Coupa Software Inc. COUP has exhibited impressive price performance in the past year. Notably, shares of Coupa Softwarehave returned approximately 96.5% year over year, substantially outperforming the industry’s growth of 20%. The stock has also outperformed S&P 500 index’s rally of 7.7%.
We note that Coupa Software has delivered a positive earnings surprise of 204.4% in the trailing four quarters. Moreover, the company has a long-term expected EPS growth rate of 30%.
Let’s delve deeper and analyze the factors driving Coupa Software’s robust performances.
Coupa Software provides a unified, cloud-based spend management platform that aids enterprises in keeping a tab on daily expenditures The company’s expanding relationship with Amazon Web Services (“AWS”) bodes well for the company. The deal will enable customers to easily configure their AWS account to send invoices into Coupa Software's platform for touchless digital processing. This move provides greater visibility and efficiency in IT cloud spending.
Further, Coupa Software is benefiting from expanding customer base on the back of growing adoption of spend management platform. Moreover, an expanding partner base is anticipated to drive the top line. The company also launched R20 that leverages Community Intelligence to reduce global supply chain risk and provides customers with new capabilities to optimize spending.
Coupa Software has announced a strategic partnership with Launchship Technology Solutions. The alliance enables businesses to manage spend, including contingent workforce spend, within a comprehensive BSM platform.
Further, the company has acquired DCR Workforce, a SaaS application provider. The buyout is aimed at strengthening Coupa Software’s strategy of helping organizations in managing business spend within a widespread BSM platform.
The company has also acquired Aquiire, a real-time supplier catalog search. The buyout extends Coupa Software’s ability to deliver a comprehensive business-to-business (B2B) shopping know-how across real-time, cached and localized catalog search.
We expect the trend to continue and drive the overall financial performance of Coupa Software.
Coupa Software reported fourth-quarter fiscal 2019 non-GAAP earnings of 5 cents per share, surpassing the Zacks Consensus Estimate of breakeven. Further, the bottom line increased from 2 cents reported in the year-ago quarter.
Revenues surged 39% from the year-ago quarter to $74.9 million, driven by growth of 45% in subscription services, which totaled $67.5 million. Professional services & other revenues also increased 3.8% to $7.4 million.
Further, the figure surpassed the consensus estimate of $68 million.
The top line was primarily driven by expanding customer base. Further, rising adoption of the company’s platform is bolstering subscription services revenues. Billing during the quarter came in at $127 million, surging 51% year over year.
For first-quarter fiscal 2020, revenues are anticipated between $73.5 million and $74 million. The Zacks Consensus Estimate for revenues is currently pegged at $73.8 million.
For fiscal 2020, total revenues are expected between $352 million and $327 million. The Zacks Consensus Estimate for revenues is currently pegged at $326.4 million.
Solid Growth Prospects
Coupa Software has solid growth prospects, as is apparent from the Zacks Consensus Estimate for fiscal 2021 earnings per share of 33 cents, reflecting year-over-year growth of 270.4%.
Meanwhile, the company’s revenues are anticipated to increase by 25.4% in fiscal 2020. Moreover, revenues are expected to rise 24.9% in fiscal 2021.
We expect the aforementioned factors to aid the company sustain strong momentum and stay afloat amid difficult times. Consequently, we suggest that investors retain the stock for the time being.
Zacks Rank and Stocks to Consider
Currently, Coupa Software carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology sector are Cadence Design Systems, Inc CDNS, Synopsys, Inc. SNPS and Symantec Corporation SYMC, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Cadence Design, Synopsys and Symantec have long-term earnings growth rates of 12%, 10% and 7.9%, respectively.
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