Coupa Software Reports Third Quarter Fiscal 2022 Financial Results

– Record Quarterly Revenues of $186 Million, 40% Year-Over-Year Growth

– Quarterly Calculated Billings of $193 Million, 38% Year-Over-Year Growth

– Quarterly Operating Cash Flows and Adjusted Free Cash Flows of $31 Million and $28 Million, Respectively

SAN MATEO, Calif., Dec. 6, 2021 /PRNewswire/ — Coupa Software (NASDAQ: COUP) today announced financial results for its third fiscal quarter ended October 31, 2021.

Coupa Software (PRNewsfoto/Coupa Software)

“We delivered another strong quarter with record revenue and profitability,” said Rob Bernshteyn, chairman and chief executive officer at Coupa. “As demonstrated by our third quarter results, we are seeing strong adoption of the Coupa platform as our customers continue to prioritize Business Spend Management as a fundamental aspect of their go-forward strategy. With the fourth quarter well under way, we continue to leverage our Value-as-a-Service approach to add strategic customers across many industries and of all sizes.”

Third Quarter Results:

  • Total revenues were $185.8 million, an increase of 40% compared to the same period last year. Subscription revenues were $164.7 million, an increase of 40% compared to the same period last year.

  • GAAP operating loss was $56.1 million, compared to $33.6 million for the same period last year. Non-GAAP operating income was $27.9 million, compared to $14.3 million for the same period last year.

  • GAAP net loss attributable to Coupa Software Incorporated was $91.2 million, compared to $60.8 million for the same period last year. GAAP net loss per basic and diluted share attributable to Coupa Software Incorporated was $1.23, compared to $0.88 for the same period last year. Non-GAAP net income attributable to Coupa Software Incorporated was $23.5 million, compared to $13.0 million for the same period last year. Non-GAAP net income per diluted share attributable to Coupa Software Incorporated was $0.31, compared to $0.18 for the same period last year.

  • Operating cash flows and adjusted free cash flows were positive $31.0 million and $28.2 million, respectively.

See the section titled “Non-GAAP Financial Measures” and the reconciliation tables below for important information regarding the non-GAAP financial measures used by Coupa.

Business Outlook:

The following forward-looking statements reflect Coupa’s expectations as of December 6, 2021.

Fourth quarter of fiscal 2022:

  • Total revenues are expected to be $185.0 to $186.0 million.

  • Subscription revenues are expected to be $166.0 to $167.0 million.

  • Professional services and other revenues are expected to be approximately $19.0 million.

  • Non-GAAP income from operations is expected to be $8.0 to $10.0 million.

  • Non-GAAP net income per diluted share attributable to Coupa Software Incorporated is expected to be $0.03 to $0.05 per share.

  • Diluted weighted average share count is expected to be approximately 77.0 million shares.

Full year fiscal 2022:

  • Total revenues are expected to be $717.0 to $718.0 million.

  • Non-GAAP income from operations is expected to be $70.0 to $72.0 million.

  • Non-GAAP net income per diluted share attributable to Coupa Software Incorporated is expected to be $0.66 to $0.69 per share.

  • Diluted weighted average share count is expected to be approximately 76.5 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 diluted share attributable to Coupa Software Incorporated to GAAP net loss per share attributable to Coupa Software Incorporated because certain items excluded from non-GAAP income from operations and non-GAAP net income per diluted share attributable to Coupa Software Incorporated, such as charges related to stock-based compensation expenses, amortization of acquired intangible assets, amortization of debt discount and issuance costs, gain or loss on conversion of convertible senior notes, the adjustment attributable to redeemable non-controlling interests, 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 company’s offerings of convertible notes in 2018, 2019 and 2020, respectively, 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 Q3, including the following: Angi, Aptim Holdings, Atr, Capsida Biotherapeutics, Compass Minerals International, Covetrus, DEVK Versicherungen, EDEKA Handelsgesellschaft Nord, Endeavor Group Limited, Orbia Advance Corporation, Softbank, and Yazaki North America.

  • Named a Gartner® Magic Quadrant™ Leader for P2P Suites for the sixth consecutive time1

  • Named a leader in ten Spend Matters SolutionMaps, covering every area of Source-to-Pay2

  • Named a Best Led Workplace in 2021 by Inc3

  • Became a Globally Certified Great Place to Work across the US, UK, India, Germany, and Ireland for 2021-20224

  • Named to Fortune’s 2021 Future 50 list5

  • Awarded a Silver medal sustainability rating from EcoVadis

  • Debuted its campaign, “Behold the Power of Spend” at the World Series, F-1, Premier League, and Bundesliga events

  • Opened registration for its 2022 global Business Spend Management (BSM) community conference Inspire in North America and EMEA

  • Hosted its annual Global Volunteer Day with well over 500 employees participating across 35 offices

  • Hosted a virtual panel “Women of Impact: Own Your Career” put on by Coupa Empower

  • Hosted a Supply Chain Symposium in London bringing together supply chain leaders from across the UK

  • Welcomed supply chain risk management and operational resilience company Interos to its portfolio of Coupa Ventures investments

Conference Call Information:

Coupa will host a conference call and live webcast for analysts and investors at 4:30 p.m. Eastern time today.

The 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.

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, including non-GAAP operating (loss) income, non-GAAP net (loss) income attributable to Coupa Software Incorporated, non-GAAP net (loss) income per basic and diluted share attributable to Coupa Software Incorporated, and adjusted free cash flows. Coupa believes these non-GAAP measures are useful in evaluating its operating performance and Coupa’s management regularly reviews and uses these measures for business planning and other purposes.

Non-GAAP operating (loss) income and non-GAAP net (loss) income attributable to Coupa Software Incorporated exclude certain items from the corresponding GAAP measures, including: stock-based compensation expenses; amortization of acquired intangible assets; the change in fair value of contingent consideration related to an acquisition; amortization of debt discount and issuance costs; gain or loss on conversion of convertible senior notes; the adjustment attributable to redeemable non-controlling interests; and related tax effects, including non-recurring income tax adjustments. In addition, the weighted average diluted shares figure used to calculate non-GAAP net income per share attributable to Coupa Software Incorporated reflects the anti-dilutive impact of the capped call transactions entered into in connection with the company’s offerings of convertible notes.

Adjusted free cash flows is defined as net cash provided by operating activities, less purchases of property and equipment, plus repayments of convertible senior notes attributable to debt discount, plus one-time payout of legacy unvested equity awards accelerated in conjunction with a business combination. Coupa has the ability to settle obligations related to its senior notes through the use of cash, shares of its common stock, or a combination of both, at its election.

Coupa believes these non-GAAP measures are useful to investors and other users of its financial information because they provide a way to measure and evaluate Coupa’s underlying operating performance and the strength of its core business consistently across the periods presented. Coupa believes these non-GAAP measures are also useful for comparing its operating performance to that of other companies in its industry, because they eliminate the effects of certain items that may vary between companies for reasons unrelated to their operating performance. Coupa believes that adjusted free cash flows also provides a useful measure of the company’s capital strength and liquidity, although it is not intended to represent and should not be viewed as the amount of residual cash flow available for discretionary expenditures.

Coupa uses these non-GAAP measures in conjunction with GAAP measures as part of its overall assessment of its performance and liquidity, 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 and liquidity. Coupa’s definitions of its non-GAAP measures may differ from those used by other companies for similarly-titled measures, 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, the company’s GAAP results.

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. In addition, Coupa compensates for the limitations of its non-GAAP financial measures by providing a reconciliation of each non-GAAP measure to the most directly comparable GAAP financial measure. These reconciliations are included in the tables attached to this release.

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, cash flows, liquidity 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 from those projected, including, without limitation: the uncertain impact of the COVID-19 pandemic, including new variants such as the Delta and Omicron variants; Coupa has a limited operating history at its current scale, which makes it difficult to predict its future operating results; Coupa may not be able to manage its recent rapid growth effectively; risks related to past and future business acquisitions, including their integration with Coupa’s existing business model, operations and culture; 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; the markets in which Coupa participates are intensely competitive; Coupa’s business depends in part on its customers renewing their subscriptions and purchasing additional subscriptions; Coupa may not be successful in expanding its sales efforts or developing widespread brand awareness in a cost-effective manner; risks and liabilities related to breach of its security measures or unauthorized access to customer data; the impact of foreign currency exchange rates and global economic conditions; and risks relating to analyst coverage of its stock.

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 September 8, 2021, 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 December 6, 2021. 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.

1Gartner, “2021 Magic Quadrant™ for Procure-to-Pay Suites”, October 27, 2021
2Spend Matters, “Spend Matters Almanac”, October 8, 2021
3Inc, “Introducing the Best Workplaces of 2021”, November 30, 2021
4Great Place to Work, “Certified™ Companies – Best Companies to Work for 2021”, July 2021
5Fortune, “The Future 50: Growth stocks to bet on in an unpredictable world”, December 2, 2021

About Coupa Software

Coupa empowers companies around the world with the visibility and control they need to spend smarter and safer. To learn more about how Coupa can help you spend smarter, visit 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

October 31,

Nine Months Ended

October 31,

2021

2020

2021

2020

Revenues:

Subscription

$

164,745

$

118,083

$

461,079

$

335,399

Professional services and other

21,071

14,881

70,912

42,700

Total revenues

185,816

132,964

531,991

378,099

Cost of revenues:

Subscription

52,279

36,528

154,701

99,335

Professional services and other

25,341

14,259

81,865

42,729

Total cost of revenues

77,620

50,787

236,566

142,064

Gross profit

108,196

82,177

295,425

236,035

Operating expenses:

Research and development

39,990

30,528

125,625

87,459

Sales and marketing

83,779

53,204

237,902

149,831

General and administrative

40,513

32,092

116,139

69,941

Total operating expenses

164,282

115,824

479,666

307,231

Loss from operations

(56,086)

(33,647)

(184,241)

(71,196)

Interest expense

(31,130)

(29,308)

(90,854)

(61,820)

Other income (expense), net

(1,298)

746

(2,746)

8,833

Loss before benefit from income taxes

(88,514)

(62,209)

(277,841)

(124,183)

Benefit from income taxes

(476)

(1,411)

(2,697)

(5,453)

Net loss

(88,038)

(60,798)

(275,144)

(118,730)

Net loss attributable to redeemable non-controlling interests

(273)

(790)

Adjustment attributable to redeemable non-controlling interests

3,438

8,673

Net loss attributable to Coupa Software Incorporated

$

(91,203)

$

(60,798)

$

(283,027)

$

(118,730)

Net loss per share, basic and diluted, attributable to Coupa Software Incorporated

$

(1.23)

$

(0.88)

$

(3.85)

$

(1.76)

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

74,133

68,941

73,514

67,349

COUPA SOFTWARE INCORPORATED

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)

(unaudited)

October 31, 2021

January 31, 2021

Assets

Current assets:

Cash and cash equivalents

$

458,195

$

323,284

Marketable securities

209,660

283,036

Accounts receivable, net of allowances

179,278

196,009

Prepaid expenses and other current assets

32,283

36,381

Deferred commissions, current portion

18,848

15,541

Total current assets

898,264

854,251

Property and equipment, net

30,161

28,266

Deferred commissions, net of current portion

42,623

36,832

Goodwill

1,515,141

1,480,847

Intangible assets, net

543,628

632,173

Operating lease right-of-use assets

38,183

41,305

Other assets

35,853

31,491

Total assets

$

3,103,853

$

3,105,165

Liabilities, Redeemable Non-Controlling Interests, Other Temporary Equity and Stockholders’ Equity

Current liabilities:

Accounts payable

$

5,279

$

4,831

Accrued expenses and other current liabilities

96,716

80,271

Deferred revenue, current portion

352,198

356,115

Current portion of convertible senior notes, net

633,641

609,068

Operating lease liabilities, current portion

12,401

11,222

Total current liabilities

1,100,235

1,061,507

Convertible senior notes, net

952,285

897,525

Deferred revenue, net of current portion

14,058

5,773

Operating lease liabilities, net of current portion

27,174

31,845

Other liabilities

68,210

67,915

Total liabilities

2,161,962

2,064,565

Redeemable non-controlling interests

10,044

Other temporary equity

369

Stockholders’ equity:

Preferred stock, $0.0001 par value per share

Common stock, $0.0001 par value per share

7

7

Additional paid-in capital

1,724,042

1,556,865

Accumulated other comprehensive income

8,748

9,165

Accumulated deficit

(800,950)

(525,806)

Total stockholders’ equity

931,847

1,040,231

Total liabilities, redeemable non-controlling interests, other temporary equity and stockholders’ equity

$

3,103,853

$

3,105,165

COUPA SOFTWARE INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

Nine Months Ended

October 31,

2021

2020

Cash flows from operating activities

Net loss attributable to Coupa Software Incorporated

$

(283,027)

$

(118,730)

Net loss and adjustment attributable to redeemable non-controlling interests

7,883

Net loss

(275,144)

(118,730)

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

Depreciation and amortization

109,900

36,529

Amortization of premium on marketable securities, net

625

869

Amortization of deferred commissions

13,335

10,102

Amortization of debt discount and issuance costs

85,716

58,727

Stock-based compensation

145,251

94,851

Loss (gain) on conversion of convertible senior notes

357

(3,166)

Repayments of convertible senior notes attributable to debt discount

(1,338)

(27,208)

Other

(3,204)

3,923

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

Accounts receivable

21,433

22,519

Prepaid expenses and other current assets

4,529

1,591

Other assets

13,968

(2,730)

Deferred commissions

(22,445)

(11,355)

Accounts payable

500

(1,435)

Accrued expenses and other liabilities

6,795

4,941

Deferred revenue

3,630

(11,630)

Net cash provided by operating activities

103,908

57,798

Cash flows from investing activities

Purchases of marketable securities

(116,583)

(788,047)

Maturities of marketable securities

94,142

351,973

Sales of marketable securities

94,916

830,125

Acquisitions, net of cash acquired

(46,719)

(94,121)

Purchases of other investments

(10,000)

Purchases of property and equipment

(10,256)

(9,559)

Net cash provided by (used in) investing activities

5,500

290,371

Cash flows from financing activities

Investment from redeemable non-controlling interests

2,223

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

1,355,066

Purchase of capped calls

(192,786)

Repayments of convertible senior notes

(5,748)

(554,244)

Proceeds from the exercise of common stock options

7,444

14,425

Proceeds from issuance of common stock for employee stock purchase plan

21,626

15,631

Net cash provided by financing activities

25,545

638,092

Effects of foreign currency exchange rates on cash, cash equivalents, and restricted cash

(178)

128

Net increase in cash, cash equivalents, and restricted cash

134,775

986,389

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

327,589

268,280

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

$

462,364

$

1,254,669

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

Cash and cash equivalents

$

458,195

$

1,251,006

Restricted cash included in other assets

4,169

3,663

Total cash, cash equivalents, and restricted cash

$

462,364

$

1,254,669

COUPA SOFTWARE INCORPORATED

Reconciliation of GAAP to Non-GAAP Financial Measures

Three Months Ended October 31, 2021

(in thousands, except percentages and per share amounts)

(unaudited)

GAAP

Stock-Based

Compensation

Expenses

Amortization of

Acquired

Intangible Assets

Amortization of

Debt Discount and

Issuance Costs

Loss on

Conversion of

Convertible

Senior Notes

Other (2)

Non-GAAP

Costs and expenses:

Costs of subscription

$

52,279

$

(4,162)

$

(16,736)

$

$

$

$

31,381

Costs of professional services and other

25,341

(4,729)

(3,642)

16,970

Gross profit

58.2

%

4.8

%

11.0

%

0.0

%

0.0

%

0.0

%

74.0

%

Research and development

39,990

(11,357)

28,633

Sales and marketing

83,779

(13,217)

(13,140)

57,422

General and administrative

40,513

(16,994)

23,519

Income (loss) from operations

(56,086)

50,459

33,518

27,891

Operating margin

(30.2)

%

27.2

%

18.0

%

0.0

%

0.0

%

0.0

%

15.0

%

Interest expense

(31,130)

29,454

(1,676)

Other income (expense), net

(1,298)

228

(1,070)

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

(88,514)

50,459

33,518

29,454

228

25,145

Provision for (benefit from) income taxes

(476)

733

1,629

1,886

Net income (loss)

(88,038)

49,726

31,889

29,454

228

23,259

Net loss attributable to non-controlling interests

(273)

(273)

Adjustment attributable to non-controlling interests

3,438

3,438

Net income (loss) attributable to Coupa Software Incorporated

(91,203)

49,726

31,889

29,454

228

3,438

23,532

Net income (loss) per share, basic, attributable to Coupa Software Incorporated (1)

$

(1.23)

$

0.32

Net income (loss) per share, diluted, attributable to Coupa Software Incorporated (1)

$

(1.23)

$

0.31

GAAP net loss per share attributable to Coupa Software Incorporated is calculated based upon 74,133 basic and diluted weighted-average shares of common stock. Non-GAAP net income per share attributable to Coupa Software Incorporated is calculated based upon 74,133 basic and 76,754 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 consists of an adjustment attributable to redeemable non-controlling interests to its redemption amount.

COUPA SOFTWARE INCORPORATED

Reconciliation of GAAP to Non-GAAP Financial Measures

Three Months Ended October 31, 2020

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