Security Staff Acquisition & Development, Enterprise, Content

UiPath Layoffs 2019: Warning Signal for IT Services Automation?

UiPath, a privately held unicorn and poster child for software robots and workflow automation, is cutting 300 to 400 employees -- or roughly 11 percent of the company's workforce. The UiPath layoffs were first reported the New York Business Journal.

The company has also seen some executive turnover, including CFO Marie Myers; Chief Revenue Officer Craig Bumpus and CIO Jeana Sublett in recent weeks, Forbes reports.

UiPath has been a torrid growth story. And it sounds like top-line revenue growth continues. The venture-backed company, recently valued at $7 billion, is expected to generate about $300 million in revenue for 2019, a September Forbes cover story says. During a UiPath conference earlier this month, the company announced its annualized recurring revenue (ARR) had indeed passed $300 million -- more than double its ARR a year ago, and 12x its ARR two years ago, Forbes reports.

Still, quick math tells you UiPath was valued at 23.3 times annual revenues for 2019. Before the cloud craze truly accelerated, most privately held software companies were valued closer to 10 times revenue or so.

Robotic Process Automation (RPA): Accelerated MSP Workflows?

UiPath is part of a heavily hyped IT wave known as robotic process automation (RPA). Key rivals include Blue Prism and Automation Anywhere. The RPA term has nothing to do with physical robots. Instead, RPA is all about software code that automates formerly manual business processes.

In theory, RPA software could be highly valuable to MSPs -- especially those that want to further automate their service desks, customer onboarding, IT management and more.

ChannelE2E has mentioned UiPath multiple times as a potential market disrupter that MSPs need to watch. Here's an example of how UiPath may fit into an MSP or corporate IT service desk strategy:

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UiPath and WeWork: Unfair Comparison?

Fast forward to the current-day job cuts, and some critics wonder if UiPath's fast-growth story will mirror the cautionary tale of WeWork -- which had to scrap an IPO, steeply cut its valuation, change CEOs, and scramble to find more financing amid no clear path to profitability.

UiPath is quick to distance itself from the WeWork debacle. Indeed, UiPath is a true software company riding recurring revenue, while WeWork essentially is a real estate firm with a questionable financial model. ChannelE2E fully agrees: UiPath certainly is not WeWork. Software is exponentially easier to scale than real estate. Still, we don't have access to UiPath's burn rate figures...

Bottom line: Business, workflow and IT service desk automation remain undeniable trends. Still, folks are wondering if the UiPath layoffs represent a small speed bump on the road to automation -- or something more...

Joe Panettieri

Joe Panettieri is co-founder & editorial director of MSSP Alert and ChannelE2E, the two leading news & analysis sites for managed service providers in the cybersecurity market.