Will Coupa Remain Independent?

San Mateo-based spend management firm Coupa (Nasdaq: COUP) went public more than two years ago. Its IPO has performed well as it continues to surpass market expectations and receive accolades for its products. Coupa values its addressable market at $37 billion and is targeting a share of $1 billion soon.

Coupa’s Financials

Coupa’s first quarter revenues grew 37% over the year to $56.4 million, surpassing the market’s estimates of $51.18 million. Loss per share of $0.01 for the quarter was also significantly better than the consensus estimate of a loss of $0.11 per share for the quarter.

By segment, subscription sales climbed 40% to $50 million and professional services and other revenues grew 17% to $6.4 million.

For the current quarter, Coupa expects revenues of $56-$57 million with a loss per share of $0.08-$0.10. The market was looking for revenues of $55.6 million with a loss of $0.11 per share for the quarter. Coupa expects to end the year with revenues of $233-$236 million compared with the market’s forecast revenues of $230.1 million. That compares with the $186.8 million that Coupa had recorded in fiscal 2017. It forecast the year’s loss per share at $0.14-$0.19 compared with the Street’s estimate of a loss of $0.24 for the year. It currently has a cumulative spend under management at $747 billion, and expects to surpass $1 trillion this fiscal year.

Besides strong financial performance, Coupa is also witnessing significant recognition from the industry. According to a recent IDC release, Coupa was named a leader in IDC’s Marketscape Worldwide SaaS and Cloud-Enabled Supplier Relationship Management (SRM) Applications 2018 assessment. This was the fifth IDC Marketscape report this year that Coupa was ranked a Leader. Other recognitions included leader in the Worldwide SaaS and Cloud-Enabled Sourcing Applications 2018, Worldwide SaaS and Cloud-Enabled Procure-to-Pay Applications 2018, Worldwide SaaS and Cloud-Enabled Travel and Expense Management 2018, and Worldwide SaaS and Cloud-Enabled Procurement Applications.

Coupa’s Product Expansion

Coupa continues to focus on the enterprise segment to drive growth. It hopes to achieve this through product innovation. It recently released version 21 of its business spend management platform that contains several new solutions and capabilities including a voice activated service for Early Access subscribers. The service uses custom Alexa skills that have been built on Amazon’s Lex technology to allow users to locate items, adjust inventory balances, and reorder stock.

Its Open Buy service has also been expanded to include supplier items and pricing content from a bigger portfolio of Early Access suppliers including Imperial Supplies, Office Depot, and Staples. Its platform is increasing focus on delivering more user-centric experiences such as approval cycle times to drive productivity. Organizations have the capability to accelerate or slow down the approval process by comparing their individual performance to peer company performance.

Additional features in their products now include automatic tax coding for supplier invoices, contract creation from Coupa Sourcing Optimization, and support for company-specific business spend management processes that have been built through the inputs received from their customer community.

Questions for Coupa’s Board

Coupa is a stellar example of a company that has leveraged the unprecedented opportunity in SaaS available today. I would like to know how does Coupa plan to address the competition from big players in the space. SAP, for instance, has deeper pockets and a wider reach with Ariba and Concur. Oracle is also making its presence felt in the industry with its Procurement Cloud. Coupa claims to be a pure-play multi-tenant SaaS vendor in the spend management software space, but does it have enough to remain independent? Or, will someone like Oracle acquire Coupa to add to their portfolio instead?

For now, the market is pleased with Coupa. Its stock is trading at 52-week high levels of $66.07 with a market capitalization of $3.76 billion. It has been climbing from the 52-week low of $28.60 that it was trading at a year ago. The stock had listed in October 2016 at $18 each.

Looking For Some Hands-On Advice?

For entrepreneurs who want to discuss their specific businesses with me, I’m very happy to assess your situation during my free online 1Mby1M Roundtables, held almost every week. You can also check out my LinkedIn Learning course here, my Lynda.com Bootstrapping course here, and follow my writings here.