Hot AI startup UiPath's job cuts were triggered after it burned cash faster than expected and missed its revenue target, according to an internal document

• UiPath just ranked number one on Deloitte's list of the 500 fastest growing tech companies in North America with an annual revenue growth rate of more than 37,000%.
• But the AI startup was burning cash faster than expected and missed a key revenue target when it cut about 400 jobs, according to a board presentation reviewed by Business Insider.
• UiPath's third quarter annual recurring revenue totaled $296 million, below its target of $343 million, according to the presentation.
• In the third quarter, UiPath's "burn" - the amount of cash it used - was $96 million, well above its target of $57 million, according to the presentation.
• The company's Chief Financial Officer Marie Myers left suddenly, at the same time as the job cuts.
• UiPath declined to comment on specific items in the presentation. Chief Marketing Officer Bobby Patrick told Business Insider: "It's improper on behalf of a former employee to share privileged financial data that is out of context."
• Patrick stressed that UiPath is a strong company that is on track to be profitable in 2020 and may go public in 2021: "You're going to see a company that is still one of the fastest growing enterprise software companies in the industry, a company with a very strong commitment to bottom line that is on the path to profitability next year. To be on the path to profitability in 2020 and be a hyper-growth company is pretty amazing."
• UiPath is seen as the dominant player in a new but fast growing market for robotic process automation, or RPA, which enables businesses to automate common and repetitive computer tasks.
• UiPath drafted a plan, dubbed Project Dawn, aimed at dramatically reducing costs through mass layoffs, according to the presentation.
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UiPath was burning cash faster than expected and its revenue growth, although robust, was below its internal targets when the company launched a plan - dubbed Project Dawn - to slash hundreds of jobs and dramatically reduce costs, according to a presentation reviewed by Business Insider.

The plan was discussed by the company's board in mid-October, shortly before UiPath let go of about 400 employees and announced the sudden departure of its well-regarded Chief Financial Officer Marie Myers.

It was a jolting development for UiPath, which just ranked No. 1 on Deloitte's 2019 list of the fastest growing tech companies in North America and is the dominant player in a new, but fast-growing market for robotic process automation, or RPA, software that allows businesses to automate common, repetitive computer tasks.

The internal presentation paints a different picture, showing a growing startup that had begun posting weaker-than-expected revenue growth and higher-than-expected expenses.

UiPath's annual recurring revenue had jumped more than 150% year-over-year as of September, according to the presentation. The company publicly announced in October that it had achieved $300 million in annual recurring revenue - a key metric for software companies. This represented healthy growth from the $200 million level it notched at the start of the year, as Business Insider previously reported.

But according to the internal presentation to the board, the ARR number seems to have been weaker than what the company had planned for. In the third quarter, UiPath had achieved an annual recurring revenue of $296 million, which was below its target of $343 million, according to the presentation.

The company, which secured $568 million in venture capital funding in January at a valuation of $7 billion, also saw its third-quarter expenses shoot up by more than $25 million above its projections. In the third quarter, UiPath's "burn" - the amount of cash it used - was $96 million, well over its target of $57 million, according to the presentation.

UiPath Chief Marketing Officer Bobby Patrick declined to comment on specific items in the presentation, saying that "it's improper on behalf of a former employee to share privileged financial data that is out of context."

But he stressed that portraying UiPath as a startup with weakening financials would be inaccurate: "I think it's important to take into context how well this company is doing. Of course, we have to optimize too. It's part of growing a fast-growth business. We're a work in progress and we made mistakes along the way. The reality is this company is doing really well."

"I can tell you that going into the first quarter we're in an extremely positive situation," he told Business Insider. "You're going to see a company that is still one of the fastest growing enterprise software companies in the industry, a company with a very strong commitment to bottom line that is on the path to profitability next year," Patrick told Business Insider. "To be on the path to profitability in 2020 and be a hyper-growth company is pretty amazing."

UiPath is eyeing a public stock offering in the not-so-distant future, he said. "Daniel has said we're not in a rush," Patrick said, referring to UiPath CEO and founder Daniel Dines. "It's likely 2021. We do have lots of investors that at some point want to see some liquidity. But we're not in a rush."

Project Dawn

The presentation noted a "strong sense of urgency to correct cash burn and improve cost efficiency." The presentation further shows that in October, UiPath came up with a plan called Project Dawn, aimed at drastically reducing its annual costs by roughly $30 million. The plan called for cutting about 400 positions - which UiPath ultimately did.

In a blog post addressing the layoffs, CEO and founder Daniel Dines said: "I pushed UiPath to work harder and faster, and pushed us to hire at blazing speeds." He said that in the last 10 months, UiPath had "grown our workforce by 60%," in what he called 'sort of a blitz scaling approach."

"We have worried that we could become less agile and responsive to customers," Dines wrote.

Five people familiar with UiPath have told Business Insider that spending was rampant at the startup, with loose policies and weak controls leading to what they viewed as excessive business class travel and frequent, pricey affairs like $200-a-plate steak dinners by executives and staff.

The layoffs, and the fact that they came simultaneously with the sudden departure of UiPath's recently-hired Chief Financial Officer Marie Myers, stunned the tech world, particularly the RPA industry in which UiPath had been the undisputed leader.

Forrester analyst Craig Le Clair, who in a recent report said UiPath "sits in the cockpit of the RPA rocket ship," said in the wake of the layoffs that UiPath appears to have gone through a phase of "irrational exuberance."

"You had a kind of a classic venture-based Silicon Valley mentality of 'let's accrue market share, let's boast about the number of customers,' which fueled a somewhat irrational hiring of people," he told Business Insider at the time.

Still, UiPath is considered one of the clear leaders in an increasingly important market sector that even Microsoft is getting into.

Patrick, UiPath's CMO, said the company was focusing on sustainable growth at a time when many startups are expected to post meaningful growth and results.

"People don't just want high growth, they want want high growth with profits," he said. "This company has done a good job of adapting to the market and figuring out how to build a long-term health company and a better place to work. That's the commitment of our CEO and our entire company."

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