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Coupa (COUP) Earnings and Revenues Beat Estimates in Q1

Zacks Equity Research

Coupa Software Inc. COUP reported first-quarter fiscal 2020 non-GAAP earnings of 3 cents per share against the Zacks Consensus Estimate of a loss of 4 cents. Further, the company reported a loss of 1 cent in the year-ago quarter.

Revenues surged 44% from the year-ago quarter to $81.3 million, driven by growth of 46% in subscription services, which totaled $72.9 million. Professional services & other revenues also increased 31.3% to $8.4 million.

Further, the figure surpassed the Zacks Consensus Estimate of $74 million.

The top line was primarily driven by expanding customer base. Further, rising adoption of Coupa’s platform is bolstering subscription services revenues. Billing during the quarter came in at $75.1 million, up 50% year over year.

Notably, the stock has returned 86.7% in the past year, substantially outperforming the industry’s rally of 7.3%.

Customer Base Expands

Coupa provides a unified, cloud-based spend management platform that helps enterprises keep a tab on daily expenditures. The company’s customer base continued to expand in the reported quarter. In the first quarter, more than 35 customers went live on Coupa platform.

Notable customer wins in the quarter include American Red Cross, Arkansas Blue Cross and Blue Shield, Baylor University, Dairy Farm international, Exxaro Resources, Goodwill of Central & Southern Indiana, Kroger, MongoDB, NEC America, Provident Mexico, Wikimedia Foundation, to name a few. 

Operating Details

Non-GAAP gross margin contracted 20 basis points from the year-ago quarter to 72.6%.

Non-GAAP operating income came in at $2.2 million compared with $3174K reported in the year-ago quarter. Non-GAAP operating margin came in at 2.7% compared with 0.6% a year ago.

Balance Sheet

As on Apr 30, 2019, Coupa had cash and cash equivalents of $346.4 million, up from $141.3 million in the previous quarter.

Cash flow from operations came in at $18.8 million during the quarter. Free cash flow was $16.1 million during the fiscal first quarter.

Guidance

For second-quarter fiscal 2020, revenues are anticipated between $84.5 million and $85.5 million. The Zacks Consensus Estimate for revenues is currently pegged at $77.7 million. Subscription revenues are expected between $77 million and $78 million, while professional services revenues are anticipated to be approximately $7.5 million.

Non-GAAP loss from operations is estimated to be in the range of $6.5-$7.5 million. Non-GAAP net loss is projected to be 10-12 cents per share.

For fiscal 2020, Coupa updated 2020 outlook. The company now anticipates total revenues between $342 million and $344 million (previously $352 million and $327 million). The Zacks Consensus Estimate for revenues is currently pegged at $326.8 million.

Non-GAAP income from operations is now anticipated in the $7-$9 million range (previously $3-$7 million). Non-GAAP net income is expected to be 7-10 cents per share (previously 4-10 cents per share).

Zacks Rank & Key Picks

Coupa currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader technology sector are Match Group, Inc. MTCH, Universal Display Corporation OLED and Autohome Inc. ATHM, each flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Match Group, Universal Display and Autohome have a long-term earnings growth rate of 15.2%, 30% and 20.9%, respectively.

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