UiPath Inc. (NYSE:PATH) Q3 2023 Earnings Call Transcript

Ashim Gupta: Yeah. So we see progress on the land size, Bryan, we see it slightly up as we look at the numbers right now. Our focus, as we move forward, though, is just overall expansion. So what we are really excited about is that, we feel good we have a healthy pipeline. Customers are expanding. They are expanding into multiple elements of our platform in terms of the number of ELAs, et cetera. So both the land size we see slightly up, but we see progress in terms of customers wanting more of the platform that is very tied to our strategy in terms of driving further expansion and getting into the C levels as we outlined at Investor Day.

Bryan Bergin: Okay. And then a follow-up on free cash flow, I heard some of the opportunistic actions you took here in the third quarter. How should we be thinking about the 4Q levels on free cash flow and just anything to be mindful there as you work through some of the restructuring actions?

Ashim Gupta: Yeah. We don’t guide to free cash flow just to make that clear to start. At the same time, we have talked about being roughly cash flow neutral. So when you look at the numbers, we expect to be able to — you should expect to see that free cash flow be positive and move us closer to that neutrality in terms of that, we are on track for those areas. And then our free cash flow expansion will be the same as we move forward in terms of our commitment on profitability that we talked about earlier.

Operator: Thank you. And our next question comes from Terry Tillman with Truist Securities. Please go ahead.

Terry Tillman: Yeah. Thanks for taking my questions. Maybe the first question is a multi-partner and then I had a follow-up. Rob, for you in terms of like earlier in the year, when you were putting forth some of these initiatives to optimize the business and improve execution. On the go-to-market side, I think, there was the idea that there could be some disruption, two go-to-market activities, because of the things you are doing. Ultimately, have you seen about what you had planned for in terms of disruption to ARR or the business or has it been less? And are you done with kind of like the right leadership team and the bench strength now? And then I have a follow-up.

Rob Enslin: It’s difficult to disaggregate and what I feel really good about is, how we looked at testing a lot of the initiatives in the U.S. and how they came through getting the right leadership really quickly in place in the U.S. and we have seen them execute. And that’s allowed us to actually move that to other parts of the world. It’s pretty clear our European business is in very good shape now. Mark has done a good job with the leadership team where they are actually stable. We — they have made all the changes necessary. And then bringing Lee on in Asia-Pacific, we feel like that’s going to pay dividends as well. And we feel like we have got the framework and the formula now to actually enable the sales force to execute to the market that they face.

Terry Tillman: That’s great to hear. And I guess for us — you had, I think, called out automation suite and Automation Cloud being up triple digits on an ARR perspective. Do you think — I mean, I know it’s still early days with those solutions. So maybe it’s just small numbers. But can you continue to grow triple digits and what would be that portion of ARR next year, just trying to understand the size and scale? Thank you.

Ashim Gupta: Yeah. In terms of go-forward guidance and cloud, et cetera, remember, we really drive customer choice for that with — in terms of allowing them to decide what is their deployment method. That being said, the team’s executed well and we see a lot — we see continued progress and excitement in the field and our customers around our cloud-first philosophy and the product releases that are coming out. In terms of just modeling, I would say, we are consistent with what we discussed at Investor Day, and previously, in terms of modeling our go-forward cloud mix. We feel like we are in line with what we have discussed previously.

Operator: Thank you. And our next question comes from Scott Berg with Needham. Please go ahead.

Scott Berg: Hi, everyone. Thanks for taking the question. I guess I got a couple. To start with on the sales side. Ashim, you talked about deal sizes improving a little bit with the change in sales execution. One of the things we see often from companies, from vendors in this environment is actually trying to sell a little bit smaller, especially when the ROI and value proposition is high and has really good expansion rates. Is that an angle that you have looked at to help maybe try to address a smaller pain point initially during this challenging macro, just to get your foot in the door and then use your natural strength to expand from there?

Ashim Gupta: Yeah. Scott that is the natural sales process that invested at UiPath and UiPath is really good at that, right, of acquiring smaller deals. So, that continues to show positive signs for us and it’s one of the levers that we said early on, we would continue to invest in and we continue to invest in. So we completely agree with you that’s something that we will continue to drive. We also mentioned that, we — as we change the segmentation, we will start to use propensity and graduation and we started to see that take impact. That allows us to take a quick acquisition and start to focus on how do we expand it and so that strategy is what that we are executing and that will drive the deal sizes up. So it’s a combination of one, it’s both, and we believe that the way that automation can play in this market with the NorthStar approach, we are well set to actually help customers also get some of the value returns for them at speed as well.