UiPath says war in Ukraine is affecting business confidence across Europe

RPA vendor's recurring revenue for 2023 will be down by $15m after pausing Russia operations

UiPath's CEO has said the war in Ukraine is "having a profound impact" on business confidence in Europe and the UK.

Speaking as he announced the RPA vendor's results for fiscal 2022, Daniel Dines, a Romanian billionaire, said he had returned from two weeks in Europe, spending time with employees in Romania and customers across the region.

He said UiPath has customers and employees in Ukraine and in Russia, where the company has paused business.

"I can tell you first hand, this war is having a profound impact on the sense of physical and economic security across the continent and in the UK. We are also starting to hear customers in the US express reservations about both political uncertainty and rising interest rates," he told investors.

"As we start the fiscal year, we believe it is prudent to guide assuming the uncertainty we are seeing in the first quarter will continue."

Dines said UiPath employs around 30 developers in Ukraine and has contingency plans in place for their projects. "In Russia, we have a small sales team; I think it's less than 15 people. We don't have any development capabilities in Russia," he added.

UiPath reported revenue of $289.7 million in Q4 fiscal 2022, ended January 31, up 39 percent on the same period a year earlier. Adjusted operating profit up was also up 18 percent to $41.9 million. Full-year revenue reached $892.3 million, having risen 47 percent on the previous year. However, the company had to lower its guidance, disappointing markets and instigating a shares slide.

Founded in Romania during 2005 as DeskOver, UiPath said fiscal 2023 would be hit by pausing business in Russia, by a reduction of around $15 million in annual recurring revenue, $5.5 million in the first quarter.

According to tech analyst Megabuyte, UiPath has been delivering results and providing guidance in line with or above market expectations since last year's IPO, which saw shares rise 23 percent on the first day of trading.

"The weaker-than-expected forecasts for 2023 therefore come as a notable shock. The reality becoming clear is that, in a bullish early 2021, the business simply came to the market at the wrong price," it said.

While other tech businesses such as MongoDB have also suspended services in Russia, the approach is not universal in the sector.

According to newswire Reuters, Microsoft president Brad Smith has written to Ukraine's government saying that despite Kyiv's calls for it to sever all ties with Russia, the Redmond software giant is set to continue doing business in the country with non-sanctioned clients, including schools and hospitals.

"Depriving these institutions of software updates and services could put at risk the health and safety of innocent civilians, including children and the elderly," Smith said.

Oracle has said it has stopped providing support and updates to Russian companies, while SAP has said it would support Russian customers within sanctions and export control rules. ®

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