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Coupa Software Reports Financial Results For the Second Quarter of Fiscal 2020

Record Quarterly Revenues of $95.1 Million, Up 54% Year-Over-Year

Quarterly Calculated Billings of $107.7 Million, Up 57% Year-Over-Year

Cumulative Spend Under Management Surpasses $1.3 Trillion

SAN MATEO, Calif., Sept. 3, 2019 /PRNewswire/ -- Coupa Software (COUP) today announced financial results for its second fiscal quarter ended July 31, 2019.

Coupa Software (PRNewsfoto/Coupa Software)

"We delivered a strong second quarter with record revenues of $95 million, up 54% year-over-year, and calculated billings of $108 million, up $57% year-over-year," said Rob Bernshteyn, chairman and chief executive officer at Coupa. "These results demonstrate our continued momentum in delivering measurable and repeatable value to our customers. By extending our leadership standing in Business Spend Management (BSM), we feel well positioned on our path to $1 billion in revenue."

Coupa defines calculated billings as the change in deferred revenue on the balance sheet for the period, plus revenue recognized during the period. See the section titled "Non-GAAP Financial Measures" and the reconciliation tables below for important details regarding Coupa's non-GAAP measures. Coupa defines free cash flows as operating cash flows less purchases of property and equipment.

Second Quarter Results

  • Total revenues were $95.1 million, an increase of 54% compared to the same period last year. Subscription revenues were $83.5 million, an increase of 51% compared to the same period last year.
  • GAAP operating loss was $22.8 million, compared to a loss of $10.6 million for the same period last year. Non-GAAP operating income was $4.8 million, compared to Non-GAAP operating income of $4.0 million for the same period last year.
  • GAAP net loss was $20.0 million, compared to a net loss of $13.9 million for the same period last year. GAAP net loss per basic and diluted share was $0.32, compared to a net loss of $0.24 for the same period last year. Non-GAAP net income was $5.3 million, compared to Non-GAAP net income of $3.3 million for the same period last year. Non-GAAP net income per diluted share was $0.07, compared to Non-GAAP net income per diluted share of $0.05 for the same period last year.
  • Operating cash flows and free cash flows were positive $1.3 million and negative $2.3 million, respectively, for the quarter ended July 31, 2019.

Business Outlook:

The following forward-looking statements reflect Coupa's expectations as of September 3, 2019.

Third quarter of fiscal 2020:

  • Total revenues are expected to be between $95.5 and $96.5 million.
  • Subscription revenues are expected to be between $86.0 and $87.0 million.
  • Professional services and other revenues are expected to be approximately $9.5 million.
  • Non-GAAP income from operations is expected to be between $3.5 and $5.5 million.
  • Non-GAAP net income per diluted share is expected to be between $0.05 and $0.08 per share.
  • Diluted weighted average share count is expected to be approximately 71.7 million shares.

Full year fiscal 2020:

  • Total revenues are expected to be between $369.0 and $372.0 million.
  • Non-GAAP income from operations is expected to be between $10.0 and $13.0 million.
  • Non-GAAP net income per diluted share is expected to be between $0.11 and $0.16 per share.
  • Diluted weighted average share count is expected to be approximately 70.0 million shares.

Coupa has not reconciled its expectations for non-GAAP income from operations to GAAP loss from operations or non-GAAP net income per share to GAAP net loss per share because certain items excluded from non-GAAP income from operations and non-GAAP net income, such as charges related to share-based compensation expenses, amortization of acquired intangible assets, amortization of debt discount and issuance costs from our convertible notes, and related tax effects, including non-recurring income tax adjustments, cannot be reasonably calculated or predicted at this time. In addition, the effect of the anti-dilutive impact of the capped call transactions entered into in connection with the convertible notes cannot be reasonably calculated or predicted at this time. The effect of these items may be significant.

Recent Business Highlights:

  • Welcomed many new customers into the Coupa community in Q2, including the following: Affirmed Networks, ASB Bank, Carousell, Comfortdelgro Corporation, Commonwealth Bank of Australia, Las Vegas Valley Water District, Lucid Software, Lucozade Ribena Suntory, Messer-US, Pochteca Materias Primas, PSSI Group, Rakuten, Redfin, Sainsbury's Supermarkets, SAUR Group, The Nebu Group, Tullow Oil, University of St. Augustine, Venafi, Volkswagen Group Australia, Waste Management, and Wawa.
  • Named as a leader in the Gartner 2019 Magic Quadrant for Procure-to-Pay Suites for the fourth consecutive time, and for the first time, ranked highest on both axes – Completeness of Vision and Ability to Execute.
  • At Inspire '19, unveiled new Community Intelligence innovations as well as Coupa Pay partnerships with Citi Commercial Cards (part of Citi's Treasury and Trades business), PayPal, Stripe, and Transfermate.

Conference Call Information:

Coupa will host a conference call and live webcast for analysts and investors at 5:00 p.m. Eastern time today.

  • Parties in the U.S. and Canada can access the call by dialing (855) 302-8830, using conference code 7538719.
  • International parties can access the call by dialing +1 (330) 871-6073, using conference code 7538719.

A live webcast will be accessible on Coupa's investor relations website at http://investors.coupa.com. A replay will be available through the same link. A telephonic replay of the conference call will be available through Tuesday, September 10, 2019. To access the replay, parties in the U.S. and Canada should call (855) 859-2056 and enter conference code 7538719. International parties should call +1 (404) 537-3406 and enter conference code 7538719.

Non-GAAP Financial Measures:

In addition to disclosing financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), this press release and the accompanying tables contain certain non-GAAP financial measures that exclude certain items, including share-based compensation expenses, amortization of acquired intangible assets, amortization of debt discount and issuance costs from convertible notes, and related tax effects, including non-recurring income tax adjustments. In addition, the weighted average diluted shares used to calculate non-GAAP net income per share reflect the anti-dilutive impact of the capped call transactions entered into in connection with the convertible notes. Coupa believes these non-GAAP measures are useful in evaluating its operating performance and regularly reviews these measures as it evaluates its business.

Coupa believes these non-GAAP measures provide investors and other users of its financial information consistency and comparability with its past financial performance and facilitate period to period comparisons of operations. Coupa believes these non-GAAP measures are useful in evaluating its operating performance compared to that of other companies in its industry, as they generally eliminate the effects of certain items that may vary for different companies for reasons unrelated to overall operating performance.

Coupa uses these non-GAAP measures in conjunction with GAAP measures as part of its overall assessment of its performance, including the preparation of its annual operating budget and quarterly forecasts, to evaluate the effectiveness of its business strategies and to communicate with its board of directors concerning its financial performance. The definitions of its non-GAAP measures may differ from the definitions used by other companies and therefore comparability may be limited. In addition, other companies may not publish these or similar metrics. Thus, Coupa's non-GAAP measures should be considered in addition to, not as substitutes for, or in isolation from, measures prepared in accordance with GAAP.

Coupa compensates for these limitations by providing investors and other users of its financial information a reconciliation of non-GAAP measures to the related GAAP financial measures. Coupa encourages investors and others to review its financial information in its entirety, not to rely on any single financial measure and to view its non-GAAP measures in conjunction with GAAP financial measures.  Please see the reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures attached to this release.

Coupa also uses key metrics such as cumulative spend under management, which represents the aggregate amount of money that has been transacted through its core platform for all of its customers collectively since it launched its platform. Coupa calculates this metric by aggregating the actual transaction data, for invoices, purchase orders and expenses, from customers on its core platform. While Coupa does not believe this metric is directly correlated to its financial results, it believes that the adoption of its core platform, as evidenced by growth in cumulative spend under management, drives additional value to its customers, which will enhance its ability to acquire new customers and to increase renewals and upsells to existing customers.

Forward-Looking Statements:

This release includes forward-looking statements. All statements other than statements of historical facts, including the statements of management and statements in "Business Outlook" are forward-looking statements. These forward-looking statements are based on Coupa's current expectations and projections about future events and trends that Coupa believes may affect its financial condition, results of operations, strategy, short- and long-term business operations and objectives, and financial needs.

These forward-looking statements are subject to a number of risks, uncertainties and assumptions that may cause actual results to differ materially, including Coupa has a limited operating history, which makes it difficult to predict its future operating results; if Coupa is unable to attract new customers, the growth of its revenues will be adversely affected; because its platform is sold to large enterprises with complex operating environments, Coupa encounters long and unpredictable sales cycles; risks and liabilities related to breach of its security measures or unauthorized access to customer data; the markets in which Coupa participates are intensely competitive; Coupa's business depends substantially on its customers renewing their subscriptions and purchasing additional subscriptions; if Coupa fails to develop widespread brand awareness cost-effectively, its business may suffer; if Coupa fails to manage its recent rapid growth effectively, Coupa may be unable to execute its business plan, maintain high levels of service, or adequately address competitive challenges; and the impact of foreign currency exchange rates and global economic conditions.

These and other risks and uncertainties that could affect Coupa's future results are included under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations," in Coupa's quarterly report on Form 10-Q filed with the Securities and Exchange Commission (SEC) on June 4, 2019, which is available at investors.coupa.com and on the SEC's website at www.sec.gov. Further information on potential risks that could affect actual results will be included in other periodic filings Coupa makes with the SEC.

The forward-looking statements in this release reflect Coupa's expectations as of September 3, 2019. Coupa undertakes no obligation to update publicly any forward-looking statements for any reason after the date of this release to conform these statements to actual results or to changes in its expectations.

About Coupa Software

Coupa Software (COUP) is a leading provider of BSM solutions. We offer a comprehensive, cloud-based BSM platform that has connected hundreds of organizations with more than five million suppliers globally. The Coupa BSM platform provides greater visibility into and control over how companies spend money. Using the Coupa BSM platform, businesses are able to achieve real, measurable value and savings that drive their profitability. Learn more at www.coupa.com. Read more on the Coupa Blog or follow @Coupa on Twitter.

 

COUPA SOFTWARE INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts) 

(unaudited)








Three Months Ended


Six Months Ended


July 31,


July 31,


2019


2018


2019


2018

Revenues:








Subscription

$  83,482


$  55,374


$ 156,439


$ 105,340

Professional services and other 

11,657


6,277


20,044


12,663

Total revenues 

95,139


61,651


176,483


118,003

Cost of revenues:








Subscription

22,062


11,773


39,465


22,947

Professional services and other 

12,428


6,867


22,354


13,818

Total cost of revenues 

34,490


18,640


61,819


36,765

Gross profit 

60,649


43,011


114,664


81,238

Operating expenses:








Research and development 

23,364


13,415


44,378


26,616

Sales and marketing 

39,820


26,580


73,430


51,240

General and administrative 

20,269


13,640


37,467


26,075

Total operating expenses 

83,453


53,635


155,275


103,931

Loss from operations 

(22,804)


(10,624)


(40,611)


(22,693)

Interest expense

(8,511)


(3,122)


(11,686)


(6,095)

Interest income and other, net

1,479


372


2,403


450

Loss before provision for (benefit from) income taxes 

(29,836)


(13,374)


(49,894)


(28,338)

Provision for (benefit from) income taxes 

(9,842)


480


(9,432)


970

Net loss

$ (19,994)


$ (13,854)


$ (40,462)


$ (29,308)

Net loss per share attributable to common stockholders, basic and diluted 

$     (0.32)


$     (0.24)


$     (0.66)


$     (0.52)

Weighted-average number of shares used in computing net loss per share attributable to common stockholders, basic and diluted

62,038


56,966


61,422


56,429

 

COUPA SOFTWARE INCORPORATED

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)

(unaudited)






July 31,


January 31,


2019


2019

Assets




Current assets:




Cash and cash equivalents 

$    613,906


$    141,250

Marketable securities

194,304


180,169

Accounts receivable, net of allowances 

83,949


95,274

Prepaid expenses and other current assets 

19,738


10,343

Deferred commissions, current portion 

9,101


7,324

Total current assets 

920,998


434,360

Property and equipment, net 

15,021


10,549

Deferred commissions, net of current portion 

22,757


18,904

Goodwill 

372,272


209,560

Intangible assets, net 

103,388


55,925

Operating lease right-of-use assets

28,477


Other assets 

14,159


10,766

Total assets 

$ 1,477,072


$    740,064

Liabilities and Stockholders' Equity




Current liabilities:




Accounts payable 

$        2,903


$        5,485

Accrued expenses and other current liabilities 

55,239


41,792

Deferred revenue, current portion 

186,493


179,967

Operating lease liabilities, current portion

6,613


Current portion of convertible senior notes, net

180,696


174,615

Total current liabilities 

431,944


401,859

Convertible senior notes, net

544,107


Deferred revenue, net of current portion 

2,426


2,620

Operating lease liabilities, net of current portion

23,617


Other liabilities 

20,906


22,304

Total liabilities 

1,023,000


426,783

Stockholders' equity:




Preferred stock, $0.0001 par value per share


Common stock, $0.0001 par value per share

7


6

Additional paid-in capital 

750,617


567,797

Accumulated other comprehensive income (loss)

(1,233)


335

Accumulated deficit 

(295,319)


(254,857)

Total stockholders' equity

454,072


313,281

Total liabilities and stockholders' equity

$ 1,477,072


$    740,064

 

COUPA SOFTWARE INCORPORATED 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 

(in thousands) 

(unaudited)






Six Months Ended


July 31,


2019


2018

Cash flows from operating activities




Net loss 

$     (40,462)


$     (29,308)

Adjustments to reconcile net loss to net cash provided by operating activities:




Depreciation and amortization 

11,330


3,997

Accretion of discounts on marketable securities, net

668


(295)

Amortization of deferred commissions 

4,309


2,660

Amortization of debt discount and issuance costs

10,998


5,642

Stock-based compensation 

38,113


24,870

Other

(95)


(541)

Changes in operating assets and liabilities net of effects from acquisition:




Accounts receivable 

20,450


11,583

Prepaid expenses and other current assets 

(7,662)


625

Other assets 

(770)


130

Deferred commissions 

(9,939)


(5,285)

Accounts payable 

(4,473)


1,955

Accrued expenses and other liabilities 

(4,061)


5,260

Deferred revenue 

1,639


2,651

Net cash provided by operating activities 

20,045


23,944

Cash flows from investing activities




Purchases of marketable securities

(258,991)


(160,500)

Maturities of marketable securities

44,796


Sales of marketable securities

199,314


Acquisition, net of cash acquired

(210,468)


(1,178)

Purchases of property and equipment

(6,173)


(3,416)

Net cash used in investing activities 

(231,522)


(165,094)

Cash flows from financing activities




Proceeds from issuance of convertible senior notes, net of issuance costs

786,567


(639)

Purchase of capped calls

(118,738)


Proceeds from the exercise of common stock options 

10,909


6,810

Proceeds from issuance of common stock for employee stock purchase plan

5,396


4,137

Net cash provided by financing activities 

684,134


10,308

Net increase (decrease) in cash, cash equivalents, and restricted cash 

472,657


(130,842)

Cash, cash equivalents, and restricted cash at beginning of year

141,319


412,976

Cash, cash equivalents, and restricted cash at end of period

$    613,976


$    282,134





Reconciliation of cash, cash equivalents, and restricted cash to the condensed consolidated balance sheets




Cash and cash equivalents

613,906


282,061

Restricted cash included in other assets

70


73

Total cash, cash equivalents, and restricted cash

$    613,976


$    282,134

 

 COUPA SOFTWARE INCORPORATED 

 Reconciliation of GAAP to Non-GAAP Financial Measures 

 Three Months Ended July 31, 2019 

 (in thousands, except percentages and per share amounts) 

 (unaudited) 



 GAAP 


 Share-Based
Compensation
Expenses 


 Amortization
of Acquired
Intangible
Assets 


 Amortization of
Debt Discount
and Issuance
Costs 


Other
Expenses (2)


 Non-GAAP 

Costs and expenses:












Costs of subscription

$22,062


$  (1,771)


$ (4,709)


$ —


$ —


$15,582

Costs of professional services and other

12,428


(2,023)





10,405

Gross profit

63.7%


4.0%


4.9%


0.0%


0.0%


72.7%













Research and development

23,364


(5,075)





18,289

Sales and marketing

39,820


(6,060)


(1,650)




32,110

General and administrative

20,269


(6,339)





13,930

Income (loss) from operations

(22,804)


21,268


6,359




4,823

Operating margin

-24.0%


22.4%


6.7%


0.0%


0.0%


5.1%













Interest expense

(8,511)




8,038



(473)

Interest income and other, net

1,479






1,479

Income (loss) before provision for income taxes 

(29,836)


21,268


6,359


8,038



5,829

Provision for (benefit from) income taxes 

(9,842)


815


(123)



9,671


521

Net income (loss)

(19,994)


20,453


6,482


8,038


(9,671)


5,308













Net income (loss) per share attributable to common stockholders, basic (1)

$  (0.32)










$   0.09

Net income (loss) per share attributable to common stockholders, diluted (1)

$  (0.32)










$   0.07


(1) GAAP net loss per share is calculated based upon 62,038 basic and diluted weighted-average shares of common stock. Non-GAAP net income per share is calculated based upon 62,038 basic and 70,852 diluted weighted-average shares of common stock. The Company uses the treasury stock method to calculate the non-GAAP diluted shares related to the convertible notes which reflects any anti-dilutive impact of the capped call transactions entered into in connection with the convertible notes.


(2) Other expenses consists of the release of a valuation allowance against deferred tax assets.

 

 COUPA SOFTWARE INCORPORATED 

 Reconciliation of GAAP to Non-GAAP Financial Measures 

 Three Months Ended July 31, 2018 

 (in thousands, except percentages and per share amounts) 

 (unaudited) 



 GAAP 


 Share-Based
Compensation
Expenses 


 Amortization
of Acquired
Intangible
Assets 


 Amortization of
Debt Discount
and Issuance
Costs 


 Non-GAAP 

Costs and expenses:










Costs of subscription

$11,773


$ (1,093)


$    (844)

$

$

$9,836

Costs of professional services and other

6,867


(1,069)




5,798

Gross profit

69.8%


3.5%


1.4%


0.0%


74.6%











Research and development

13,415


(2,958)




10,457

Sales and marketing

26,580


(3,863)


(251)



22,466

General and administrative

13,640


(4,575)




9,065

Income (loss) from operations

(10,624)


13,558


1,095



4,029

Operating margin

-17.2%


22.0%


1.8%


0.0%


6.5%











Interest expense

(3,122)




2,894


(228)

Interest income and other, net

372





372

Income (loss) before provision for income taxes

(13,374)


13,558


1,095


2,894


4,173

Provision for income taxes

480


371


25



876

Net income (loss)

(13,854)


13,187


1,070


2,894


3,297











Net income (loss) per share attributable to common stockholders, basic (1)

$  (0.24)








$  0.06

Net income (loss) per share attributable to common stockholders, diluted (1)

$  (0.24)








$  0.05


(1) GAAP net loss per share is calculated based upon 56,966 basic and diluted weighted-average shares of common stock. Non-GAAP net income per share is calculated based upon 56,966 basic and 66,157 diluted weighted-average shares of common stock.

 

 COUPA SOFTWARE INCORPORATED 

 Reconciliation of GAAP to Non-GAAP Financial Measures 

 Six Months Ended July 31, 2019 

 (in thousands, except per share amounts) 

 (unaudited) 



 GAAP 


 Share-Based
Compensation
Expenses 


 Amortization
of Acquired
Intangible
Assets 


 Amortization of
Debt Discount
and Issuance
Costs 


Other
Expenses (2)


 Non-GAAP 

Costs and expenses:












Costs of subscription

$39,465


$  (3,159)


$ (6,881)

$

$


$ 29,425

Costs of professional services and other

22,354


(3,468)





18,886

Gross profit

65.0%


3.8%


3.9%


0.0%


0.0%


72.6%













Research and development

44,378


(9,123)





35,255

Sales and marketing

73,430


(10,899)


(2,656)




59,875

General and administrative

37,467


(11,464)





26,003

Income (loss) from operations

(40,611)


38,113


9,537




7,039

Operating margin

-23.0%


21.6%


5.4%


0.0%


0.0%


4.0%













Interest expense

(11,686)




10,998



(688)

Interest income and other, net

2,403






2,403

Income (loss) before provision for (benefit from) income taxes 

(49,894)


38,113


9,537


10,998



8,754

Provision for (benefit from) income taxes 

(9,432)


1,308


(246)



9,671


1,301

Net income (loss)

(40,462)


36,805


9,783


10,998


(9,671)


7,453













Net income (loss) per share attributable to common stockholders, basic (1)

$  (0.66)










$    0.12

Net income (loss) per share attributable to common stockholders, diluted (1)

$  (0.66)










$    0.11


(1) GAAP net loss per share is calculated based upon 61,422 basic and diluted weighted-average shares of common stock. Non-GAAP net income per share is calculated based upon 61,422 basic and 69,563 diluted weighted-average shares of common stock. The Company uses the treasury stock method to calculate the non-GAAP diluted shares related to the convertible notes which reflects any anti-dilutive impact of the capped call transactions entered into in connection with the convertible notes.


(2) Other expenses consists of the release of a valuation allowance against deferred tax assets.

 

 COUPA SOFTWARE INCORPORATED 

 Reconciliation of GAAP to Non-GAAP Financial Measures 

 Six Months Ended July 31, 2018 

 (in thousands, except per share amounts) 

 (unaudited) 



 GAAP 


 Share-Based
Compensation
Expenses 


 Amortization
of Acquired
Intangible
Assets 


 Amortization of
Debt Discount
and Issuance
Costs 


 Non-GAAP 

Costs and expenses:










Costs of subscription

$22,947


$ (1,924)


$ (1,628)



$19,395

Costs of professional services and other

13,818


(2,015)




11,803

Gross profit

68.8%


3.3%


1.4%


0.0%


73.6%











Research and development

26,616


(5,505)




21,111

Sales and marketing

51,240


(6,833)


(541)



43,866

General and administrative

26,075


(8,593)




17,482

Income (loss) from operations

(22,693)


24,870


2,169



4,346

Operating margin

-19.2%


21.1%


1.8%


0.0%


3.7%











Interest expense

(6,095)




5,642


(453)

Interest income and other, net

450





450

Income (loss) before provision for income taxes

(28,338)


24,870


2,169


5,642


4,343

Provision for income taxes

970


540


73



1,583

Net income (loss)

(29,308)


24,330


2,096


5,642


2,760











Net income (loss) per share attributable to common stockholders, basic (1)

$  (0.52)








$   0.05

Net income (loss) per share attributable to common stockholders, diluted (1)

$  (0.52)








$   0.04


(1) GAAP net loss per share is calculated based upon 56,429 basic and diluted weighted-average shares of common stock. Non-GAAP net income per share is calculated based upon 56,429 basic and 64,623 diluted weighted-average shares of common stock.

 

 COUPA SOFTWARE INCORPORATED 

 Reconciliation of GAAP Cash Flows from Operations to Free Cash Flows 

 (A Non-GAAP Financial Measure) 

 (in thousands) 

 (unaudited) 



Three Months Ended


Six Months Ended


July 31,


July 31,


2019


2018


2019


2018

Net cash provided by operating activities 

$  1,252


$ 11,308


$ 20,045


$ 23,944

Less: purchases of property and equipment

(3,519)


(2,292)


(6,173)


(3,416)

Free cash flows

$ (2,267)


$   9,016


$ 13,872


$ 20,528

 

Cision

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