UiPath to cut 10% of staff amid AI investment focus
'Workforce reduction is aimed at further driving operational efficiency and customer centricity,' according to a UiPath
About a month after changing CEOs, business automation platform provider UiPath revealed plans to cut 10 percent of its employee base – about 4,200 employees.
The New York-based vendor said in a regulatory filing that most of the cuts should happen by the end of the first quarter of fiscal year 2026 – in April 2025. UiPath is currently in the second quarter of its 2025 fiscal year.
"This workforce reduction is aimed at further driving operational efficiency and customer centricity," according to the filing with the US Securities and Exchange Commission (SEC). "These changes reflect efforts to reshape the organisation by streamlining the Company's structure, particularly in operational and corporate functions, better prioritising our go-to-market investments and focusing our research and development investments on artificial intelligence and driving innovation across our platform."
UiPath layoffs
UiPath plans to spend between $15 million and $20 million on employee termination benefits and between $2 million to $5 million on lease exit and other contractual costs, according to the vendor.
It expects to spend a total of between $17 million to $25 million, predominantly in cash and by the first quarter of fiscal year 2026.
In a report published on Tuesday, investment firm William Blair said that the layoffs, "while unfortunate, could help reshape the organization and go-to-market motion after the company significantly reduced its growth outlook last quarter."
"We believe this announcement is reflective of UiPath's aim to drive more operational efficiency (taking some unnecessary operational layers out of the organisation) while maintaining top-line growth," according to the report. "Overall, we believe management's commitment to focus on profitability is a step in the right direction as the company adjusts to a more challenging environment."
The firm maintained its "market perform" rating for the vendor, saying that UiPath needs "more visibility into large renewals and sales execution stabilises" despite a "leadership position in the market for automation technology (that) should help the company deliver durable growth and expanding margins over time."
The cuts come after UiPath co-founder and CIO Daniel Dines returned to the CEO role on 1st June, succeeding former CEO Rob Enslin.
In UiPath's most recent quarterly earnings call, in May, Dines highlighted UiPath's work with partners, especially global systems integrators, according to the transcript.
"Partners continue to be a core pillar of our go-to-market strategy, and GSIs are building long-term differentiated businesses with us," Dines said. He highlighted the company's work with Accenture expanding UiPath's role with an energy company and EY's work in a digital transformation plan with an Ireland-based private health insurer.
"We have a lot to do in the partnership side of the business," Dines said during the call, according to a transcript.
UiPath's opportunity in AI
A June report from William Blair based on a talk with UiPath Chief Financial Officer Ashim Gupta said that the vendor changed "sales rep compensation structures" and was "removing unnecessary layers to its go-to-market motion to make the organisation more nimble" because of "recent execution issues" and "deal slippage and pressure on large deals during the first quarter."
"UiPath believes these changes can be implemented over the next several quarters (not years) and noted that sales rep attrition has remained consistent with historical trends," according to the report.
In the GenAI race, UiPath has seen "an acceptance rate of more than 70% for Autopilot expressions within its pilot group" and "believes that gen AI will have additional long-term benefits as business users will be able to create more complex automations and drive a higher ROI for the platform."
Its Intelligent Document Processing and Test Suite tools have gained "solid traction," according to the report.
UiPath competes with ServiceNow in about 1% of deals and with Microsoft's Power Automate offering in lower complexity robotic process automation (RPA) use cases, but "does not believe the competitive environment is contributing to weakness with large deals as its win rates remain in line with historical levels," according to the William Blair report.
The economy has affected "large multiyear deals as sales cycles elongate and customers put higher scrutiny on deals," the report says.
Customers "spending more than $100,000 on the platform are using at least one solution outside of RPA," and IDP is "starting to lead large deals to the platform."
Still, "UiPath highlighted that it is still primarily replacing point solution RPA solutions or converting greenfield opportunities when landing new customers onto the platform," according to the report.
UiPath is not alone among tech vendors shedding employee counts in the middle of the calendar year. Layoff plans have also been reported for Microsoft and OpenText.
This article was first published on CRN.