could be public announcements of the results of hearings, motions, or other interim proceedings or developments. If securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our Class A common stock.
We may require additional capital to support the growth of our business, and this capital might not be available on acceptable terms, if at all. We have funded our operations since inception primarily through customer payments and net proceeds from sales of equity securities.
We may require additional capital to support the growth of our business, and this capital may not be available on acceptable terms, if at all. We have funded our operations since inception primarily through customer payments and net proceeds from sales of equity securities.
Moreover, there could be public announcements of the results of hearings, motions, or other interim proceedings or developments and if securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our common stock.
Moreover, there could be public announcements of the results of hearings, motions, or other interim proceedings or developments and if securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our Class A common stock.
These established companies may have a competitive advantage over us due to their size, capital resources, and greater development or commercialization capabilities. In addition, companies that perceive us to be a competitor may be unwilling to assign or license rights to us.
These more established companies may have a competitive advantage over us due to their size, capital resources, and greater development or commercialization capabilities. In addition, companies that perceive us to be a competitor may be unwilling to assign or license rights to us.
In addition to the other risks described herein, factors that may affect our results of operations include the following: • fluctuations in demand for or pricing of our platform and products; • fluctuations in usage of our platform and products; • fluctuations in our mix of revenue from licenses and service arrangements; • our ability to attract new customers; • our ability to retain our existing customers; • customer expansion rates and the pricing and quantity of licenses renewed; • fluctuations in mix of revenue, cost of revenue, and gross margin from sales directly to end-customers and/or to strategic alliance partners and/or through channel partners; • timing and amount of our investments to expand the capacity of our third-party cloud infrastructure providers; • seasonality; • the investment in new products and features relative to investments in our existing infrastructure and products; • the timing of our customer purchases; • fluctuations or delays in purchasing decisions in anticipation of new products or enhancements by us or our competitors; • changes in customers’ budgets and in the timing of their budget cycles and purchasing decisions; • our ability to control costs, including our operating expenses; • the amount and timing of payment for operating expenses, particularly sales and marketing and research and development expenses, including commissions; • the amount and timing of non-cash expenses, including stock-based compensation, goodwill impairments, and other non-cash charges; • the amount and timing of costs associated with recruiting, training, and integrating new employees and retaining and motivating existing employees; • the effects of acquisitions and their integration; • general economic conditions, both domestically and internationally, as well as economic conditions specifically affecting industries in which our customers participate; • the impact of new accounting pronouncements; • changes in regulatory or legal environments that may cause us to incur, among other elements, expenses associated with compliance; • changes in the competitive dynamics of our market, including consolidation among competitors or customers; and • significant security breaches of, technical difficulties with, or interruptions to, the delivery and use of our products and platform capabilities.
In addition to the other risks described herein, factors that may affect our results of operations include the following: • fluctuations in demand for or pricing of our platform and products; • fluctuations in usage of our platform and products; • fluctuations in our mix of revenue from licenses and service arrangements; • our ability to attract new customers; • our ability to retain our existing customers; • customer expansion rates and the pricing and quantity of licenses renewed; • fluctuations in mix of revenue, cost of revenue, and gross margin from sales directly to end-customers and/or through channel partners including our strategic alliances; • timing and amount of our investments to expand the capacity of our third-party cloud infrastructure providers; • seasonality; • the investment in new products and features relative to investments in our existing infrastructure and products; • the timing of customer purchases; • fluctuations or delays in purchasing decisions in anticipation of new products or enhancements by us or our competitors; • changes in customers’ budgets and in the timing of their budget cycles and purchasing decisions; • our ability to control costs, including our operating expenses; • the amount and timing of payment for operating expenses, particularly sales and marketing and research and development expenses, including commissions; • the amount and timing of non-cash expenses, including stock-based compensation, goodwill impairments, and other non-cash charges; • the amount and timing of costs associated with recruiting, training, and integrating new employees and retaining and motivating existing employees; • the effects of acquisitions and their integration; • general economic conditions, both domestically and internationally, as well as economic conditions specifically affecting industries in which our customers participate; • the impact of new accounting pronouncements; • changes in regulatory or legal environments that may cause us to incur, among other elements, expenses associated with compliance; • changes in the competitive dynamics of our market, including consolidation among competitors or customers; and 28 Table of Contents • significant security breaches of, technical difficulties with, or interruptions to the delivery and use of our products and platform capabilities.
If we fail to do so, our business, results of operation and financial condition may be harmed. If we fail to continue to differentiate our platform and products from those offered by our competitors, then our business, results of operations, and financial condition may be harmed.
If we fail to do so, our business, results of operations, and financial condition may be harmed. If we fail to continue to differentiate our platform and products from those offered by our competitors, then our business, results of operations, and financial condition may be harmed.
Overall growth of our business depends on a number of additional factors, including our ability to: • price our products effectively so that we are able to attract new customers and expand sales to our existing customers; • expand the functionality and use cases for the products we offer on our platform; • maintain and expand the rates at which customers purchase and renew licenses to our platform; • provide our customers with support that meets their needs; • continue to introduce and sell our products to new markets; • continue to develop new products and new functionality for our platform and successfully further optimize our existing products and infrastructure; • successfully identify and acquire or invest in businesses, products, or technologies that we believe could complement or expand our platform; and • increase awareness of our brand on a global basis and successfully compete with other companies.
Overall growth of our business depends on a number of additional factors, including our ability to: • price our products effectively so that we are able to attract new customers and expand sales to our existing customers; • expand the functionality and use cases for the products we offer on our platform; • maintain and expand the rates at which customers purchase and renew licenses to our platform; • provide our customers with support that meets their needs; • continue to introduce and sell our products to new markets; 17 Table of Contents • continue to develop new products and new functionality for our platform and successfully further optimize our existing products and infrastructure; • successfully identify and acquire or invest in businesses, products, or technologies that we believe could complement or expand our platform; and • increase awareness of our brand on a global basis and successfully compete with other companies.
As a result, our revenue and ARR could fluctuate materially and could be materially and disproportionately impacted by purchasing decisions of these customers or any other significant future customer.
As a result, our revenue and ARR could fluctuate materially and could be materially and disproportionately impacted by the purchasing decisions of these customers or any other significant future customer.
The market price of our Class A common stock may be highly volatile and may fluctuate or decline substantially as a result of a variety of factors, some of which are beyond our control, including: • actual or anticipated fluctuations in our financial condition or results of operations; • variance in our financial performance from expectations of securities analysts; • changes in the pricing of licenses to our products; • changes in our projected operating and financial results; • changes in laws or regulations applicable to our platform and products; • announcements by us or our competitors of significant business developments, acquisitions, or new products; • significant data breaches, disruptions to or other incidents involving our software; • our involvement in litigation or governmental investigations; • future sales of our Class A common stock by us or our stockholders; • changes in senior management or key personnel; • the issuance of new or changed securities analysts’ reports or recommendations; • the trading volume of our Class A common stock; • changes in the anticipated future size and growth rate of our market; • economic and market conditions in general, or in our industry in particular; and • technical factors in the public trading market for our Class A common stock that may produce price movements that may or may not comport with macro, industry, or company-specific fundamentals, including, without limitation, the sentiment of retail investors, the amount and status of short interest in our securities, access to margin debt, trading in options and other derivatives on our common stock and other technical trading factors.
The market price of our Class A common stock may be highly volatile and may fluctuate or decline substantially as a result of a variety of factors, some of which are beyond our control, including: • actual or anticipated fluctuations in our financial condition or results of operations; • variance in our financial performance from expectations of securities analysts; • changes in the pricing of our products and services; • changes in our projected operating and financial results; • changes in laws or regulations applicable to our platform and products; • announcements by us or our competitors of significant business developments, acquisitions, or new products; • significant data breaches, disruptions to, or other incidents involving our software; • our involvement in litigation or governmental investigations; • future sales of our Class A common stock by us or our stockholders; • changes in senior management or key personnel; • the issuance of new or changed securities analysts’ reports or recommendations; • the trading volume of our Class A common stock; • changes in the anticipated future size and growth rate of our market; • economic and market conditions in general, or in our industry in particular; and 51 Table of Contents • technical factors in the public trading market for our Class A common stock that may produce price movements that may or may not comport with macro, industry, or company-specific fundamentals, including, without limitation, the sentiment of retail investors, the amount and status of short interest in our securities, access to margin debt, trading in options and other derivatives on our common stock, and other technical trading factors.
In addition, any incident affecting our third-party hosting services’ infrastructure that may be caused by cyber-attacks, natural disasters, fire, flood, severe storm, earthquake, power loss, telecommunications failures, outbreaks of contagious diseases, military actions, terrorist or other attacks, and other similar events beyond our control could negatively affect our cloud-based products.
In addition, any incident affecting our third-party hosting services’ infrastructure that may be caused by cyberattacks, natural disasters, fire, flood, severe storm, earthquake, power loss, telecommunications failures, outbreaks of contagious diseases, military actions, terrorist or other attacks, and other similar events beyond our control could negatively affect our cloud-based products.
In the ordinary course of business, we collect, receive, access, generate, transfer, store, disclose, share, make accessible, protect, secure, dispose of, use, share and otherwise process personal data and other sensitive information, including proprietary and confidential business data, trade secrets, intellectual property, sensitive third- 30 Table of Contents party data about employees, contractors, customers, suppliers, and others.
In the ordinary course of business, we collect, receive, access, generate, transfer, store, disclose, share, make accessible, protect, secure, dispose of, use, and otherwise process personal data and other sensitive 33 Table of Contents information, including proprietary and confidential business data, trade secrets, intellectual property, sensitive third- party data about employees, contractors, customers, suppliers, and others.
Any change in Trade Controls could result in decreased use of our platform and products by, or in our decreased ability to export or sell our platform and products to, existing or potential customers.
Any change in Trade Controls could result in decreased use of our platform and products by, or decrease in our ability to export or sell our platform and products to, existing or potential customers.
Our effective tax rate could increase due to several factors, including: • changes in the relative amounts of income before taxes in the various jurisdictions in which we operate that have differing statutory tax rates; • changes in tax laws, tax treaties, and regulations or the interpretation of them; • changes to our assessment about our ability to realize our deferred tax assets that are based on estimates of our future results, the prudence and feasibility of possible tax planning strategies, and the economic and political environments in which we do business; • the outcome of current and future tax audits, examinations, or administrative appeals; • changes international tax frameworks; and • the effects of acquisitions.
Our effective tax rate could increase due to several factors, including: • changes in the relative amounts of income before taxes in the various jurisdictions in which we operate that have differing statutory tax rates; • changes in tax laws, tax treaties, and regulations or the interpretation of them; • changes to our assessment about our ability to realize our DTAs that are based on estimates of our future results, the prudence and feasibility of possible tax planning strategies, and the economic and political environments in which we do business; • the outcome of current and future tax audits, examinations, or administrative appeals; • changes international tax frameworks; and • the effects of acquisitions.
Such Trade Controls and any further restrictions that may be promulgated by relevant governmental authorities could adversely affect our business. See "—Risks Related to Our Business, Products, Operations, and Industry—The Russian military operation in Ukraine may produce near and longer term economic and geopolitical disruption which may harm our business." for additional information.
Such Trade Controls and any further restrictions that may be promulgated by relevant governmental authorities could adversely affect our business. See "—Risks Related to Our Business, Products, Operations, and Industry—The Russian military action in Ukraine may produce near and longer term economic and geopolitical disruption which may harm our business." for additional information.
If our customers are unable to implement our platform successfully, or in a timely manner, or if our customers perceive that the implementation of our platform is too complex or time consuming, customer perceptions of our company and our software may be impaired, our reputation and brand may suffer, and customers may choose not to renew their licenses or increase their purchases of our related services.
If our customers are unable to implement our platform successfully, or in a timely manner, or if our customers perceive that the implementation of our platform is too complex or time consuming, customer perceptions of us and our software may be impaired, our reputation and brand may suffer, and customers may choose not to renew their licenses or increase their purchases of our related services.
We cannot predict whether our dual class structure, combined with the concentrated control of our Chief Executive Officer, Co-Founder, and Chairman, who holds all of the outstanding shares of our Class B common stock, will result in a lower or more volatile market price of our Class A common stock or in adverse publicity or other adverse consequences.
We cannot predict whether our dual class structure, combined with the concentrated control of our Co-Chief Executive Officer, Co-Founder, and Chairman, Daniel Dines, who holds all of the outstanding shares of our Class B common stock, will result in a lower or more volatile market price of our Class A common stock or in adverse publicity or other adverse consequences.
Any failure of or delay in these efforts could result in impaired system performance and reduced customer satisfaction, resulting in decreased sales to new customers, lower dollar-based net retention rates, the issuance of service credits, or requested refunds, which would hurt our revenue growth and our reputation.
Failure of or delay in these continuing efforts could result in impaired system performance and reduced customer satisfaction, resulting in decreased sales to new customers, lower dollar-based net retention rates, the issuance of service credits, or requested refunds, which would hurt our revenue growth and our reputation.
While these and other BEPS initiatives are in the final stages of approval and/or implementation, we cannot predict their 43 Table of Contents outcome or what potential impact they may have on our tax obligations and operations or our financial statements, up to their final enactment in national and international legislation.
While these and other BEPS initiatives are in the final stages of approval and/or implementation, we 46 Table of Contents cannot predict their outcome or what potential impact they may have on our tax obligations and operations or our financial statements, up to their final enactment in national and international legislation.
A 44 Table of Contents successful assertion by one or more states requiring us to collect taxes where we presently do not do so, or to collect more taxes in a jurisdiction in which we currently do collect some taxes, could result in substantial tax liabilities, including taxes on past sales, as well as penalties and interest.
A successful assertion 47 Table of Contents by one or more states requiring us to collect taxes where we presently do not do so, or to collect more taxes in a jurisdiction in which we currently do collect some taxes, could result in substantial tax liabilities, including taxes on past sales, as well as penalties and interest.
Government demand and payment for our products are affected by public sector budgetary cycles and funding authorizations, with funding reductions or delays adversely affecting public sector demand for our products. These customers may also be subject to a rapidly evolving regulatory framework that may implicate their ability to use our platform and products.
Government demand and payment for our products are affected by public sector budgetary cycles and funding authorizations, with funding reductions or delays adversely affecting public sector demand for our products. These customers may also be subject to a rapidly evolving regulatory framework that may impact their ability to use our platform and products.
Our platform and products provide automation solutions that our customers can integrate throughout their businesses. Accordingly, we compete with companies that provide RPA and other automation solutions, including Appian Corporation, Automation Anywhere, Inc., Blue Prism Group PLC, Celonis Inc., Kofax Inc., Kyron Systems Inc., Microsoft Corporation, NICE LTD., NTT Ltd., Pegasystems Inc., and WorkFusion, Inc.
Our platform and products provide automation solutions that our customers can integrate throughout their businesses. Accordingly, we compete with companies that provide RPA and other automation solutions, including Appian Corporation, Automation Anywhere, Inc., Blue Prism Group PLC, Celonis Inc., Kofax Inc., Microsoft Corporation, NICE LTD., NTT Ltd., Pegasystems Inc., and WorkFusion, Inc.
If our quarterly on annual results of operations fall below the expectations of investors and securities analysts who follow our stock, the price of our Class A common stock could decline substantially, and we could face lawsuits that are costly and may divert management’s attention, including securities class action suits.
If our quarterly or annual results of operations fall below the expectations of investors or securities analysts who follow our stock, the price of our Class A common stock could decline substantially, and we could face lawsuits that are costly and may divert management’s attention, including securities class action suits.
If we are unable to maintain or increase our ARR or revenue at a rate sufficient to offset the expected increase in our costs, our business, financial position, and results of operations will be harmed, and we may not be able to achieve or maintain profitability over the long term.
If we are unable to maintain or increase our ARR or revenue at a rate sufficient to offset the expected increase in our costs, our business, financial condition, and results of operations will be harmed, and we may not be able to achieve or maintain profitability over the long term.
We regularly train our customers and channel partners in the proper use of and the variety of benefits that can be derived from our automation platform and products to maximize its potential. We and our channel partners often work with our customers to achieve successful implementations, particularly for large, complex deployments.
We regularly train our customers and channel partners in the proper use of and the variety of benefits that can be derived from our automation platform and products to maximize their potential. We and our channel partners often work with our customers to achieve successful implementations, particularly for large, complex deployments.
If we fail to attract new personnel or fail to retain and motivate our current personnel, our business and future growth prospects would be harmed. We have a history of operating losses and have not been profitable in the past. We may not be able to reach and maintain profitability in the future.
If we fail to attract new personnel or fail to retain and motivate our current personnel, our business and future growth prospects could be harmed. We have a history of operating losses and have not been profitable in the past. We may not be able to reach and maintain profitability in the future.
Any dispute with a customer or other third party with respect to such obligations could have adverse effects on our relationship with such customer or other third party and other existing or prospective customers, reduce demand for our products and services, and adversely affect our business, financial conditions, and results of operations.
Any dispute with a customer or other third party with respect to such obligations could have adverse effects on our relationship with such customer or other third party and other existing or prospective customers, reduce demand for our products and services, and adversely affect our business, financial condition, and results of operations.
For example, any failure by a third-party processor to comply with applicable law, regulations, or contractual obligations could result in adverse effects, including inability to or interruption in our ability to operate our business and proceedings against us by governmental entities or others.
For example, any failure by a third-party processor to comply with applicable laws, regulations, or contractual obligations could result in adverse effects, including inability to or interruption in our ability to operate our business and proceedings against us by governmental entities or others.
If an author or other third party that distributes such open source software were to allege that we had not complied with the conditions of one or more of these licenses, we could be required to incur significant legal expenses defending against such allegations and could be subject to significant damages, enjoined from the sale of 39 Table of Contents our products that contained the open source software and required to comply with onerous conditions or restrictions on these products, which could disrupt the distribution and sale of these products.
If an author or other third party that distributes such open source software were to allege that we had not complied with the conditions of one or more of these licenses, we could be required to incur significant legal expenses defending against such allegations and could be subject to significant damages, enjoined from the sale of our products that contained the open source software, and required to comply with onerous conditions or restrictions on these products, which could disrupt the distribution and sale of these products.
Our amended and restated certificate of incorporation provides the Court of Chancery of the State of Delaware is the exclusive forum for the following types of actions or proceedings under Delaware statutory or common law: • any derivative claim or cause of action brought on our behalf; • any claim or cause of action asserting a breach of fiduciary duty; • any claim or cause of action against us arising under the Delaware General Corporation Law; • any claim or cause of action arising under or seeking to interpret our amended and restated certificate of incorporation or our amended and restated bylaws; and • any claim or cause of action against us that is governed by the internal affairs doctrine.
Our amended and restated certificate of incorporation provides the Court of Chancery of the State of Delaware is the exclusive forum for the following types of actions or proceedings under Delaware statutory or common law: • any derivative claim or cause of action brought on our behalf; • any claim or cause of action asserting a breach of fiduciary duty; • any claim or cause of action against us arising under the Delaware General Corporation Law; 50 Table of Contents • any claim or cause of action arising under or seeking to interpret our amended and restated certificate of incorporation or our amended and restated bylaws; and • any claim or cause of action against us that is governed by the internal affairs doctrine.
In particular, we intend to continue to expend significant funds to further develop our platform, including by introducing new products and functionality, and to expand our inside sales team and enterprise sales force to drive new customer adoption, expand use cases and integrations, and support international expansion.
In particular, we intend to continue to expend significant funds to further develop our platform, including by introducing new products and functionality, and to adapt and grow our inside sales team and enterprise sales force to drive new customer adoption, expand use cases and integrations, and support international expansion.
Risks Related to Ownership of Our Class A Common Stock The dual class structure of our common stock has the effect of concentrating voting control with our Chief Executive Officer, Co-Founder, and Chairman, which will limit your ability to influence the outcome of important decisions.
Risks Related to Ownership of Our Class A Common Stock The dual class structure of our common stock has the effect of concentrating voting control with Daniel Dines, our Co-Chief Executive Officer, Co-Founder, and Chairman, which will limit your ability to influence the outcome of important decisions.
Our limited operating history and recent rapid growth also make it difficult to evaluate our future prospects and may increase the risk that we will not be successful. • We may not be able to successfully manage our growth and, if we are not able to grow efficiently, our business, financial condition, and results of operations could be harmed. • Because we derive substantially all of our revenue from our automation platform, failure of this platform to satisfy customer demands could adversely affect our business, results of operations, financial condition, and growth prospects. • Our business depends on our existing customers renewing their licenses and purchasing additional licenses and products from us and our channel partners.
Our limited operating history and recent rapid growth also make it difficult to evaluate our future prospects and may increase the risk that we will not be successful. • We may not be able to successfully manage our growth and, if we are not able to grow efficiently, we may not be able to reach or maintain profitability, and our business, financial condition, and results of operations could be harmed. • Because we derive substantially all of our revenue from our automation platform, failure of this platform to satisfy customer demands could adversely affect our business, results of operations, financial condition, and growth prospects. • Our business depends on our existing customers renewing their licenses and purchasing additional licenses and products from us and our channel partners.
These government measures include export controls restricting certain exports, re-exports, transfers or releases of commodities, software, and technology to Russia and Belarus, and sanctions targeting certain officials, individuals, entities, regions, and industries in Russia, Belarus, and Ukraine, including certain large Russian banks.
These government measures include (i) export controls restricting certain exports, re-exports, transfers or releases of commodities, software, and technology to Russia and Belarus, and (ii) sanctions targeting certain officials, individuals, entities, regions, and industries in Russia, Belarus, and Ukraine, including certain large Russian banks.
We also target customers in Asia and have operations in Japan, Singapore, India, Hong Kong, and Australia and are subject to new and emerging data privacy regimes in Asia, including China’s Personal Information Protection Law, Japan’s Act on the Protection of Personal Information, and Singapore’s Personal Data Protection Act.
We also target customers in Asia and have operations in Japan, Singapore, India, Hong Kong, and Australia and are subject to new and emerging data privacy regimes in Asia, including China’s PIPL, Japan’s Act on the Protection of Personal Information, and Singapore’s Personal Data Protection Act.
Our contracts may not contain limitations of liability, and even where they do, there can be no assurance that limitations of liability in our contracts are sufficient to protect us from liabilities, damages, or claims related to our data privacy and security obligations.
Our contracts may not contain limitations of liability, and even when they do, there can be no assurance that limitations of liability in our contracts are sufficient to protect us from liabilities, damages, or claims related to our data privacy and security obligations.
An increasing number of states have considered or adopted laws that attempt to impose tax collection obligations on out-of-state companies. Additionally, the Supreme Court of the United States ruled in South Dakota v. Wayfair, Inc. et al ("Wayfair") that online sellers can be required to collect sales and use tax despite not having a physical presence in the buyer’s state.
An increasing number of states have considered or adopted laws that attempt to impose tax collection obligations on out-of-state companies. Additionally, the Supreme Court of the U.S. ruled in South Dakota v. Wayfair, Inc. et al that online sellers can be required to collect sales and use tax despite not having a physical presence in the buyer’s state.
In addition, any patents issued from pending or future patent applications or licensed to us in the future may not be sufficiently broad to protect our proprietary technologies, may not provide us with competitive advantages, or may be successfully challenged by third parties.
In addition, any patents issued from pending or future patent applications or licensed to us in the future may not be sufficiently broad to protect our proprietary technologies, may not provide us with competitive advantages, or may be successfully challenged by third parties. The U.S.
If our information technology systems or data, or those of third parties upon which we rely are or were compromised, we could experience adverse consequences resulting from such compromise, including but not limited to regulatory investigations or actions; litigation; fines and penalties; disruptions of our business operations; reputational harm; loss of revenue or profits; loss of customers or sales; and other adverse consequences.
If our information technology systems or data, or those of third parties upon which we rely, are or were compromised, we could experience adverse consequences resulting from such compromise, including but not limited to regulatory investigations or actions; litigation; fines and penalties; disruptions 35 Table of Contents of our business operations; reputational harm; loss of revenue or profits; loss of customers or sales; and other adverse consequences.
The United States Patent and Trademark Office and various foreign governmental patent and trademark agencies also require compliance with a number of procedural, documentary, fee payment, and other similar provisions during the patent and trademark application process and after a patent or trademark registration has issued.
Patent and Trademark Office and various foreign governmental patent and trademark agencies also require compliance with a number of procedural, documentary, fee payment, and other similar provisions during the patent and trademark application process and after a patent or trademark registration has issued.
Real or perceived errors, failures, or bugs in our platform and products could result in negative publicity, loss of or delay in market acceptance of our platform and products, regulatory investigations and enforcement actions, harm to our brand, weakening of our competitive position, claims by customers for losses sustained by them, or failure to meet the stated service level commitments in our customer agreements.
Real or perceived errors, failures, or 26 Table of Contents bugs in our platform and products could result in negative publicity, loss of or delay in market acceptance of our platform and products, regulatory investigations and enforcement actions, harm to our brand, weakening of our competitive position, claims by customers for losses sustained by them, or failure to meet the stated service level commitments in our customer agreements.
For example, these types of unfavorable conditions have in the past and could in the future disrupt the timing of and attendance at key industry events, which we rely upon in part to generate sales of our products.
For example, these types of unfavorable conditions have in the past disrupted and could in the future disrupt the timing and attendance of key industry events, which we rely upon in part to generate sales of our products.
Even if such licenses are available, we may be required to pay the licensor substantial royalties based on sales of our products and services. Such royalties are a component of the cost of our products or services and may affect the margins on our products and services.
Even if such licenses were available, we might be required to pay the licensor substantial royalties based on sales of our products and services. Such royalties are a component of the cost of our products or services and may affect the margins on our products and services.
In addition, although we carry general liability and cyber security insurance, our insurance may not be adequate to indemnify us for all liability that may be imposed or otherwise protect us from liabilities or damages with respect to claims alleging compromises of customer data, and any such coverage may not continue to be available to us on acceptable terms or at all.
In addition, although we carry general liability and cybersecurity insurance, our insurance may not be adequate to indemnify us for all liability that may be imposed or otherwise protect us from liabilities or damages with respect to claims alleging compromises of customer data, and any such coverage may not continue to be available to us on acceptable terms or at all.
Furthermore, legal standards relating to the validity, enforceability, and scope of protection of intellectual property rights are uncertain. Despite our precautions, it may be possible for unauthorized third parties to copy our 36 Table of Contents brands, products and platform capabilities, and use information that we regard as proprietary to create brands and products that compete with ours.
Furthermore, legal standards relating to the validity, enforceability, and scope of protection of intellectual property rights are uncertain. Despite our precautions, it may be possible for unauthorized third parties to copy our brands, products, and platform capabilities, and use information that we regard as proprietary to create brands and products that compete with ours.
Certain index providers have announced restrictions on including companies with multiple-class share structures in certain of their indexes. For example, in July 2017, FTSE Russell and Standard & Poor’s announced that they would cease to allow most newly public companies utilizing dual or multi-class capital structures to be included in their indices.
Certain index providers have announced restrictions on including companies with multiple-class share structures in certain of their indexes. For example, in July 2017, FTSE Russell and Standard & Poor’s announced that they would cease to allow most newly public companies utilizing dual or 49 Table of Contents multi-class capital structures to be included in their indices.
Even if the claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert the resources of our management and harm our business and operating results.
Even if the claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert the resources of our management and harm our business and results of operations.
Moreover, we cannot ensure that we have not incorporated additional open source software in our products in a manner that is inconsistent with the terms of the applicable license or our current policies and procedures.
Moreover, we cannot ensure that we have not incorporated additional open source software in our products in a manner that is inconsistent with the terms of the applicable licenses or our current policies and procedures.
If our cloud-based products are unavailable or if our users are unable to access our cloud-based products within a reasonable amount of time or at all, we may experience a loss of customers, lost or delayed market acceptance of our platform and products, delays in payment to us by customers, injury to our reputation and brand, legal claims against us, and the diversion of our resources.
If our cloud-based products are unavailable or if our users are unable to access our cloud-based products within a reasonable amount of time or at all, we may experience a loss of customers, loss or delay of market acceptance of our platform and products, delays in payment to us by customers, injury to our reputation and brand, legal claims against us, and the diversion of our resources.
If we cannot introduce new services or enhance our existing services to keep pace with changes in our customers’ deployment strategies, we may not be able to attract new customers, retain existing customers, and expand their use of our software or secure renewal contracts, which are important for the future of our business.
If we cannot introduce new services or enhance our existing services to keep pace with changes in our customers’ deployment strategies, 25 Table of Contents we may not be able to attract new customers, retain existing customers, and expand their use of our software or secure renewal contracts, which are important for the future of our business.
An adverse determination of any litigation proceedings could put our intellectual property at risk of being invalidated or interpreted narrowly and could put our related patents, patent applications, and trademark filings at risk of being invalidated, not issuing, or being cancelled.
An adverse determination of any litigation proceedings could put our intellectual property at risk of being invalidated or interpreted narrowly and could put our related patents, patent applications, and trademark filings at risk of being invalidated, not issued, or cancelled.
Our corporate structure and intercompany arrangements cause us to be subject to the tax laws of various jurisdictions, and we could be obligated to pay additional taxes, which could materially adversely affect our business, financial condition, results of operations, and prospects. We have been rapidly expanding our international operations and personnel to support our business in numerous international markets.
Our corporate structure and intercompany arrangements cause us to be subject to the tax laws of various jurisdictions, and we could be obligated to pay additional taxes, which could materially adversely affect our business, financial condition, results of operations, and prospects. Our international operations and personnel have rapidly expanded to support our business in numerous international markets.
If our ARR or revenue growth does not meet our expectations in future periods, our business, financial position, and results of operations may be harmed, and we may not achieve or maintain profitability in the future.
If our ARR or revenue growth does not meet our expectations in future periods, our business, financial condition, and results of operations may be harmed, and we may not achieve or maintain profitability in the future.
If we fail to successfully promote and maintain our brand, our business, financial condition, and results of operations may suffer. If we cannot maintain our company culture as we grow, our success and our business and competitive position may be harmed.
If we fail to successfully promote and maintain our brand, our business, financial condition, and results of operations may suffer. If we cannot maintain our corporate culture as we grow, our success and our business and competitive position may be harmed.
As we continue to hire more employees to keep pace with our growth, it may become more difficult for us to find employees that exhibit these virtues or to instill them in our new employees.
As we continue to hire more employees to keep pace with our growth, it may become more difficult for us to find employees that exhibit these values or to instill them in our new employees.
If these third-party software providers were to modify the terms of their licensing arrangements with our customers in a manner that would reduce the utility of our products, or increase the cost to use our products in connection with these third-party software products, then our customers may no longer choose to adopt our automation platform or continue to 17 Table of Contents use our products.
If these third-party software providers were to modify the terms of their licensing arrangements with our customers in a manner that would reduce the utility of our products, or increase the cost to use our products in connection with these third-party software products, then our customers may no longer choose to adopt our automation platform or continue to use our products.
If we fail to protect our intellectual property rights adequately, our competitors may gain access to our proprietary technology and develop and commercialize substantially identical products, services, or technologies and our business, financial condition, results of operations, or prospects may be harmed. In addition, defending our intellectual property rights may entail significant expense.
If we fail to protect our intellectual property rights adequately, our competitors may gain access to our proprietary technology 39 Table of Contents and develop and commercialize substantially identical products, services, or technologies and our business, financial condition, results of operations, or prospects may be harmed. In addition, defending our intellectual property rights may entail significant expense.
Declines in renewals or purchases of additional licenses by our customers could harm our future operating results. Part of our growth strategy relies on our ability to deliver significant value in a short time to our customers, so that our customers will scale the use of our platform throughout their enterprise.
Declines or significant delays in renewals or purchases of additional licenses and products by our customers could harm our future operating results. Part of our growth strategy relies on our ability to deliver significant value in a short time to our customers, so that our customers will scale the use of our platform throughout their enterprise.
The provisions would not apply to suits brought to enforce a duty or liability created by the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Furthermore, Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all such Securities Act actions. Accordingly, both state and federal courts have jurisdiction to entertain such claims.
The provisions would not apply to suits brought to enforce a duty or liability created by the Exchange Act . Furthermore, Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all such Securities Act actions. Accordingly, both state and federal courts have jurisdiction to entertain such claims.
Any disruption as a result of cyber-attacks or similar issues, or any limitation on the capacity of our third-party hosting services, could impede our ability to onboard new customers or expand the usage of our existing customers or otherwise adversely affect our business, which could adversely affect our financial condition and results of operations.
Any disruption as a result of cyberattacks or similar issues, or any limitation on the capacity of our third-party hosting services, could impede our ability to onboard new customers or expand the usage of our existing customers or otherwise adversely affect our business, which could adversely affect our financial condition and results of operations.
We have been subject to investigations by regulators in Romania and Turkey in connection with a security incident affecting our information technology systems in 2020; however, we have remediated the incident and notified all affected individuals and relevant government authorities as required under applicable privacy laws.
We have been subject to investigations by regulators in Romania and Turkey in connection with a security incident affecting our information technology systems in 2020; however, we have remediated the incident and notified all affected individuals and relevant data protection authorities as required under applicable privacy laws.
Our Chief Executive Officer, Co-Founder, and Chairman, Daniel Dines, who, collectively with his controlled entities, holds all our outstanding shares of Class B common stock, and beneficially owned shares representing approximately 87% voting power of our outstanding capital stock as of January 31, 2022. As a result, Mr.
Our Co-Chief Executive Officer, Co-Founder, and Chairman, Daniel Dines, collectively with his controlled entities, holds all our outstanding shares of Class B common stock, and beneficially owned shares representing approximately 87% voting power of our outstanding capital stock as of January 31, 2023. As a result, Mr.
If we choose controlled company status in the future, our status as a controlled company could cause our Class A common stock to be less attractive to certain investors or otherwise harm our trading price. 46 Table of Contents We cannot predict the impact our dual class structure may have on the market price of our Class A common stock.
If we choose controlled company status in the future, our status as a controlled company could cause our Class A common stock to be less attractive to certain investors or otherwise harm our trading price. We cannot predict the impact our dual class structure may have on the market price of our Class A common stock.
Seasonality may cause fluctuations in our sales and results of operations. Historically, we have experienced seasonality in new and renewal customer bookings, as typically we enter into a higher percentage of license agreements with new customers and renewals with existing customers in the 27 Table of Contents fourth quarter of our fiscal year.
Seasonality may cause fluctuations in our sales and results of operations. Historically, we have experienced seasonality in new and renewal customer bookings, as typically we enter into a higher percentage of license agreements with new customers and renewals with existing customers in the fourth quarter of our fiscal year.
Foreign Corrupt Practices Act ("FCPA") U.S. domestic bribery laws, the United Kingdom Bribery Act, and other anti-corruption and anti-money laundering laws in the countries in which we conduct activities. Due to the international scope of our operations, we must comply with these laws in each jurisdiction where we operate.
FCPA , U.S. domestic bribery laws, the United Kingdom Bribery Act, and other anti-corruption and anti-money laundering laws in the countries in which we conduct activities. Due to the international scope of our operations, we must comply with these laws in each jurisdiction where we operate.
In addition to RPA software providers, we compete with automation lifecycle technology providers, such as low-code, iBPMS, iPaaS, process mining, and test automation vendors, which develop and market automation capabilities as extensions of their core platforms, and enterprise platform vendors, which provide horizontal applications and productivity tools and are acquiring, building, or investing in RPA functionality or partnering with RPA providers.
In addition to RPA software providers, we compete with automation lifecycle technology providers, such as low-code, iBPMS , iPaaS , process mining, IDP , and test automation vendors, which develop and market automation capabilities as extensions of their core 20 Table of Contents platforms, and enterprise platform vendors, which provide horizontal applications and productivity tools and are acquiring, building, or investing in automation functionality or partnering with automation providers.
Our current and future international business and operations involve a variety of risks, including: • slower than anticipated availability and adoption of our platform and products by international businesses; • changes in a specific country’s or region’s political, regulatory, or economic conditions; • the need to adapt and localize our products for specific countries; • greater difficulty collecting accounts receivable and longer payment cycles; • potential changes in trade relations, regulations, or laws; 40 Table of Contents • unexpected changes in laws, regulatory requirements, or tax laws; • more stringent regulations relating to privacy and data security and the unauthorized use of, or access to, commercial and personal data, particularly in Europe; • differing and potentially more onerous labor regulations, especially in Europe, where labor laws are generally more advantageous to employees as compared to the United States, including deemed hourly wage and overtime regulations in these locations; • challenges inherent in efficiently managing, and the increased costs associated with, an increased number of employees over large geographic distances, including the need to implement appropriate systems, policies, benefits, and compliance programs that are specific to each jurisdiction; • potential changes in laws, regulations, and costs affecting our U.K. operations and local employees due to Brexit; • difficulties in managing a business in new markets with diverse cultures, languages, customs, legal systems, alternative dispute systems, and regulatory systems; • increased travel, real estate, infrastructure, and legal compliance costs associated with international operations; • currency exchange rate fluctuations and the resulting effect on our revenue and expenses and the cost and risk of entering into hedging transactions if we chose to do so in the future; • limitations on our ability to reinvest earnings from operations in one country to fund the capital needs of our operations in other countries; • laws and business practices favoring local competitors or general market preferences for local vendors; • limited or insufficient intellectual property protection or difficulties obtaining, maintaining, protecting, or enforcing our intellectual property rights, including our trademarks and patents; • political instability or terrorist activities; • an outbreak of a contagious disease, which may cause us or our third-party providers and/or customers to temporarily suspend our or their respective operations in the affected city or country; • exposure to liabilities under anti-corruption and anti-money laundering laws, including the FCPA, U.S. bribery laws, the United Kingdom Bribery Act, and similar laws and regulations in other jurisdictions; • exposure to anti-competition laws in foreign jurisdictions that may conflict with or be more restrictive than similar U.S. anti-competition laws; • adverse changes to domestic and foreign tax law and the burdens of foreign exchange controls that could make it difficult to repatriate earnings and cash; and • the impact of the Russian military action and evolving geopolitical situation in Ukraine and the near- and longer-term effects on our employees, our business, and the global economic environment.
Our current and future international business and operations involve a variety of risks, including: • slower than anticipated availability to and adoption of our platform and products by international businesses; • changes in a specific country’s or region’s political, regulatory, or economic conditions; • the need to adapt and localize our products for specific countries; • greater difficulty collecting accounts receivable and longer payment cycles; • potential changes in trade relations, regulations, or laws; • unexpected changes in laws or regulatory requirements, including tax laws and regulations; • more stringent regulations relating to privacy and data security and the unauthorized use of or access to commercial and personal data, particularly in Europe; • differing and potentially more onerous labor regulations, especially in Europe, where labor laws are generally more advantageous to employees as compared to the U.S., including deemed hourly wage and overtime regulations in these locations; • challenges inherent in efficiently managing, and the increased costs associated with, an increased number of employees over large geographic distances, including the need to implement appropriate systems, policies, benefits, and compliance programs that are specific to each jurisdiction; • difficulties in managing a business in new markets with diverse cultures, languages, customs, legal systems, alternative dispute systems, and regulatory systems; • increased travel, real estate, infrastructure, and legal compliance costs associated with international operations; • currency exchange rate fluctuations and the resulting effect on our revenue and expenses, and the cost and risk of entering into hedging transactions if we chose to do so in the future; • limitations on our ability to reinvest earnings from operations in one country to fund the capital needs of our operations in other countries; • laws and business practices favoring local competitors or general market preferences for local vendors; • limited or insufficient intellectual property protection or difficulties obtaining, maintaining, protecting, or enforcing our intellectual property rights, including our trademarks and patents; • political instability or terrorist activities; • an outbreak of a contagious disease, which may cause us or our third-party providers and/or customers to temporarily suspend our or their respective operations in the affected city or country; • exposure to liabilities under anti-corruption and anti-money laundering laws, including the FCPA, U.S. bribery laws, the United Kingdom Bribery Act, and similar laws and regulations in other jurisdictions; • exposure to anti-competition laws in foreign jurisdictions that may conflict with or be more restrictive than similar U.S. anti-competition laws; • adverse changes to domestic and foreign tax laws and regulations, and the requirements of foreign exchange controls, which could make it difficult to repatriate earnings and cash; and • the impact of the Russian military action and evolving geopolitical situation in Ukraine and the near- and longer-term effects on our employees, our business, and the global economic environment. 44 Table of Contents Although we have taken steps designed to ensure that UiPath complies with applicable regulations including evolving U.S. and international sanctions, these steps involve additional compliance costs and operational costs.
If we are unable to protect our rights in these trademarks and trade names, third parties may file for registration of trademarks similar or identical to our trademarks, thereby impeding our ability to build brand identity and possibly leading to market confusion.
If we are unable to protect our rights in these trademarks and trade names, third parties may file for registration of trademarks similar or identical to our trademarks, thereby impeding our ability 30 Table of Contents to build brand identity and possibly leading to market confusion.
In addition, responding to any action will 34 Table of Contents likely result in a materially significant diversion of management’s attention and resources and significant defense costs and other professional fees. Sales to government entities and highly regulated organizations are subject to a number of challenges and risks.
In addition, responding to any action will likely result in a materially significant diversion of management’s attention and resources and significant defense costs and other professional fees. Sales to government entities and highly regulated organizations are subject to a number of challenges and risks.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeFor additional information regarding obligations under operating leases, see Note 8 , Operating Leases , to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.
Biggest changeWe do not own any real property. We believe our leased properties are in good operating condition and adequately serve our current business operations. For additional information regarding obligations under operating leases, see Note 8, Operating Leases , to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.
Item 2. Properties Our corporate headquarters and other significant leased real property as of January 31, 2022 are shown in the following table.
Item 2. Properties Our corporate headquarters and other significant leased real property as of January 31, 2023 are shown in the following table.
Location Business Purpose Square Footage Lease Expiration Date New York, NY Temporary global headquarters 16,428 12/31/2022 New York, NY Future global headquarters 26,363 3/31/2038 Bucharest, Romania Corporate office 86,352 9/1/2025 Bellevue, WA Product development center 39,120 11/30/2024 Bangalore, India Corporate office 21,006 2/15/2023 Tokyo, Japan Serviced office space 3,229 9/30/2022 We also lease other spaces for our sales, services, development, and administrative activities in various locations in the U.S. and around the world.
Location Business Purpose Square Footage Lease Expiration Date New York, NY Global headquarters 26,363 3/31/2038 Bucharest, Romania Corporate office 100,335 3/1/2028 Bellevue, WA Product development center 39,120 11/30/2024 Bangalore, India Corporate office 21,006 2/14/2028 Tokyo, Japan Serviced office space 3,358 9/30/2023 We also lease other spaces for our sales, services, development, and administrative activities in various locations in the U.S. and around the world.
Removed
We do not own any real property. We believe our leased properties are in good operating condition and adequately serve our current business operations. Although a portion of our workforce is remote at present due to the COVID-19 pandemic, we currently expect to reoccupy our material leased facilities when conditions permit.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings Information pertaining to legal proceedings, if any, can be found in Note 11 , Commitments and Contingencies — Litigation, to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K. Item 4. Mine Safety Disclosures Not applicable. 52 Table of Contents PART II
Biggest changeItem 3. Legal Proceedings Information pertaining to legal proceedings, if any, can be found in Note 11, Commitments and Contingencies — Litigation , to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K. Item 4. Mine Safety Disclosures Not applicable. 53 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeDividends We did not declare or pay any dividends on our Class A or Class B common stock over the past three fiscal years and we do not anticipate paying cash dividends in the foreseeable future.
Biggest changeDividends We have never declared or paid any dividends on our Class A or Class B common stock, and we do not anticipate paying cash dividends in the foreseeable future.
Use of Proceeds from Initial Public Offering of Class A Common Stock In April 2021, we completed our initial public offering ("IPO"), in which we issued and sold 13.0 million shares of our Class A common stock, including 3.6 million shares pursuant to the exercise in full of the underwriters’ option to purchase additional shares, and the selling stockholders sold an additional 14.5 million shares, at a public offering price of $56.00 per share, resulting in net proceeds to us of $687.9 million after deducting underwriting discounts and commissions and offering expenses.
Use of Proceeds from Initial Public Offering of Class A Common Stock In April 2021, we completed our IPO , in which we issued and sold 13.0 million shares of our Class A common stock, including 3.6 million shares pursuant to the exercise in full of the underwriters’ option to purchase additional shares, and the selling stockholders sold an additional 14.5 million shares, at a public offering price of $56.00 per share, resulting in net proceeds to us of $687.9 million after deducting underwriting discounts and commissions and offering expenses.
We believe the number of beneficial owners of our Class A common stock is substantially greater than the number of record holders because a large portion of Class A common stock is held in “street name” by brokers.
The number of beneficial owners of our Class A common stock is substantially greater than the number of record holders because a large portion of Class A common stock is held in “street name” by brokers.
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our Class A common stock began trading on the New York Stock Exchange on April 21, 2021, under the ticker symbol "PATH." There currently is no established public trading market for our Class B common stock, but each share of Class B common stock is convertible at any time at the option of the holder into one share of Class A common stock, and is automatically converted upon sale or transfer into one share of Class A common stock.
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our Class A common stock is traded on the New York Stock Exchange under the ticker symbol "PATH." There currently is no established public trading market for our Class B common stock, but each share of Class B common stock is convertible at any time at the option of the holder into one share of Class A common stock, and is automatically converted upon sale or transfer into one share of Class A common stock.
The graph 53 Table of Contents assumes a $100 investment in our Class A common stock and each of the above indices at April 21, 2021, with cash dividends reinvested as applicable. Item 6. [Reserved]
The graph assumes a $100 investment in our Class A common stock and each of the above indices at April 21, 2021, with cash dividends reinvested as applicable. Item 6. [Reserved]
Stock Performance Graph The following graph compares the cumulative total return of our Class A common stock for the period from April 21, 2021, the date our Class A common stock began trading, through January 31, 2022, as compared to the cumulative total return of the S&P 500 Index and S&P 500 Technology Index over the same period .
Stock Performance Graph The following graph compares the cumulative total return of our Class A common stock for the period from April 21, 2021, the date our Class A common stock began trading on the New York Stock Exchange, through January 31, 2023, as compared to the cumulative total return of the S&P 500 Index and S&P 500 Technology Index over the same period .
Number of Holders of Common Stock The number of record holders of Class A and Class B common stock as of March 30, 2022 was 78 and one, respectively.
Number of Holders of Common Stock The number of record holders of our Class A and Class B common stock as of March 21, 2023 was 61 and one, respectively.
Removed
There has been no material change in the planned use of proceeds from our IPO from those disclosed in the final prospectus for our IPO, filed with the SEC on April 21, 2021 pursuant to Rule 424(b)(4) under the Securities Act (the "Final Prospectus.") Issuer Purchase of Equity Securities None. Recent Sales of Unregistered Securities None.
Added
There has been no material change in the planned uses of proceeds from our IPO from those disclosed in the 2022 Form 10-K.
Added
Issuer Purchase of Equity Securities The following table presents shares of Class A common stock withheld to satisfy employee tax obligations associated with net settlement of RSUs during the three months ended January 31, 2023: Period Total Number of Shares Purchased Average Price Paid Per Share November 1 – 30 — $ — December 1 – 31 — — January 1 – 31 1,529,066 12.71 Total 1,529,066 $ 12.71 54 Table of Contents Recent Sales of Unregistered Securities None.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeResults of Operations The following tables set forth selected consolidated statement of operations data and such data as a percentage of total revenue for each of the periods indicated (in thousands): Year Ended January 31, 2022 2021 Revenue: Licenses $ 481,427 $ 346,035 Subscription services 369,867 232,542 Professional services and other 40,958 29,066 Total revenue 892,252 607,643 Cost of revenue: Licenses (1) 11,888 7,054 Subscription services (1)(2)(3) 60,565 24,215 Professional services and other (2)(3) 96,415 34,588 Total cost of revenue 168,868 65,857 Gross profit 723,384 541,786 Operating expenses: Sales and marketing (1)(2)(3) 697,682 380,154 Research and development (2)(3) 276,657 109,920 General and administrative (1)(2)(3) 249,991 162,035 Total operating expenses 1,224,330 652,109 Operating loss (500,946) (110,323) Interest income 3,551 1,152 Other (expense) income, net (13,488) 14,513 Loss before income taxes (510,883) (94,658) Provision for (benefit from) income taxes 14,703 (2,265) Net loss $ (525,586) $ (92,393) Year Ended January 31, (1) Includes amortization of acquired intangible assets as follows (in thousands): 2022 2021 Cost of licenses revenue $ 2,521 $ 2,493 Cost of subscription services revenue 1,100 — Sales and marketing 1,397 115 General and administrative 101 — Total amortization of acquired intangible assets $ 5,119 $ 2,608 (2) Includes stock-based compensation expense as follows (in thousands): Year Ended January 31, 2022 2021 Cost of subscription services revenue $ 12,232 $ 513 Cost of professional services and other revenue 29,849 1,860 Sales and marketing 237,975 16,356 Research and development 135,713 11,435 General and administrative 99,814 56,003 Total stock-based compensation expense $ 515,583 $ 86,167 62 Table of Contents (3) Includes employer payroll tax expense related to equity transactions as follows (in thousands): Year Ended January 31, 2022 2021 Cost of subscription services revenue $ 1,142 $ — Cost of professional services and other revenue 4,516 — Sales and marketing 39,615 — Research and development 5,810 — General and administrative 3,001 — Total employer payroll tax expense related to equity transactions $ 54,084 $ — The following table sets forth our consolidated statement of operations data expressed as a percentage of revenue for the period indicated: Year Ended January 31, 2022 2021 Revenue: Licenses 54 % 57 % Subscription services 41 % 38 % Professional services and other 5 % 5 % Total revenue 100 % 100 % Cost of revenue: Licenses 1 % 1 % Subscription services 7 % 4 % Professional services and other 11 % 6 % Total cost of revenue 19 % 11 % Gross profit 81 % 89 % Operating expenses: Sales and marketing 78 % 62 % Research and development 31 % 18 % General and administrative 28 % 27 % Total operating expenses 137 % 107 % Operating loss (56) % (18) % Interest income — % — % Other (expense) income, net (1) % 2 % Loss before income taxes (57) % (16) % Provision for (benefit from) income taxes 2 % (1) % Net loss (59) % (15) % Comparison of Fiscal Year 2022 and Fiscal Year 2021 Revenue Year Ended January 31, 2022 2021 Change % Change (dollars in thousands) Licenses $ 481,427 $ 346,035 $ 135,392 39 % Subscription services 369,867 232,542 137,325 59 % Professional services and other 40,958 29,066 11,892 41 % Total revenue $ 892,252 $ 607,643 $ 284,609 47 % Total revenue increased by $284.6 million, or 47%, for the fiscal year ended January 31, 2022 compared to the fiscal year ended January 31, 2021, primarily due to an increase in licenses revenue of $135.4 million and 63 Table of Contents increase in subscription services revenue of $137.3 million.
Biggest changeNet Loss Over the longer term, we seek to drive durable growth while improving profitability and aligning resources to maximize return on investment through operational efficiencies. 60 Table of Contents Results of Operations The following table sets forth selected consolidated statement of operations data for each of the periods indicated (in thousands): Year Ended January 31, 2023 2022 Revenue: Licenses $ 497,836 $ 481,427 Subscription services 508,823 369,867 Professional services and other 51,922 40,958 Total revenue 1,058,581 892,252 Cost of revenue: Licenses (1) 10,421 11,888 Subscription services (1)(2)(3)(4) 87,366 60,565 Professional services and other (2)(3)(4) 82,264 96,415 Total cost of revenue 180,051 168,868 Gross profit 878,530 723,384 Operating expenses: Sales and marketing (1)(2)(3)(4) 701,558 697,682 Research and development (2)(3)(4) 285,750 276,657 General and administrative (1)(2)(3)(4) 239,505 249,991 Total operating expenses 1,226,813 1,224,330 Operating loss (348,283) (500,946) Interest income 27,955 3,551 Other income (expense), net 2,767 (13,488) Loss before income taxes (317,561) (510,883) Provision for income taxes 10,791 14,703 Net loss $ (328,352) $ (525,586) (1) Includes amortization of acquired intangible assets as follows (in thousands): Year Ended January 31, 2023 2022 Cost of licenses revenue $ 2,754 $ 2,521 Cost of subscription services revenue 1,811 1,100 Sales and marketing 2,153 1,397 General and administrative 178 101 Total amortization of acquired intangible assets $ 6,896 $ 5,119 (2) Includes stock-based compensation expense as follows (in thousands): Year Ended January 31, 2023 2022 Cost of subscription services revenue $ 11,894 $ 12,232 Cost of professional services and other revenue 11,855 29,849 Sales and marketing 154,922 237,975 Research and development 102,546 135,713 General and administrative 88,623 99,814 Total stock-based compensation expense $ 369,840 $ 515,583 61 Table of Contents (3) Includes employer payroll tax expense related to employee equity transactions as follows (in thousands): Year Ended January 31, 2023 2022 Cost of subscription services revenue $ 272 $ 1,142 Cost of professional services and other revenue 263 4,516 Sales and marketing 4,605 39,615 Research and development 1,692 5,810 General and administrative 930 3,001 Total employer payroll tax expense related to equity transactions $ 7,762 $ 54,084 (4) Includes restructuring expense as follows (in thousands): Year Ended January 31, 2023 2022 Cost of subscription services revenue $ 182 $ — Cost of professional services and other revenue 710 — Sales and marketing 19,491 — Research and development 494 — General and administrative 2,569 — Total restructuring expense $ 23,446 $ — The following table sets forth our consolidated statement of operations data expressed as a percentage of revenue for the periods indicated: Year Ended January 31, 2023 2022 Revenue: Licenses 47 % 54 % Subscription services 48 % 41 % Professional services and other 5 % 5 % Total revenue 100 % 100 % Cost of revenue: Licenses 1 % 1 % Subscription services 8 % 7 % Professional services and other 8 % 11 % Total cost of revenue 17 % 19 % Gross profit 83 % 81 % Operating expenses: Sales and marketing 66 % 78 % Research and development 27 % 31 % General and administrative 23 % 28 % Total operating expenses 116 % 137 % Operating loss (33) % (56) % Interest income 3 % — % Other income (expense), net — % (1) % Loss before income taxes (30) % (57) % Provision for income taxes 1 % 2 % Net loss (31) % (59) % 62 Table of Contents Comparison of Fiscal Year 2023 and Fiscal Year 2022 Revenue Year Ended January 31, 2023 2022 Change % Change (dollars in thousands) Licenses $ 497,836 $ 481,427 $ 16,409 3 % Subscription services 508,823 369,867 138,956 38 % Professional services and other 51,922 40,958 10,964 27 % Total revenue $ 1,058,581 $ 892,252 $ 166,329 19 % Total revenue increased by $166.3 million, or 19%, for fiscal year 2023 compared to fiscal year 2022, primarily due to a $139.0 million increase in subscription services revenue, related in part to the transition to our Flex Offerings, and a $16.4 million increase in licenses revenue.
Impact of COVID-19 When the COVID-19 pandemic began to unfold, we took decisive action across our internal and customer operations to ensure the resilience of our company and the safety of our employees.
Impact of COVID-19 When the COVID-19 pandemic began to unfold, we took decisive action across our internal and customer operations to ensure the resilience of the Company and the safety of our employees.
We calculate dollar-based net retention rate as of a period end by starting with the ARR from the cohort of all customers as of 12 months prior to such period-end ("Prior Period ARR"). We then calculate the ARR from these same customers as of the current period-end ("Current Period ARR").
We calculate dollar-based net retention rate as of a period end by starting with Prior Period ARR , the ARR from the cohort of all customers as of 12 months prior to such period end. We then calculate Current Period ARR , the ARR from these same customers as of the current period end.
We expect that our research and development expenses will increase in absolute dollars for the foreseeable future as we continue to invest in research and development efforts to develop new technology and enhance the functionality and capabilities of our existing products and platform infrastructure.
We expect that our research and development expenses will increase in absolute dollars for the foreseeable future as we continue to invest in efforts to develop new technology and enhance the functionality and capabilities of our existing products and platform infrastructure.
Net proceeds were $687.9 million after deducting underwriting discounts and commissions of $35.6 million and offering expenses of $4.5 million. In July 2020, we completed our Series E preferred stock financing with gross proceeds totaling $225.9 million. In February 2021, we completed our Series F preferred stock financing with gross proceeds totaling $750.0 million.
Net proceeds were $687.9 million after deducting underwriting discounts and commissions of $35.6 million and offering expenses of $4.5 million. In February 2021, we completed our Series F preferred stock financing with gross proceeds totaling $750.0 million. In July 2020, we completed our Series E preferred stock financing with gross proceeds totaling $225.9 million.
This discussion, particularly information with respect to our future results of operations or financial condition, business strategy and plans and objectives of management for future operations, includes forward-looking statements that involve risks and uncertainties as described under the heading “ Special Note Regarding Forward-Looking Statements ” in this Annual Report on Form 10-K.
This discussion, particularly with respect to our future results of operations or financial condition, business strategy and plans and objectives of management for future operations, includes forward-looking statements that involve risks and uncertainties as described under the heading “ Special Note Regarding Forward-Looking Statements ” in this Annual Report on Form 10-K.
As a public market for our common stock did not exist prior to the IPO, we have limited trading history on which to base expectations of volatility; we presently estimate expected volatility based on the volatility of similar publicly held entities, referred to as “guideline companies,” over a look-back period equivalent to the expected term.
As a public market for our common stock did not exist prior to the IPO, we have limited trading history on which to base expectations of volatility; we presently estimate expected volatility based on the volatility of a group of similar publicly held entities, referred to as “guideline companies,” over a look-back period equivalent to the expected term.
We do not yet have sufficient relevant historical exercise data to provide a reasonable basis for estimation of expected term post-IPO; we presently use the simplified method permitted under Staff Accounting Bulletin 14, which deems the expected term to be the average of the time-to-vest and the contractual life. • Expected volatility.
We do not yet have sufficient relevant historical exercise data to provide a reasonable basis for estimation of expected term post-IPO; we presently use the simplified method permitted under Staff Accounting Bulletin 14, which deems the expected term to be the average of the time-to-vest and the contractual life.
Credit Facility In January 2020, we entered into an Amended and Restated Loan and Security Agreement (the "Credit Agreement") with HSBC Bank USA, N.A, HSBC Ventures USA Inc., and Silicon Valley Bank, which provided a $100.0 million senior secured revolving credit facility. We repaid the Credit Agreement in full in July 2020.
In January 2020, we entered into an Amended and Restated Loan and Security Agreement with HSBC Bank USA, N.A, HSBC Ventures USA Inc., and Silicon Valley Bank, which provided a $100.0 million senior secured revolving credit facility, and which we repaid in full in July 2020.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our audited consolidated financial statements and related notes for the fiscal year ended January 31, 2022 included elsewhere in this Annual Report on Form 10-K.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our audited consolidated financial statements and related notes for the fiscal year ended January 31, 2023 included elsewhere in this Annual Report on Form 10-K.
Our future capital requirements will depend on many factors, including our revenue growth rate, our product sales, license renewal activity, the timing and the amount of cash received from customers, the expansion of sales and marketing activities, the timing and extent of spending to support development efforts, the introduction of new and enhanced products, the continuing market adoption of our products, expenses associated with our international expansion, and the timing and extent of additional capital expenditures to invest in existing and new office spaces.
Our future capital requirements will depend on many factors, including our revenue growth rate, sales of our products and services, license renewal activity, the timing and the amount of cash received from customers, the expansion of sales and marketing activities, the timing and extent of spending to support development efforts, the introduction of new and enhanced products, the continuing market adoption of our products, expenses associated with our international expansion, and the timing and extent of capital expenditures to invest in existing and new office spaces.
Net cash used in operating activities for the fiscal year ended January 31, 2022 of $55.0 million was driven by cash payments for operating expenditures, primarily associated with the compensation of our teams, including increased year-end fiscal 2021 sales commissions and bonuses paid in the first quarter of fiscal 2022 and employer payroll taxes related to employee equity transactions.
Net cash used in operating activities for fiscal year 2022 of $55.0 million was driven by cash payments for operating expenditures, primarily associated with the compensation of our teams, including increased year-end fiscal 2021 sales commissions and bonuses paid in the first quarter of fiscal 2022 and employer payroll taxes related to employee equity transactions.
Our fiscal quarters end on April 30, July 31, and October 31, and our fiscal year ends January 31. References to fiscal years 2022, 2021, and 2020 in this Annual Report on Form 10-K refer to our fiscal years ended January 31, 2022, 2021, and 2020, respectively.
Our fiscal quarters end on April 30, July 31, and October 31, and our fiscal year ends January 31. References to fiscal years 2023, 2022, and 2021 in this Annual Report on Form 10-K refer to our fiscal years ended January 31, 2023, 2022, and 2021, respectively.
Obligations under contracts that we can cancel without a significant penalty are not included in the table above. Critical Accounting Estimates Our consolidated financial statements are prepared in accordance with GAAP.
Obligations under contracts that we can cancel without a significant penalty are not included in the table above. Critical Accounting Estimates Our consolidated financial statements are prepared in accordance with U.S. GAAP .
For both types of licenses, revenue is recognized at the point in time at which the customer is able to use and benefit from the software, which is generally upon delivery to the customer or upon commencement of the renewal term.
Revenue for licenses is recognized at the point in time at which the customer is able to use and benefit from the software, which is generally upon delivery to the customer or upon commencement of the renewal term.
We believe that our existing cash, cash equivalents, marketable securities, payments from customers, and borrowing capacity will be sufficient to fund our anticipated cash requirements for the next twelve months.
We believe that our existing cash, cash equivalents, marketable securities, payments from customers, and borrowing capacity will be sufficient to fund our anticipated cash requirements for the next twelve months and the long term.
Our operational rigor, digital infrastructure, and global footprint have enabled us to support our customers navigating new challenges presented by the pandemic and existing needs to automate.
Our operational rigor, digital infrastructure, and global footprint have enabled us to support our customers navigating new challenges presented by the pandemic as well as existing needs to automate.
Revenue Recognition We recognize revenue in accordance with Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers. ASC 606 requires recognition of revenue when control of promised goods or services is transferred to customers, in an amount that reflects the consideration we expect to be entitled to receive in exchange for those goods or services.
Revenue Recognition We recognize revenue in accordance with ASC 606, Revenue from Contracts with Customers. ASC 606 requires recognition of revenue when control of promised goods or services is transferred to customers, in an amount that reflects the consideration we expect to be entitled to receive in exchange for those goods or services.
We expect cost of professional services and other revenue to continue to increase in absolute dollars for the foreseeable future as our customer base grows. 60 Table of Contents Operating Expenses Our operating expenses consist of sales and marketing, research and development, and general and administrative expenses.
We expect cost of professional services and other revenue to continue to increase in absolute dollars for the foreseeable future as our customer base grows. Operating Expenses Our operating expenses consist of sales and marketing, research and development, and general and administrative expenses.
Our primary uses of cash from operating activities are for personnel-related expenses, direct costs to deliver our licenses, and marketing expenses. To date, our operating cash flows have generally been negative and we have supplemented working capital requirements primarily through net proceeds from the sale of equity securities.
Our primary uses of cash from operating activities are for personnel-related expenses, direct costs to deliver licenses and provide subscription and professional services, and marketing expenses. To date, our operating cash flows have generally been negative and we have supplemented working capital requirements primarily through net proceeds from the sale of equity securities.
A discussion regarding our financial condition and our results of operations for fiscal year 2022 compared to fiscal year 2021 is presented below.
A discussion regarding our financial condition and our results of operations for fiscal year 2023 compared to fiscal year 2022 is presented below.
Our research and development expenses may fluctuate as a percentage of our total revenue from period to period due to the timing and extent of these expenses.
Our research and development expenses may fluctuate as a percentage of revenue from period to period due to the timing and extent of expenses.
ARR is the key performance metric we use in managing our business because it illustrates our ability to acquire new subscription customers and to maintain and expand our relationship with existing subscription customers. We define ARR as annualized invoiced amounts per solution SKU from subscription licenses and maintenance obligations assuming no increases or reductions in their subscriptions.
ARR is the key performance metric we use in managing our business because it illustrates our ability to acquire new subscription customers and to maintain and expand our relationships with existing subscription customers. We define ARR as annualized invoiced amounts per solution SKU from subscription licenses and maintenance and support obligations assuming no increases or reductions in customers' subscriptions.
Our invoiced amounts are not matched to transfer of control of the performance obligations associated with the underlying subscription licenses and maintenance obligations as they are with respect to our GAAP revenue. This can result in timing differences between our GAAP revenue and ARR calculations.
Our invoiced amounts are not matched to transfer of control of the performance obligations associated with the underlying subscription licenses and maintenance and support obligations. This can result in timing differences between our GAAP revenue and ARR calculations.
Our dollar-based net retention rate, which represents the net expansion of ARR from existing customers over the preceding 12 months, was 145% as of both January 31, 2022 and 2021.
Our dollar-based net retention rate, which represents the net expansion of ARR from existing customers over the preceding 12 months, was 123% and 145% as of January 31, 2023 and 2022, respectively.
Other cash operating expenditures included payments for professional services, software, and office rent. These outflows were partially offset by cash collections from our customers, which were approximately 44% higher than in the prior year.
Other cash operating expenditures included payments related to our workforce restructuring, and payments for professional services, software, and office rent. These outflows were partially offset by cash collections from our customers, which were approximately 26% higher than in the prior year.
ARR does not include the costs we may incur to obtain such subscription licenses or provide such maintenance, and does not reflect any actual or anticipated reductions in invoiced value due to contract non-renewals or service cancellations other than for specific bad debt or disputed amounts.
ARR does not include the costs we may incur to obtain such subscription licenses or provide such maintenance and support, and does not reflect any actual or anticipated reductions in invoiced value due to contract non-renewals or service cancellations other than for specific reserves, for example those for credit losses or disputed amounts.
Liquidity and Capital Resources We have financed operations since our inception primarily through customer payments and net proceeds from sales of equity securities. Our principal uses of cash in recent periods have been funding our operations, investing in capital expenditures, and engaging in various business acquisitions.
Liquidity and Capital Resources We have financed operations since our inception primarily through customer payments and net proceeds from sales of equity securities. Our principal uses of cash in recent periods have been to fund our operations, invest in capital expenditures, and engage in various business acquisitions.
Professional Services and Other Cost of professional services and other revenue primarily consists of personnel-related expenses of our professional services team, including salaries and bonuses, stock-based compensation expense, and employee benefit costs. Cost of professional services and other revenue also includes expenses related to third-party consulting services and allocated overhead.
Professional Services and Other Cost of professional services and other revenue primarily consists of personnel-related expenses of our professional services team, including salaries and bonuses, stock-based compensation expense, and employee benefit costs. Cost of professional services and other revenue also includes expenses related to third-party consulting services and allocated overhead. We recognize these expenses as they are incurred.
Financing Activities Net cash provided by financing activities for the fiscal year ended January 31, 2022 of $1,469.7 million was primarily driven by $749.8 million in net proceeds from issuance of Series F convertible preferred stock, $692.4 million in net proceeds from our IPO after deducting underwriting expenses and commissions, proceeds from employee stock purchase plan contributions of $19.0 million, proceeds from the exercise of stock options of $12.2 million, and net receipts of tax withholdings on sell-to-cover equity award transactions of $10.4 million, partially offset by payments of tax withholdings on net settlement of equity awards of $10.5 million and payments of IPO-related costs of $3.7 million.
Net cash provided by financing activities for fiscal year 2022 of $1,469.7 million was primarily driven by $749.8 million in net proceeds from issuance of Series F convertible preferred stock, $692.4 million in net proceeds from our IPO after deducting underwriting expenses and commissions, proceeds from ESPP contributions of $19.0 67 Table of Contents million, proceeds from stock option exercises of $12.2 million, and net receipts of tax withholdings on sell-to-cover equity award transactions of $10.4 million, partially offset by payments of tax withholdings on net settlement of equity awards of $10.5 million, and payments of IPO-related costs of $3.7 million.
Approximately 27% of the increase in revenue was from new customers and the remainder was attributable to existing customers. As we continued to expand our sales efforts in the United States and internationally, our revenue increased across all geographical regions.
Approximately 34% of the increase in total revenue was from new customers and the remainder was attributable to existing customers. As we continued to expand our sales efforts in the U.S. and internationally, our revenue increased across all geographical regions.
The Credit Facility is subject to customary fees for loan facilities of this type, including ongoing commitment fees at a rate of 0.25% per annum on the daily amount available to be drawn. As of January 31, 2022, we had no outstanding debt under the Credit Facility and were in compliance with our covenants thereunder.
The Credit Facility is subject to customary fees for loan facilities of this type, including ongoing commitment fees at a rate of 0.25% per annum on the daily amount available to be drawn. As of January 31, 2023, we had no outstanding debt under the Credit Facility.
Our ARR may fluctuate as a result of a number of factors, including customers’ satisfaction or dissatisfaction with our platform and professional services, pricing, competitive offerings, economic conditions, or overall changes in our customers’ spending levels.
Our ARR may fluctuate as a result of a number of factors, including customers’ satisfaction or dissatisfaction with our platform, pricing, competitive offerings, economic conditions, overall changes in our customers’ spending levels, and our ability to successfully execute on our strategic goals.
At January 31, 2022 and 2021, our ARR was $925.3 million and $580.5 million, respectively, representing a growth rate of 59%. Approximately 25% of this growth rate was due to new customers and 75% of this growth rate was due to existing customers.
At January 31, 2023 and 2022, our ARR was $1,203.8 million and $925.3 million, respectively, representing a growth rate of 30%. Approximately 25% of this growth rate was due to new customers and 75% of this growth rate was due to existing customers.
As of January 31, 2022 and 2021, our principal sources of liquidity were cash, cash equivalents, restricted cash, and marketable securities totaling $1,884.7 million and $474.0 million, respectively, and we had an accumulated deficit of $1,495.9 million and $970.4 million, respectively.
As of January 31, 2023 and 2022, our principal sources of liquidity were cash, cash equivalents, and marketable securities totaling $1,759.8 million and $1,884.7 million, respectively, and we had an accumulated deficit of $1,824.3 million and $1,495.9 million, respectively.
Global demand for automation has continued to accelerate as automation becomes ever more critical for business execution and performance in a remote working environment, and we have continued to invest in the development and marketing of our automation platform to meet that demand.
Global demand for automation has continued to accelerate as automation becomes ever more critical for business execution and performance in remote working environments, and we have continued to invest in the development and marketing of our automation platform to meet that demand. Key Performance Metric We monitor ARR to help us measure and evaluate the effectiveness of our operations.
Moreover, our presentation of ARR may differ from similarly titled metrics presented by other companies and may not be comparable to such other metrics. For further information, s ee the section titled “ Risk Factors —Risks Related to Our Business, Products, Operations, and Industry" included in Part I, Item 1A of this Annual Report on Form 10-K.
For further information, s ee the section titled “ Risk Factors —Risks Related to Our Business, Products, Operations, and Industry " included in Part I, Item 1A of this Annual Report on Form 10-K.
The effective tax rate was (2.9)% and 2.4% for the fiscal years ended January 31, 2022 and January 31, 2021, respectively. The change was primarily driven by higher foreign tax expenses resulting from higher year-over-year earnings of our cost-plus margin entities.
The effective tax rate was (3.4)% and (2.9)% for fiscal years 2023 and 2022, respectively. The change was primarily driven by lower foreign tax expenses resulting from lower year-over-year earnings of our cost-plus margin entities, coupled with lower permanent differences in those jurisdictions.
At the inception of a contract with a customer, we assess the goods or services promised to identify distinct performance obligations. The distinct performance obligations identified in our typical contracts include but are not limited to software license (term or perpetual), support and maintenance, when-and-if-available upgrades, training services, and professional services.
At the inception of a contract with a customer, we assess the goods or services promised to identify distinct performance obligations. The distinct performance obligations identified in our typical contracts include, but are not limited to, software licenses, SaaS , maintenance and support, and professional services. The pattern and timing of revenue recognition for each of these performance obligations varies.
We expect that our general and administrative expenses will decrease as a percentage of our total revenue as our revenue grows over the longer term, although our general and administrative expenses may fluctuate as a percentage of our revenue from period to period due to the timing and extent of these expenses.
We expect that over the longer term our general and administrative expenses will decrease as a percentage of revenue, although this percentage may fluctuate from period to period due to timing and extent of expenses. Interest Income Interest income consists of interest income earned on our cash deposits, cash and cash equivalents balances, and marketable securities.
Our effective tax rate is affected by tax rates in foreign jurisdictions and the relative amounts of income we earn in those jurisdictions, as well as by non-deductible expenses as permanent differences and by changes in our valuation allowances.
DTAs , as we have concluded that it is more likely than not that these DTAs will not be realized. Our effective tax rate is affected by tax rates in foreign jurisdictions and the relative amounts of income we earn in those jurisdictions, as well as by non-deductible expenses as permanent differences and by ch anges in our valuation allowances.
Interest Income Year Ended January 31, 2022 2021 Change % Change (dollars in thousands) Interest income $ 3,551 $ 1,152 $ 2,399 208 % Percentage of revenue — % — % Interest income increased by $2.4 million, or 208%, for the fiscal year ended January 31, 2022 compared to the fiscal year ended January 31, 2021 as a result of the period-over-period increase in our cash and cash equivalents and marketable securities.
Interest Income Year Ended January 31, 2023 2022 Change % Change (dollars in thousands) Interest income $ 27,955 $ 3,551 $ 24,404 687 % Percentage of revenue 3 % — % Interest income increased by $24.4 million, or 687%, for fiscal year 2023 compared to fiscal year 2022 as a result of a period-over-period increase in our marketable securities and the associated impact of increased interest rates on these accounts.
Other (Expense) Income, Net Year Ended January 31, 2022 2021 Change % Change (dollars in thousands) Other (expense) income, net $ (13,488) $ 14,513 $ (28,001) (193) % Percentage of revenue (1) % 2 % 65 Table of Contents Other expense, net increased by $28.0 million, or 193%, for the fiscal year ended January 31, 2022 compared to the fiscal year ended January 31, 2021.
Other Income (Expense), Net Year Ended January 31, 2023 2022 Change % Change (dollars in thousands) Other income (expense), net $ 2,767 $ (13,488) $ 16,255 121 % Percentage of revenue — % (1) % Other income, net increased by $16.3 million, or 121%, for fiscal year 2023 compared to fiscal year 2022.
In April 2021, we completed our IPO, which resulted in the issuance of 13.0 million shares of our Class A common stock at a public offering price of $56.00 per share, including 3.6 million shares pursuant to the exercise in full of the underwriters’ option to purchase additional shares.
During the fiscal years ended January 31, 2023 and 2022, we reported net losses of $328.4 million and $525.6 million, respectively, and net cash used in operations of $10.0 million and $55.0 million, respectively. 65 Table of Contents In April 2021, we completed our IPO , which resulted in the issuance of 13.0 million shares of our Class A common stock at a public offering price of $56.00 per share, including 3.6 million shares pursuant to the exercise in full of the underwriters’ option to purchase additional shares.
Cost of subscription services revenue was also impacted by an increase in hosting and software services of $5.5 million, an increase in depreciation and amortization expense of $2.3 million, and an increase in third-party consulting fees of $1.5 million.
Sales and marketing expense was also impacted by an $8.2 million increase in third-party consulting fees, a $3.2 million increase in rent, a $1.8 million increase in depreciation and amortization, and a $1.6 million increase in hosting costs.
Net cash used in investing activities for the fiscal year ended January 31, 2021 of $126.0 million was driven by purchases of marketable securities of $103.1 million, deferred payments related to previous business 67 Table of Contents acquisitions of $19.7 million, capital expenditures of $2.0 million, and capitalized software development costs of $1.2 million.
Net cash used in investing activities for fiscal year 2022 of $35.4 million was driven by $15.4 million in net purchases of marketable securities, capital expenditures of $8.9 million, payments related to business acquisitions of $5.5 million, capitalized software development costs of $3.0 million, and $2.7 million in other investing activities.
Provision For (Benefit From) Income Taxes Year Ended January 31, 2022 2021 Change % Change (dollars in thousands) Provision for (benefit from) income taxes $ 14,703 $ (2,265) $ 16,968 (749) % Percentage of revenue 2 % (1) % Provision for income taxes increased by $17.0 million, or 749%, for the fiscal year ended January 31, 2022 compared to the fiscal year ended January 31, 2021.
Provision For Income Taxes Year Ended January 31, 2023 2022 Change % Change (dollars in thousands) Provision for income taxes $ 10,791 $ 14,703 $ (3,912) (27) % Percentage of revenue 1 % 2 % Provision for income taxes decreased by $3.9 million, or 27%, for fiscal year 2023 compared to fiscal year 2022.
Following the completion of the IPO in April 2021, we have incurred and expect to continue to incur additional general and administrative expenses as a result of operating as a public company. As a result, we expect the dollar amount of our general and administrative expenses to increase for the foreseeable future.
Following the completion of the IPO in April 2021, we have incurred and expect to continue to incur additional general and administrative expenses as a result of operating as a public company, including as a result of our transition from emerging growth company to large accelerated filer status at the end of fiscal year 2023.
General and Administrative Year Ended January 31, 2022 2021 Change % Change (dollars in thousands) General and administrative $ 249,991 $ 162,035 $ 87,956 54 % Percentage of revenue 28 % 27 % General and administrative expense increased by $88.0 million, or 54%, for the fiscal year ended January 31, 2022 compared to the fiscal year ended January 31, 2021.
General and Administrative Year Ended January 31, 2023 2022 Change % Change (dollars in thousands) General and administrative $ 239,505 $ 249,991 $ (10,486) (4) % Percentage of revenue 23 % 28 % General and administrative expense decreased by $10.5 million, or 4%, for fiscal year 2023 compared to fiscal year 2022.
Cash Flows The following table summarizes our cash flows for the periods presented: Year Ended January 31, 2022 2021 (dollars in thousands) Net cash (used in) provided by operating activities (1) $ (54,963) $ 29,177 Net cash used in investing activities $ (35,442) $ (125,991) Net cash provided by financing activities $ 1,469,673 $ 250,418 (1) Inclusive of: Payments for employer payroll taxes related to employee equity transactions $ (51,693) $ — Net receipts of employee tax withholdings on stock option exercises $ 6,382 $ — Operating Activities Our largest source of operating cash is cash generation from sales to our customers.
However, uncertainty remains over liquidity concerns in the broader financial services industry, and there may be additional impacts to our business and our industry that we cannot predict at this time. 66 Table of Contents Cash Flows The following table summarizes our cash flows for the periods presented: Year Ended January 31, 2023 2022 (dollars in thousands) Net cash used in operating activities (1) $ (9,981) $ (54,963) Net cash used in investing activities (289,143) (35,442) Net cash (used in) provided by financing activities (60,669) 1,469,673 (1) Inclusive of: Cash paid for employer payroll taxes related to employee equity transactions $ (9,112) $ (51,693) Net (payments) receipts of employee tax withholdings on stock option exercises (5,394) 6,382 Cash paid for restructuring costs (19,339) — Operating Activities Our largest source of operating cash is cash generation from sales to our customers.
Cost of professional services and other revenue increased primarily due to an increase of $46.4 million, in personnel-related expenses, which included $28.0 million in stock-based compensation expense, mostly due to recognition of expense beginning in the first quarter of fiscal 2022 as a result of the satisfaction of IPO-related performance condition for RSUs, and an increase of $4.5 million related to employer tax on settlement of equity awards, and the remainder of which was largely due to increased headcount.
Cost of professional services and other revenue decreased primarily due to a $23.3 million decrease in personnel-related expenses, which included an $18.0 million decrease in stock-based compensation expense mostly resulting from the satisfaction of IPO-related performance conditions for RSUs during fiscal year 2022 and a $4.3 million decrease in employer payroll tax expense related to equity transactions, partially offset by a $0.6 million increase in employee termination benefits related to our restructuring actions beginning in the second quarter of fiscal year 2023, and the remainder of which was largely due to a decrease in headcount.
Investing Activities Net cash used in investing activities for the fiscal year ended January 31, 2022 of $35.4 million was driven by $16.9 million in net purchases of marketable securities and other investments, $8.9 million in capital expenditures, $5.5 million in cash consideration associated with the acquisition of Cloud Elements, which is presented net of cash acquired, $3.0 million in capitalized software development costs, and $1.2 million in purchases of intangible assets.
Investing Activities Net cash used in investing activities for fiscal year 2023 of $289.1 million was primarily driven by $237.0 million in net purchases of marketable securities, $29.5 million in cash consideration associated with the acquisition of Re:Infer , which is presented net of cash acquired, and $23.8 million in capital expenditures.
Material Cash Requirements The following table summarizes the aggregate effect that our material contractual obligations as of January 31, 2022 are expected to have on our cash flows in the periods indicated (in thousands): Payments Due by Period Total Less Than 1 Year 1-3 Years 3-5 Years More Than 5 Years (dollars in thousands) Operating lease commitments $ 79,860 $ 2,399 $ 17,705 $ 10,337 $ 49,419 Purchase commitments 56,845 12,807 39,392 4,646 — Total contractual obligations $ 136,705 $ 15,206 $ 57,097 $ 14,983 $ 49,419 The amounts in the table above are associated with agreements that are enforceable and legally binding.
The following table summarizes the aggregate effect that our material contractual obligations as of January 31, 2023 are expected to have on our cash flows in the periods indicated (in thousands): Payments Due by Period Total Less Than 1 Year 1-3 Years 3-5 Years More Than 5 Years (dollars in thousands) Operating lease commitments $ 93,413 $ 11,950 $ 17,816 $ 14,919 $ 48,728 Purchase commitments 214,654 66,846 135,677 12,131 — Total contractual obligations $ 308,067 $ 78,796 $ 153,493 $ 27,050 $ 48,728 The amounts in the table above are associated with agreements that are enforceable and legally binding.
A discussion regarding our results of operations for fiscal year 2021 compared to fiscal year 2020 is presented in the Final Prospectus under the section titled "Management's Discussion and Analysis of Financial Condition and Results of Operations." Overview We are at the forefront of technology innovation and thought leadership in automation, creating an end-to-end platform that provides automation with user emulation at its core.
A discussion regarding our results of operations for fiscal year 2022 compared to fiscal year 2021 was presented in the 2022 Fo rm 10-K , under the section titled "Management's Discussion and Analysis of Financial Condition and Results of Operations." 55 Table of Contents Overview UiPath is at the forefront of technology innovation and thought leadership in automation, as the provider of an end-to-end platform that can help customers realize the true potential of digital transformation.
ARR should be viewed independently of revenue and deferred revenue as ARR is an operating metric and is not intended to be combined with or to replace these items.
ARR should be viewed independently of revenue and deferred revenue as ARR is an operating metric and is not intended to be combined with or to replace these items. For clarity, we use annualized invoiced amounts per solution SKU rather than revenue calculated in accordance with U.S. GAAP to calculate our ARR.
We may use the proceeds of future borrowings under the Credit Facility for refinancing other indebtedness, working capital, capital expenditures and other general corporate purposes, including permitted business acquisitions. Borrowings under the Credit Facility bear interest at a base rate, as defined in the Credit Facility, plus a margin of 2.0% or 3.0% depending on the base rate.
Borrowings under the Credit Facility bear interest at a base rate, as defined in the Credit Facility, plus a margin of 2.0% or 3.0% depending on the base rate.
Research and Development Research and development expenses consist primarily of personnel-related expenses, including salaries and bonuses, stock-based compensation expense, and employee benefits costs for our research and development employees. Research and development costs are expensed as incurred, with the exception of certain software development costs which are eligible for capitalization.
Research and development costs are expensed as incurred, with the exception of certain software development costs which are eligible for capitalization.
ASC 718 requires the measurement and recognition of compensation expense for all stock-based awards made to employees, directors, and non-employees based on the grant date fair value of the awards. The fair value of each RSU is equal to the fair value of our Class A common stock on the grant date.
ASC 718 requires the measurement and recognition of compensation expense for all stock-based awards made to employees, directors, and non-employees based on the grant date fair value of the awards. During fiscal year 2023, we granted 30.0 million RSUs and 5.0 million stock options, and issued 1.2 million shares under our ESPP.
We expect that our sales and marketing expense will decrease as a percentage of our total revenue over the long term, although our sales and marketing expenses may fluctuate as a percentage of our total revenue from period to period due to the timing and extent of these expenses.
We expect that over the longer term our sales and marketing expenses will decrease as a percentage of revenue, although this percentage may fluctuate from period to period due to timing and extent of expenses. 59 Table of Contents Research and Development Research and development expenses consist primarily of personnel-related expenses, including salaries and bonuses, stock-based compensation expense, and employee benefits costs for our research and development employees, and allocated overhead.
This increase was primarily attributable to an increase of $324.7 million in personnel-related expenses, which included an increase of $221.6 million in stock-based compensation, mostly due to recognition of expense beginning in the first quarter of fiscal 2022 as a result of the satisfaction of IPO-related performance condition for RSUs, and an increase of $39.3 million related to employer tax on settlement of equity awards, and the remainder of which was largely due to increased headcount.
This decrease was primarily attributable to a $6.7 million decrease in personnel-related expenses, which included an $11.2 million decrease in stock-based compensation mostly resulting from the satisfaction of IPO-related performance conditions for RSUs during fiscal 2022 and a $2.1 million decrease in employer payroll tax expense related to equity transactions, partially offset by a $4.2 million increase in salaries largely due to increased 64 Table of Contents headcount, and a $2.2 million increase in employee termination benefits related to our restructuring actions beginning in the second quarter of fiscal year 2023.
Professional Services and Other Professional services and other revenue consists of fees associated with professional services for process automation, customer education, and training services. Our professional services contracts are structured on a time and materials or fixed price basis, and the related revenue is recognized as the services are rendered.
Our professional services contracts are structured on a time and materials or fixed price basis, and the related revenue is recognized as the services are rendered. Cost of Revenue Licenses Cost of licenses revenue consists of all direct costs to deliver our licenses to customers, amortization of software development costs related to our licenses, and amortization of acquired developed technology.
Similar to travel and entertainment, trade show expenses also decreased in fiscal year 2021 and through the first half of fiscal year 2022, as a result of the COVID-19 pandemic. We have since seen trade show expenses resume, largely in connection with our FORWARD IV user conference in October 2021.
Sales and marketing expenses also include sales and partner commissions, marketing event costs, advertising costs, travel, trade shows, other marketing materials, and allocated overhead. Similar to travel and entertainment, trade show expenses also decreased in fiscal year 2021 and through the first half of fiscal year 2022, as a result of the COVID-19 pandemic.
Sales and Marketing Sales and marketing expenses consist primarily of personnel-related expenses associated with our sales and marketing teams and related sales support teams, including salaries and bonuses, stock-based compensation expense, and employee benefit costs. Sales and marketing expenses also include sales and partner commissions, marketing event costs, advertising costs, travel, trade shows, other marketing materials, and allocated overhead.
During fiscal year 2023, we reinstated travel and in-person meetings and events, resulting in a resumption of these expenses. Sales and Marketing Sales and marketing expenses consist primarily of personnel-related expenses associated with our sales and marketing teams and related sales support teams, including salaries and bonuses, stock-based compensation expense, and employee benefit costs.
Cost of licenses revenue increased primarily due to an increase in third-party software resale costs of $5.1 million, partially offset by a decrease in amortization of software development costs.
Cost of licenses revenue decreased primarily due to a $1.9 million decrease in third-party software resale costs, partially offset by an increase in amortization of acquired intangible assets. Cost of subscription services revenue grew primarily due to a $15.4 million increase in personnel-related expenses as a result of higher headcount during fiscal year 2023.
Other (Expense) Income, Net Other (expense) inc ome, net primarily consists of foreign exchange gains and losses and gains and losses associated with foreign currency forward contracts. 61 Table of Contents Provision For (Benefit From) Income Taxes Provision for (benefit from) income taxes consists of U.S. federal and state income taxes and income taxes in certain foreign jurisdictions in which we conduct business.
Other Income (Expense), Net Other inc ome (expense) , net primarily consists of foreign exchange gains and losses. Other income (expense), net also includes gains and losses associated with foreign currency forward contracts for those periods in which such contracts were outstanding.
Cost of professional services and other revenue was also impacted by a $15.7 million increase in third-party consulting fees.
Cost of subscription services revenue was also impacted by a $7.2 million increase in hosting and software services expenses, a $1.6 million increase in third-party software resale costs, a $1.1 million increase in depreciation and amortization, and a $0.6 million increase in rent and other administrative costs.
Our obligations under the Credit Facility are secured by substantially all of our assets, except for our intellectual property. The Credit Facility contains certain customary covenants, including, but not limited to, those relating to additional indebtedness, liens, asset divestitures, and affiliate transactions.
The Credit Facility contains certain customary covenants, including, but not limited to, those relating to additional indebtedness, liens, asset divestitures, and affiliate transactions. We may use the proceeds of future borrowings under the Credit Facility for refinancing other indebtedness, working capital, capital expenditures, and other general corporate purposes, including permitted business acquisitions.
Cost of Revenue and Gross Margin Year Ended January 31, 2022 2021 Change % Change (dollars in thousands) Licenses $ 11,888 $ 7,054 $ 4,834 69 % Subscription services 60,565 24,215 36,350 150 % Professional services and other 96,415 34,588 61,827 179 % Total cost of revenue $ 168,868 $ 65,857 $ 103,011 156 % Gross margin 81 % 89 % Total cost of revenue increased by $103.0 million, or 156%, for the fiscal year ended January 31, 2022 compared to the fiscal year ended January 31, 2021.
Cost of Revenue and Gross Margin Year Ended January 31, 2023 2022 Change % Change (dollars in thousands) Licenses $ 10,421 $ 11,888 $ (1,467) (12) % Subscription services 87,366 60,565 26,801 44 % Professional services and other 82,264 96,415 (14,151) (15) % Total cost of revenue $ 180,051 $ 168,868 $ 11,183 7 % Gross margin 83 % 81 % Total cost of revenue increased by $11.2 million, or 7%, for fiscal year 2023 compared to fiscal year 2022.
General and administrative expense was also impacted by an increase of $12.1 million in third-party consulting fees, an increase of $9.9 million in insurance-related expenses as a result of becoming a public company, an increase of $3.9 million related to hosted business applications, and an increase of $3.3 million related to other tax expenses, partially offset by a $4.8 million aggregate decrease in bad debt and rent expenses.
General and administrative expense was also impacted by a $6.7 million decrease in third-party consulting fees, a $5.1 million decrease in other tax expense, and a $2.9 million decrease in hosted business applications.
From time to time, we also sell perpetual licenses that provide customers the right to use software for an indefinite period of time.
Licenses We primarily sell term licenses (including the term license portion of Flex Offerings), which provide customers the right to use software for a specified period of time.
In October 2020, we entered into a new Senior Secured Credit Facility (the "Credit Facility") with HSBC Ventures USA Inc., 66 Table of Contents Silicon Valley Bank, Sumitomo Mitsui Banking Corporation, and Mizuho Bank, LTD, which provided a $200.0 million senior secured revolving credit facility with a maturity date of October 30, 2023.
Credit Facility In October 2020, we entered into th e Credit Facility with HSBC Ventures USA Inc., Silicon Valley Bank, Sumitomo Mitsui Banking Corporation, and Mizuho Bank, LTD. Our obligations under the Credit Facility are secured by substantially all of our assets, except for our intellectual property.
Operating Expenses Sales and Marketing Year Ended January 31, 2022 2021 Change % Change (dollars in thousands) Sales and marketing $ 697,682 $ 380,154 $ 317,528 84 % Percentage of revenue 78 % 62 % Sales and marketing expense increased by $317.5 million, or 84%, for the fiscal year ended January 31, 2022 compared to the fiscal year ended January 31, 2021.
Research and Development Year Ended January 31, 2023 2022 Change % Change (dollars in thousands) Research and development $ 285,750 $ 276,657 $ 9,093 3 % Percentage of revenue 27 % 31 % Research and development expense increased by $9.1 million, or 3%, for fiscal year 2023 compared to fiscal year 2022.
A summary of ARR-related data at January 31, 2022 and 2021 is as follows: At January 31, 2022 2021 (dollars in thousands) Annualized renewal run-rate (ARR) $ 925,276 $ 580,483 Incremental annualized renewal run-rate (iARR) $ 344,793 $ 229,042 Customers with ARR greater than $1 million: Number of customers 158 89 Percent of fiscal year revenue 43 % 35 % Customers with ARR greater than $100 thousand: Number of customers 1,493 1,002 Percent of fiscal year revenue 79 % 75 % Dollar-based net retention rate 145 % 145 % Key Factors Affecting Our Performance Our results of operations and financial condition are impacted by the macro factors affecting our industry, including the proliferation of cloud-based applications, the cost of skilled human capital, and the global demand for automation solutions.
A summary of ARR-related data at January 31, 2023 and 2022 is as follows: At January 31, 2023 2022 (dollars in thousands) Annualized renewal run-rate (ARR) $ 1,203,845 $ 925,276 Incremental ARR (1) $ 278,569 $ 344,793 Customers with ARR ≥ $1 million: Number of customers 229 158 Percent of fiscal year revenue 43 % 43 % Customers with ARR ≥ $100 thousand: Number of customers 1,785 1,493 Percent of fiscal year revenue 81 % 79 % Dollar-based net retention rate 123 % 145 % (1) For the twelve months ended January 31, 2023 and 2022, respectively Components of Results of Operations Revenue We derive revenue from the sale of: (1) software licenses for use of our proprietary software and related maintenance and support; (2) the right to access certain software products we host (i.e., SaaS); and (3) professional services.
As cloud-based license software and services become a larger percentage of our total revenue, we expect the cloud offering to impact the timing of our recognition of revenue as well as impact our operating margins due to an increase in hosting fees and cloud infrastructure costs.
As sales of SaaS products become a larger percentage of our total revenue, we expect our gross margin to be impacted by increased hosting fees and cloud infrastructure costs.
The increase was primarily attributable to an increase of $157.6 million in personnel-related expenses, which included an increase of $124.3 million in stock-based compensation, mostly due to recognition of expense beginning in the first quarter of fiscal 2022 as a result of the satisfaction of IPO-related performance condition for RSUs, and an increase of $5.8 million related to employer tax on settlement of equity awards, and the remainder of which was largely due to increased headcount.
Research and development expense was also impacted by a $2.2 million decrease in personnel-related expenses, which included a $33.2 million decrease in stock-based compensation mostly resulting from the satisfaction of IPO-related performance conditions for RSUs during fiscal 2022 and a $4.1 million decrease in employer payroll tax expense related to equity transactions, partially offset by a $26.6 million increase in salaries primarily resulting from increased headcount, a $7.5 million increase in bonuses and other employee benefits, and a $0.4 million increase in employee termination benefits related to our restructuring actions beginning in the second quarter of fiscal year 2023.
Subscription Services Subscription services revenue consists of maintenance and support revenue generated through technical support and the provision of unspecified updates and upgrades on a when-and-if-available basis for both term and perpetual license arrangements. Maintenance and support for perpetual licenses is renewable, generally on an annual basis, at the option of the customer.
Subscription Services We generate subscription services revenue through the provision of: (1) maintenance and support services, which include technical support and unspecified updates and upgrades on a when-and-if-available basis for our licenses, and (2) SaaS products, including those sold as part of our Flex Offerings.
Our gross margin decreased to 81% for the fiscal year ended January 31, 2022 compared to 89% for the fiscal year ended January 31, 2021, primarily as a result of stock-based compensation expense recognized in connection with the satisfaction of performance-based vesting conditions following our IPO.
Our gross margin increased to 83% for fiscal year 2023 compared to 81% for fiscal year 2022, primarily as a result of higher stock-based compensation expense and employer payroll tax on settlement of equity awards recognized in fiscal year 2022 in connection with the satisfaction of IPO-related performance conditions for RSUs. 63 Table of Contents Operating Expenses Sales and Marketing Year Ended January 31, 2023 2022 Change % Change (dollars in thousands) Sales and marketing $ 701,558 $ 697,682 $ 3,876 1 % Percentage of revenue 66 % 78 % Sales and marketing expense increased by $3.9 million, or 1%, for fiscal year 2023 compared to fiscal year 2022.
Most of our contracts contain multiple performance obligations. The transaction price is allocated to the separate performance obligations on a relative SSP basis. Whenever possible, we refer to observable SSP, which is the price of the same good or service in standalone sales to similar customers in similar circumstances.
Whenever possible, we allocate the transaction price based on observable SSP, which is the price of the same good or service in standalone sales to similar customers in similar circumstances. If observable SSP is not available, we estimate the SSP using data that may include historical prices, discounting practices, list prices, cost data and other observable inputs.
We have also entered into the Credit Facility (as defined below) with an available borrowing capacity of $200.0 million.
In connection with our IPO, all shares of convertible preferred stock then outstanding automatically converted into shares of Class A common stock. In October 2020, we entered into the Credit Facility (described further below) with an available borrowing capacity of $200.0 million.
In evaluating the similarity of guideline companies, we consider factors such as industry, stage of life cycle, size, and degree of financial leverage. • Risk-free interest rate . The risk-free interest rate is based on the U.S. Treasury yield in effect at the time of grant for a period consistent with the expected term. • Estimated dividend yield .
In evaluating the similarity of guideline companies, we consider factors such as industry, stage of life cycle, size, and degree of financial leverage. The expected volatility for the aforementioned 2.1 million stock options ranged from 59.4% to 61.8%.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe estimated translation impact to our consolidated financial statements of a hypothetical 10% change in foreign currency exchange rates would amount to $22.2 million for the fiscal year ended January 31, 2022 . During the fiscal year ended January 31, 2022, approximately 53% of our revenues and approximately 32% of our expenses were denominated in non-U.S. dollar currencies.
Biggest changeThe estimated translation impact to our consolidated financial statements of a hypothetical 10% change in foreign currency exchange rates would amount to $10.4 million for fiscal year 2023.
Asset and liability balances denominated in non-U.S. dollar currencies are translated into U.S. dollars using period-end exchange rates, while translation of revenue and expenses is based on average monthly rates. Translation adjustments are recorded as a component of accumulated other comprehensive income (loss), and transaction gains and losses are recorded in other (expense) income, net on our consolidated financial statements.
Asset and liability balances denominated in non-U.S. dollar currencies are translated into U.S. dollars using period-end exchange rates, while translation of revenue and expenses is based on average monthly rates. Translation adjustments are recorded as a component of accumulated other comprehensive income (loss), and transaction gains and losses are recorded in other income (expense), net on our consolidated financial statements.
We do not enter into investments for trading or speculative purposes. The Credit Facility allowed us to borrow up to $200.0 million as of January 31, 2022, but there were no amounts outstanding thereunder .
We do not enter into investments for trading or speculative purposes. The Credit Facility allowed us to borrow up to $200.0 million as of January 31, 2023, but there were no amounts outstanding thereunder .
The effect of a hypothetical 10% change in interest rates would not have had a material impact on our consolidated financial statements for the fiscal year ended January 31, 2022. Foreign Currency Exchange Risk The functional currency of our non-U.S. subsidiaries is the local currency.
The effect of a hypothetical 10% change in interest rates would not have had a material impact on our consolidated financial statements for fiscal year 2023. Foreign Currency Exchange Risk The functional currency of our non-U.S. subsidiaries is the local currency.
In addition, we had $115.9 million of marketable securities, consisting of corporate bonds, municipal bonds and commercial paper . Such interest-earning instruments carry a degree of interest rate risk. The primary objectives of our investment activities are the preservation of capital, the fulfillment of liquidity needs, and the fiduciary control of cash.
In addition, we had $357.7 million of marketable securities, consisting of corporate bonds, municipal bonds, agency bonds, commercial paper, and treasury bills . Such interest-earning instruments carry a degree of interest rate risk. The primary objectives of our investment activities are the preservation of capital, the fulfillment of liquidity needs, and the fiduciary control of cash.
Our market risk exposure is principally the result of fluctuations in interest rates and foreign currency exchange rates. Interest Rate Risk As of January 31, 2022, we had $1,768.7 million of cash and cash equivalents. Cash and cash equivalents consist of cash in banks, bank deposits, and money market accounts.
Our market risk exposure is principally the result of fluctuations in interest rates and foreign currency exchange rates. Interest Rate Risk As of January 31, 2023, we had $1,402.1 million of cash and cash equivalents. Cash and cash equivalents consist of cash in banks, bank deposits, money market accounts, and treasury bills.
Removed
For the fiscal year ended January 31, 2022, we recognized net foreign currency transaction losses of $8.9 million af ter the impact of foreign currency forward contracts. 71 Table of Contents
Added
For fiscal year 2023, approximately 51% of our revenue and approximately 34% of our expenses were denominated in non-U.S. dollar currencies, and we recognized net foreign currency transaction losses of $0.5 million. 70 Table of Contents

Other PATH 10-K year-over-year comparisons