Back to top

Image: Bigstock

Factors to Watch Before Coupa Software's (COUP) Q2 Earnings

Read MoreHide Full Article

Coupa Software Incorporated (COUP - Free Report) is scheduled to release second-quarter fiscal 2021 results on Sep 8.

For the fiscal second quarter, the company expects earnings in the range of 6-8 cents per share. The Zacks Consensus Estimate for earnings has been steady in the past 30 days at 8 cents per share, which indicates growth of 14.3% on a year-over-year basis.

Revenues are anticipated between $118 million and $119 million. The consensus mark for fiscal second-quarter revenues is pegged at $118.8 million, which suggests growth of 24.9% from the prior-year quarter.

Coupa Software, Inc. Price and EPS Surprise

Coupa Software, Inc. Price and EPS Surprise

Coupa Software, Inc. price-eps-surprise | Coupa Software, Inc. Quote

Notably, the company beat estimates in each of the trailing four quarters, the average surprise being 215.36%.

Factors to Note

Coupa Software’s fiscal second-quarter performance is likely to have benefited from solid uptake of Business Spend Management (BSM) offerings and an expanding customer base. Notably, the coronavirus outbreak has impacted budgets and companies have been striving to optimize spending patterns to survive the macroeconomic impacts. This may have bolstered adoption of Coupa Software’s BSM solutions in the quarter to be reported, especially across industries including life sciences and healthcare.

Moreover, coronavirus pandemic has bolstered demand for digital payment offerings. This is expected to have contributed to momentum in solutions such as Coupa Pay, Accelerate, Invoice payments and Virtual Cards for Pos, and might get reflected in the fiscal second-quarter top line. It has extended these solutions to partners like BNP Paribas, American Express, Citibank, Transfermate, Stripe and PayPal.

Smart and efficient spend-control programs that provide enhanced reporting and analytics have been the primary reason behind Coupa Software’s expanding clientele. Coronavirus crisis induced solid momentum in Coupa Advantage Express, Strategic Sourcing, Risk Assess and Source Together solutions might get reflected in the company’s subscription services revenues in the quarter to be reported.

Coupa Software anticipates Subscription revenues between $107 million and $108 million. The Zacks Consensus Estimate for Subscription revenues is currently pegged at $109 million, which suggests growth of 30.6% from the prior-year reported figure.

During the quarter under review, the U.K.-headquartered, humanitarian aid, development, and advocacy organization, World Vision, adopted Coupa BSM Platform to source and accelerate delivery of sanitation and protective supplies, “to the world's most vulnerable children,” amid the COVID-19 pandemic.

An expanding clientele is instilling investor optimism in the stock. Notably, the stock has returned 135.5% year to date, compared with the industry’s rally of 82.9%.

Year to Date Price Performance

Further, the company has been adding new capabilities to Coupa Supplier Insights and Coupa BSM solutions, which is anticipated to have bolstered adoption amid coronavirus crisis induced supply chain woes. This may have generated incremental revenues in the quarter under review. Notably, the company has strengthened Coupa Pay solution with greater payment flexibility capabilities.

Introduction of Coupa CLM Advanced on synergies from integration of Coupa BSM platform with Exari's technology amid ongoing digital transformation is expected to have strengthened the company’s position in the BSM market.

However, rising operating expenses on product development amid stiff competition from SAP Ariba and Oracle’s (ORCL - Free Report) Procurement Cloud offerings, in the Procure-to-Pay (P2P) space, might have kept margins under pressure in the fiscal second quarter.

Moreover, COVID-19 led macroeconomic weakness induced reduced spend across small and medium sized business (SMB) is likely to have limited growth in the fiscal second quarter.

Also, coronavirus crisis led lower spend on travel may have hampered adoption of Coupa Travel Sabre, formerly known as Yapta, which in turn, is likely to have weighed on the fiscal second-quarter revenues. Markedly, during fourth-quarter fiscal 2020, Coupa Software acquired Seattle-based Yapta, with an aim to strengthen Coupa BSM Platform’s Travel and Expense offering with travel price optimization capabilities and offer travel savings to businesses in real-time.

Notably, in fiscal first quarter earnings conference, management noted that the company anticipates no contribution from the Yapta acquisition through 2020, however, it was previously envisioned to contribute $1-$2 million to revenues.

What Our Model Says

Our proven model does not conclusively predict an earnings beat for Coupa Software this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

Coupa Software has a Zacks Rank #4 (Sell), which makes surprise prediction difficult. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks With the Favorable Combination

Here are some companies, which, per our model, have the right combination of elements to post an earnings beat in their upcoming release:

Zscaler, Inc. (ZS - Free Report) has an Earnings ESP of +21.74% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

RH (RH - Free Report) has an Earnings ESP of +13.47% and a Zacks Rank #2.

Breakout Biotech Stocks with Triple-Digit Profit Potential

The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.

Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.

See these 7 breakthrough stocks now>>

Published in