Large funding rounds are often precursors to IPOs. We saw this with Snowflake
So, it's interesting to note that UiPath raised $750 million at a $35 billion valuation. Some of the participants in UiPath's Series F were Alkeon Capital, Coatue, T. Rowe Price, Dragoneer, and Tiger Capital. The company is said to have 6,300 customers including companies like Verizon
UiPath was founded in 2005 by Romanian engineers, Daniel Dines and Marcus Tirca. The company has become the leader in the field with an estimated 50% market share. It's considered to be one of the biggest and most successful startups to emerge from Eastern Europe.
UiPath is an AI-based, robotic, automation platform that helps companies "automate millions of repetitive, mind-numbing tasks for business and government organizations all over the world, improving productivity, customer experience and employee job satisfaction."
This is currently estimated to be a $2 billion industry but grow to over $20 billion by the end of the decade. The benefits for companies and employees are clear in that they would be able to focus on higher-value work while monotonous tasks can be completed by the AI. It's also likely that the AI would grow even more capable over time as the technology improves and it learns through various iterations.
Other companies have been investing in this space as well. For example, Microsoft
Stock Price Outlook
Other than valuation, there is a lot to like about UiPath. It's the leading company in a rapidly expanding industry. It's likely to have high margins given that it's a subscription-based software business. Customer retention will likely be high since it will increase profits and become integral to operations.
Additionally, the business will benefit from network effects as the AI will continually improve with the more tasks that it completes. History shows that in these types of businesses, first-mover advantages matter.
UiPath has a lot in common with some of the biggest winners of the past decade. On the downside, rising interest rates mean that the investing climate for high-multiple stocks may be less friendly. Additionally, large companies with big pockets are looking to compete in this space like SAP and Microsoft which could erode margins and market share. The lofty valuation also means there is more risk.
Overall, while these risks are real, the stock should do well especially as investors are eager for companies exposed to AI.