The first half of 2021 was a key period for private companies becoming exchange-listed by launching initial public offerings (IPOs). In fact, from 1 January 2021 to 16 June 2021, 521 IPOs were conducted on U.S. stock exchanges. This figure is more than five fold the rate of 2020, which featured 82 IPOs by the same point in time.
Although a broad cross section of companies chose to list in the first six months of 2021, internet, FinTech, cryptocurrency and technology issues stole the limelight. To the delight of growth-oriented equities investors, a multitude of high profile IPOs were conducted. The likes of Coinbase (COIN), VIZIO (VZIO), Coupang (CPNG) and Affirm (AFRM) headed up the list. Among these offerings was UiPath (PATH), which transitioned from being privately held to publicly traded in April 2021.
What Is UiPath?
UiPath is a robotics automation company that specialises in digitising workloads and improving operational efficiencies. Conceived in 2005 by Romanian entrepreneur Daniel Dines, UiPath has grown into one of the world's leading internet technology (IT) software providers. The corporate headquarters are located in New York, New York (USA) and Dines is the acting chief executive officer (CEO).
The foundation of UiPath's core businesses is robotics process automation (RPA). According to UiPath, RPA is "a software technology that makes it easy to build, deploy and manage software robots that emulate human actions interacting with digital systems and software." From a practical standpoint, RPA technologies are used to automate mundane or low-value tasks. Examples of such duties are data entry/extraction, proofreading and evaluating standardised data sets.
The company's service suite centers on its flagship UiPath Platform. With the platform, clients can digitally transform their enterprise via UiPath's multifaceted technological infrastructure. Through creating, integrating and managing different forms of RPA, also referred to as "robots," customers utilise the advanced functionality of the UiPath platform's artificial intelligence (AI) applications. Subsequently, the UiPath platform assists customers in maximising their operational productivity via these AI-driven segments:
- Discovery: Features such as Task Mining, Process Mining, Task Capture and the Automation Hub help people understand their business processes. In doing so, it is possible to decide which operations are ideal for automation.
- Build: With Studio and Studio X, employees are able to build software robots for process automations. Nearly all processes may be automated with the Document Understanding, AI Computer Vision and Artificial Intelligence tools.
- Manage: Robot performance, efficiency and security may be monitored via the Orchestrator or Automation Cloud. Using the AI Center and Test Suite, even the most advanced workflows may be evaluated.
- Run: Clients are free to integrate all types of robots to automate virtually any process.
- Engage: The UiPath platform furnishes clients with multiple ways of interacting with their robots. Whether managing workflow in the Action Center or assigning robots new tasks with the UiPath Assistant, users are able to direct AI applications seamlessly and code-free.
As the self-stated "world's first platform for hyperautomation," UiPath has a truly global reach, encompassing more than 40 international offices. The explosive growth of the company led to several accolades in 2020, namely being included in the CNBC Disruptor 50 and Forbes AI50.
The UiPath IPO
From a practical standpoint, there are many benefits and drawbacks of being formally listed on an exchange. Below is brief look at a few of each:
Going public has several key benefits. Among the greatest are the establishment of a true market value for shares, vastly increased financial resources and a reduced cost of capital. For companies with ambitious growth objectives, IPOs offer an opportunity to quickly raise the money necessary for expansion.
On the other hand, IPO listings carry with them substantial costs, typically 4%-7% of the offering's proceeds. Also, the company is subject to new disclosure requirements and public scrutiny. Further, corporate leadership and management are accountable to the shareholders; this factor raises the company's exposure to lawsuits and litigation.
At the end of the day, the decision of whether or not to go public is made by a company's owners and leadership. If the benefits outweigh the drawbacks, then launching an IPO is a viable course of action. For UiPath, corporate leadership filed a form S-1 with the U.S. Securities and Exchange Commission (SEC) in late March of 2021.
UiPath's S-1 Filing
According to the SEC, form S-1 is a registration filing for companies to adhere to the Securities Act of 1933. Upon completing the S-1, a company has disclosed a thorough description of properties and business, defined the security being offered, outlined the corporate management structure and put forth independently verified financial statements. Upon submission of the S-1, investors and regulators have a clear picture of the company's operational and financial positions.
UiPath's S-1 publicly disclosed the following key points:
- For the fiscal year ending 31 January 2021, the company generated US$607.6 million in gross revenue.
- Net losses fell from US$519.9 million (2020) to US$92.3 million (2021).
- UiPath claimed a customer base in the neighborhood of 8,000.
- UiPath sought to list on the New York Stock Exchange (NYSE) as Class A common stock under the symbol PATH (NYSE:PATH).
- Investment banking giants JP Morgan, Bank of America, Morgan Stanley and Credit Suisse were deemed the IPO's lead underwriters.
Transitioning From Private To Public
Ahead of the official public launch, UiPath Inc. conducted a series of lucrative funding excursions. Since 2005, the company has raised an estimated US$2 billion through eight different private funding rounds, the latest of which being a US$750 million Series F funding round (February 2021). High-profile Series F investors were Sequoia, Tiger Global and Alkeon Capital, whose interest contributed to the company's post-round estimated worth of US$35 billion.
Upon earning the lofty valuation, UiPath turned its attention to the public marketplace. Dubbed as being one of the most anticipated U.S. software IPOs in history, the firm officially went public on 21 April 2021. In the first days of trade on Wall Street, the UiPath stock performed well:
- On 20 April, 23.9 million shares of PATH were sold by UiPath and its investors at US$56.00 per share. These proceeds raised US$1.34 billion for the IPO.
- During the first public session, PATH rose 23% before settling at US$69.00 per share.
- CEO Dines remained the company's largest shareholder, controlling 88% of voting shares valued at over US$7 billion.
In subsequent months, shares of PATH experienced significant volatility. From the April IPO to 17 June 2021, share prices traded in a range between US$61.50 and US$90.00. As of 17 June 2021, UiPath held a market capitalisation of US$34.987 billion on 508.83 billion shares outstanding.
UiPath is an innovator in the provision of robotics process automation (RPA) services. The company aids businesses in digitising workflows and improving operational efficiencies. Founded in 2005, UiPath is one of the leading software service providers in the world. Following an impressive US$750 million Series F funding round, the company's leadership filed form S-1 with the SEC in March 2021.
In late April of 2021, UiPath launched a traditional IPO, with shares of PATH being listed for trade on the NYSE (NYSE:PATH). The offering was deemed one of the largest software IPOs ever, raising US$1.34 billion in capital. At press time, PATH holds a market capitalisation near US$35 billion, maintaining the gains realised during the IPO's first publicly-traded session on Wall Street.