Coupa Software (COUP 64.76, +0.57, +0.89%) has been quietly trading to new highs this
week, so we thought it'd be good to provide some color. Coupa is a cloud-based
provider of business spend management (BSM) software. Its platform provides
greater visibility into and control over how companies spend money so that they
can save more money.
Indirect spend is particularly difficult to manage due to inefficient employee spending behavior and disparate systems that obstruct spend visibility. The core of COUP's platform consists of procurement, invoicing, and expense management modules that form its transactional engine and capture a company's spend.
Through the Coupa Open Business Network, suppliers of all sizes can interact with buyers electronically, thus significantly reducing paper, improving operating efficiencies, and reducing costs. As more vendors use the platform, the platform becomes more useful to clients and it grows the amount of spend under management. COUP sells its product on its own, but also works closely with systems integrators, including KPMG, Deloitte, Accenture, IBM, PwC, and Wipro, to drive enterprise adoption.
On June 4, COUP reported Q1 (Apr) results that were much better than prior guidance. Coupa reported a non-GAAP loss of $(0.01) per share, which was much better than prior guidance of $(0.13)-(0.11). Revenue rose 37% year/year to $56.4 mln, which also was above prior guidance of $51.0-51.5 mln. Subscription revenue rose 40% to $50.0 mln. Non-GAAP operating margin improved to 0.6% from -11.2% in the prior year period.
Coupa also issued upside guidance for Q2 (Jul) as the company expects a non-GAAP loss of $(0.10)-(0.08) and revenue of $56-57 mln. On the business front, Coupa expanded its customer base by adding blue chip and high growth customers, and it saw several marquee customers go live. New customers added in Q1 include Ingersoll Rand, First American, Fastweb, Just Energy, Evotec AG, and Renew Financial among others.
Coupa also announced new product innovations to advance the company's BSM capabilities, including enhancements to community intelligence and additional user-centric experiences that will provide businesses even more visibility into spend, processes, and performance. Coupa commissioned a study by The Economist Intelligence Unit which polled more than 500 CFOs and senior finance executives. The study revealed that greater than 60% of finance executives lack complete visibility into the transactions within their organizations. In addition, 76% think leveraging new technologies or improving processes would enable their companies to work better with other functions.
Looking ahead, COUP typically reports Q2 (Jul) results in early September. They have a history of beating expectations by a good amount when they report earnings. From a broader perspective, COUP sees a lot of growth ahead as spend management is still in the early adoption stage. COUP says maybe 20-30% of spend is actually being managed through an IT platform. Most of it still being managed through paper, fax, email, phone calls etc. COUP sees a very sizable multi-billion dollar marketplace that is just starting to be tapped into.
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