Where will UiPath be in 5 years?


As is often the case with its press conferences, You’re here (NASDAQ: TSLA) made a splash in August with its AI Day event, showing off its work on a “humanoid robot” that could one day serve as an in-person assistant for physical tasks. A working prototype could be released as early as 2022.

Suffice it to say, it could be at least a few years before Elon Musk and his company’s sci-fi-sounding pipe dream becomes a reality in the life of the average person. However, another type of robot is already available, quietly roaming offices around the world and automating redundant tasks that most of us despise. These software robots, known as RPA (robotic process automation), are one of the fastest growing technologies today. And according to a technology researcher Gartner, UiPath (NYSE: PATH) is the leader in this industry. Where will this first robotics stock be in five years?

Image source: Getty Images.

A brief introduction to software robots

When I say “robots”, maybe your mind conjures up images of human companions like the one Tesla is building. However, RPAs are removed from any physical form or “body” and confined to a computer or network. This doesn’t necessarily reduce the usefulness of this form of robot, however.

RPAs offered by platforms like UiPath have some key features. They can be trained, which means that a developer can embed code that “teaches” them how to perform a task. They also integrate with other software, for example a Microsoft (NASDAQ: MSFT) Word doc or other commercial tool. They should also be easily deployable, allowing a worker (including those with little or no expertise in software coding) or a developer to release them on a defined job. Some platforms, like UiPath, use advanced machine learning techniques to improve them in more advanced tasks.

All kinds of office work can be handled by RPAs like entering data, filling out forms, calculating numbers, voice transcription and translation, to name a few. Think of RPAs as virtual office assistants that reside on your computer or device.

RPAs could be very important to the economy

Some might immediately fear that just as technology has automated some blue-collar jobs, technology is coming next for thought workers (or white collar workers). Perhaps, to some extent, it is.

As with all technological advancements, we will have to undergo a period of transition in which the displaced systems and those who have been tasked with working with them will find new places in the economy. But something interesting has happened in the wake of the pandemic: Many companies are reporting labor shortages, often for positions requiring highly redundant work.

The debate still rages on as to the cause. Some cite the extension of unemployment benefits as the reason, but I think an influx of self-employed workers – accelerated by online software companies like Shopify (NYSE: SHOP), Fifth (NYSE: FVRR), and Wix.com (NASDAQ: WIX) that make it easier than ever to start your own business – one of the main reasons. As proof, I cite a study from the US Census Bureau which shows a massive increase in monthly start-ups of new businesses, which number in the tens of thousands every month since last spring.

A line graph showing an almost 50% increase in new business start-ups over the past year and a half.

Image source: United States Census Bureau.

In short, now that workers have new employment options like never before, I don’t expect a labor shortage in some areas of the economy to improve anytime soon. RPA platforms like UiPath could become an increasingly important “recruiting agency” for many organizations, helping them automate those unwanted jobs that no one wants so that they and their employees can focus on a job. higher level critical thinking.

UiPath for the ultra-long term?

As already mentioned, UiPath was named a leader in RPAs, and when it made its public debut in early 2021, it received an assessment to match that leadership. Unfortunately, even a very first report on earnings as a public concern did not prevent a 7% drop in that IPO price. Nonetheless, as of this writing, UiPath is still valued at a market cap of $ 32 billion, a whopping 37 times the expected revenue for the year 2021.

At this point, the hefty price tag makes UiPath an investment that’s only suitable for those with ultra-long prospects – five years, maybe longer. Certainly, this is a growing business. First quarter revenue increased 65% compared to a year ago. However, the company’s current outlook for sales growth of 47% for the full year of 2021 means that a slowdown is in order.

Not that annual growth close to 47% is anything to complain about, but over the next few years there will be noticeable competition in the RPA space. The ubiquitous software giant Microsoft, for example, has its own RPA platform. Given its massive size and enviable ability to distribute its own digital tools (though not always the best in their class), the cloud computing giant is a notable rival. The same Gartner report that named UiPath the current leader also shows Automation Anywhere as one of the top contenders. The company is currently privately held, but may be considering an IPO. A myriad of other peer software also offers RPA offerings.

But let’s not take too much away from UiPath’s future prospects. RPA is already a big behind-the-scenes market worth spending billions of dollars every year, and it’s growing. After its IPO, UiPath ended April 2021 with $ 1.8 billion in cash and cash equivalents and no debt. Strengthening its sales channels and innovating new uses for its software robots will undoubtedly be top priorities when choosing where to deploy all this capital. RPA is in its early stages of development, and UiPath’s initial advance will not be easy to replicate.

Personally, I’m in no rush to buy UiPath stocks right now (I often wait for a earnings report or two before dipping my toe in the water on new IPO stocks). However, RPA and the associated automation software could be very important in five years. (Sorry, Tesla, your humanoid robot will have its hour later). There is more than a good chance that UiPath will keep its lead and be a much bigger company than it is now. At the very least, keep an eye out for this new software technologist.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.


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