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UiPath shares jumped 23% on Wednesday on the company's first day of trading on Wall Street, a testament to the continued interest among investors in the software industry.
But despite that success, there remain questions over whether a red-hot sector defined recently by blockbuster IPOs could be cooling down ahead of other major public offerings. The slowdown in the broader market, for example, forced UiPath to price shares for its public offering below those sold in a private fundraising round in February, according to its top financial chief.
"We're in line with how the market has moved," CFO Ashim Gupta told Protocol. "We're still in an extremely positive market for great enterprise software companies … [and] looking at it just versus February or January is too short of [a] time frame."
Overall, the company, which is a leader in the fast-growing robotic process automation market, and its selling shareholders brought in $1.34 billion through its IPO — less than what Qualtrics and Snowflake accrued in their market debuts, but still a monumental figure.
Similar to how Snowflake's public offering was viewed as a bellwether for the booming data analytics market, the industry is watching UiPath's IPO closely given it's one of the few major AI-backed firms to go public. C3.ai, which is owned by software pioneer Tom Siebel, held its public offering in December; shares are now down 44% from the debut.
When asked how UiPath plans to avoid the same fate, Gupta cited the company's growth to date as evidence it can maintain value to investors and the potential $60 billion market opportunity.
"The best way to combat hype is by progress," he said. "Putting up substantive progress and substantive financial numbers … that is what is going to continue to drive a substantive valuation."
UiPath reported an 81% jump in revenue in fiscal year 2021 to $607.6 million, a bump that was partially due to major cuts to marketing and product development. The company also cites its retention rate as a big differentiator: On average, customers increased spending on UiPath by 45% in FY 2021 over the prior year.
While there have been a slew of major software IPOs in recent months, more are looming. Databricks, for example, which just raised $1 billion and is valued at $28 billion, is plotting its own IPO as soon as this year.
Joe Williams is a senior reporter at Protocol covering enterprise software, including industry giants like Salesforce, Microsoft, IBM and Oracle. He previously covered emerging technology for Business Insider. Joe can be reached at JWilliams@Protocol.com. To share information confidentially, he can also be contacted on a non-work device via Signal (+1-309-265-6120) or JPW53189@protonmail.com.