The Class: Shareholder rights law firm Robbins LLP reminds investors it filed a securities fraud class action lawsuit on September 6, 2023, in the U.S. District Court for the Southern District of New York (the "Court") on behalf of purchasers of UiPath, Inc. (NYSE: PATH) common stock between April 21, 2021 and March 30, 2022. The complaint alleges violations of sections 10(b) and 20(a) of the Securities Exchange Act of 1934.
If you wish to discuss this action or have any questions concerning this notice or your rights or interests, please contact attorney Aaron Dumas, Jr. of Robbins LLP at (800) 350-6003, via the shareholder information form on our website, or by e-mail.
The Details: UiPath, Inc. (PATH) Misled Investors Regarding Its Business and Key Financial Metrics
UiPath is a global provider of robotic process automation (“RPA”) software. RPA software allows companies to use installed “robots” to execute mundane and menial tasks on behalf of their employees, freeing up those employees to perform more valuable tasks.
On April 21, 2021, defendants conducted UiPath’s initial public offering (“IPO”), selling over 27.5 million UiPath shares at a price of $56 per share for over $1.5 billion in gross offering proceeds. Leading up to the IPO, defendants claimed that UiPath was experiencing exceptional growth and was competitively positioned to continue these robust growth trends into the future. IPO documents represented that the Company had grown its annualized renewal run-rate ("ARR") to more than $580 million in the fiscal year ended January 31, 2021, representing 65% year-over-year growth, and its revenues to more than $600 million during this same period, representing 81% year-over-year growth.
Following the IPO, defendants continued to claim that UiPath was undergoing “record” growth and attributed UiPath’s apparent success in the burgeoning automation industry to the competitive superiority of UiPath’s technology. Defendants also downplayed competitive threats facing UiPath, in particular by Microsoft, with defendant Dines stating during the June 8, 2021 conference call that UiPath’s products were “very differentiated” from those offered by Microsoft and claiming that comparing the two was “like comparing apples to oranges” because the two were not significant competitive rivals.
However, on September 7, 2021, UiPath announced its quarterly results for the second quarter of fiscal year 2022, revealing a dramatic slowdown in the growth of the Company’s revenue and ARR metrics. On the corresponding conference call, defendant Gupta indicated that UiPath’s financial results provided to investors in connection with the IPO had been boosted by previously undisclosed discounting, stating that UiPath was shifting away from discounted multi-year contracts as the Company was no longer “compelled to trade any type of discount.” Instead, defendants announced they were moving to a “ramping” contract model. For the next quarter, UiPath reported lackluster net new ARR growth of just 42%.
Then, on March 30, 2022, UiPath provided deeply disappointing revenue and ARR guidance for its fiscal 2023, revealing that the Company’s downward growth trajectory was expected to continue. As a result of these revelations, the price of UiPath stock declined to a low of less than $22 per share, more than 75% below the Class Period high, causing the Class to suffer hundreds of millions of dollars in losses and economic damages under the federal securities laws.
During the class period, defendants failed to disclose: (a) that UiPath’s “ramping” contract model and defendants’ directions to investors to focus on the bespoke ARR metric created a materially misleading impression of client demand for the Company’s products and its revenue and ARR growth metrics, as the lower initial contract commitment induced certain customers to sign up with the Company who would not pay for larger commitments as the contracts ramped in later time periods; (b) that part of the motivation for UiPath’s “ramping” contract model was the Company’s inability to sign up customers for longer-term engagements without substantial discounting; (c) that UiPath’s actual total addressable market was not as large as portrayed by defendants, because many companies included in the market survey did not need the type of high-cost, high-functionality automation products offered by the Company; (d) that UiPath was losing customers to Microsoft, ServiceNow, SAP, Salesforce, IBM, and other established enterprise software vendors that were building automation into their platforms; (e) that UiPath was losing customers due to the increased availability of low-code automation software offered by vendors, such as Microsoft’s Power Automate software, which were capable of addressing the majority of customer use cases at a fraction of the price of UiPath’s products and services; (f) that UiPath was suffering from a loss of channel sales due to strained relationships with the Company’s partners as a result of increased competition between UiPath and these partners; and (g) that, as a result of (a)-(f) above, defendants’ statements during the class period regarding the Company’s business, operations, and key financial metrics such as revenues and ARR were materially false and misleading.
Next Steps: If you purchased or otherwise acquired UiPath, Inc. common stock between April 21, 2021 and March 30, 2022, you have until November 6, 2023, to ask the court to appoint you as the lead plaintiff for the class. A lead plaintiff is a representative party acting on behalf of other class members in directing the litigation. Any member of the Class may move the Court to serve as lead plaintiff through counsel of their choice, or may choose to do nothing and remain an absent Class member.
All representation is on a contingency fee basis. Shareholders pay no fees or expenses.
About Robbins LLP: Some law firms issuing releases about this matter do not actually litigate securities class actions; Robbins LLP does. A recognized leader in shareholder rights litigation, the attorneys and staff of Robbins LLP have been dedicated to helping shareholders recover losses, improve corporate governance structures, and hold company executives accountable for their wrongdoing since 2002. Since our inception, we have obtained over $1 billion for shareholders.
To be notified if a class action against UiPath, Inc. settles or to receive free alerts when corporate executives engage in wrongdoing, sign up for Stock Watch today.
Attorney Advertising. Past results do not guarantee a similar outcome.