UPDATED 19:11 EST / APRIL 19 2021

AI

UiPath ups IPO price range, raising its valuation to $28B

Automation services provider UiPath Inc. has raised both the size and price range of its initial public offering in a move that boosts the company’s expected value to about $28 billion when it hits the market this week.

The company, which is led by its Chief Executive Daniel Dines (pictured), said today it has upped its IPO price from a broad range of $43 to $50 per share to a much narrower scale of $52 to $54. That’s about a 21% jump from the lower end of its initial range and an 8% gain on the upper end.

In addition, UiPath said it will also be selling more shares than before, which would mean its total valuation is larger at the top end than the 8% gain suggests. The company, which plans to list on the New York Stock Exchange under the ticker symbol “PATH,” will now sell 23.9 million Class A shares in its IPO, up from an original 21.3 million shares listed in its April 12 filing. The increased price range and the new total number of shares for sale means UiPath could raise as much as $1.3 billion through the IPO.

All told, UiPath will have 434.1 million Class A shares and 82.5 million Class B shares following the offering, for a total of 516.5 million altogether. The only difference between the shares is that the Class B shares come with greater voting rights.

At that level, UiPath is expected to have a market cap of $26,9 billion at the low end of its price range and $27.9 million at the upper end of the scale.

The IPO is in any case hotly anticipated given UiPath’s leadership in the red-hot robotic process automation sector that it leads. The company’s RPA platform is used by enterprises to reduce costs and operational errors by automating repetitive work. UiPath’s platform uses artificial intelligence models to learn how employees perform common tasks in business applications. Those models then create so-called software robots that can replicate employees’ workflow, thereby dramatically reducing the need for manual input.

UiPath says it has saved some enterprise customers hundreds of thousands of person-hours previously spent on repetitive work. According to its IPO prospectus, the company’s software is used by more than 7,000 organizations worldwide, including more than 60% of the Fortune Global 500.

Despite that strong reputation, UiPath caused a bit of a surprise last week when it set its initial IPO price range, as it failed to find the value that its private backers had expected. The company was valued at $35 billion as recently as February, following its final, $750 million financing round.

It’s said that UiPath’s value has been hurt by higher U.S. Treasury yields since February that have set off broad declines in the market capitalization of many high-growth tech firms. The volatility has been such that some startups, such as Instacart, are said to be considering delaying their IPOs.

“The UiPath IPO looks like it’s still on track and I haven’t seen any untoward news concerning the company,” analyst Charles King of Pund-IT Inc. told SiliconANGLE. “I expect the pullback in expectations is mainly about the general cooling of interest toward IPOs that we’ve seen over the past three months. Plus, with other hot IPOs on the calendar such as Databricks and Rivian, there may be signs that investors won’t be a quick to pull the trigger as UiPath once assumed.”

Analyst Holger Mueller of Constellation Research Inc. told SiliconANGLE that UiPath was likely just being cautious and that today’s price range raise is due to its clearer understanding of the likely demand for its IPO. Going public is always tricky, and valuations are volatile, especially in dynamic markets like RPA,” Mueller said.

Dave Vellante, chief analyst at SiliconANGLE sister market research firm Wikibon, agreed that UiPath was likely just being conservative. In his analysis of UiPath’s IPO this week, he said the company’s implied valuation is most likely just a placeholder for a much higher number.

“Frankly, we would be surprised if the stock doesn’t rocket on day one of trading,” Vellante said. “As we always stress, it’s rare that you won’t find a better buying opportunity after the first day.”

King said that in any case, UiPath is smart to lower expectations. “Where capital markets are concerned, it’s better to practice modesty and be pleasantly surprised than to be a braggart who falls flat on his face,” he said.

Regardless of the valuation, IPOs aren’t just about the extra cash but also the additional awareness they bring.

“UiPath is kicking butt and this should be an extremely successful IPO and I predict it will only extend its market-leading position,” Vellante added. “Going public not only brings capital, it brings a presence and awareness, which is critical to compete with companies like Microsoft and other incumbent players.”

Photo: SiliconANGLE

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