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Coupa Software (COUP) Q2 Earnings & Revenues Beat Estimates

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Coupa Software Inc. (COUP - Free Report) reported second-quarter fiscal 2021 non-GAAP earnings of 21 cents per share that surpassed the Zacks Consensus Estimate by 162.5%. Further, the bottom line soared 200% from the year-ago quarter.

Revenues of $125.9 million outpaced the Zacks Consensus Estimate by 5.96%. Further, the top line improved 32% from the prior-year quarter.

Subscription revenues (88.6% of total revenues) surged 34% year over year to $111.6 million. Meanwhile, Professional services & other revenues (11.4%) climbed 23% year over year to $14.3 million.

The top line was primarily driven by robust adoption of the company’s Business Spend Management (BSM) offerings and traction witnessed Coupa Pay offerings. Moreover, the company witnessed growth in traction of spend management offerings amid coronavirus crisis-triggered macroeconomic weakness and work-from-home wave.

Utilizing Coupa Software’s offerings, enterprises were able to manage spend and procurement amid remote working trends. Moreover, macroeconomic weakness led by coronavirus crisis has increased need to optimize spend patterns, which favored the company’s performance in the fiscal second quarter.

Expanding Clientele Remains Noteworthy

Coupa Software’s customer base continued to expand in the reported quarter. Notable new deal wins in the quarter include 2U (TWOU - Free Report) , CECO Environmental Corporation (CECE - Free Report) , OneMain Holdings (OMF - Free Report) , 14 West, Canfor Corporation, Confluent Inc., Cycle and Carriage Industries, HammondCare, SalesLoft, Shorelight Education, Strategic Education, Toyota Finance Australia, and Westpac Banking.

Moreover, ongoing momentum in solutions such as Accelerate, Invoice payments and Virtual Cards for Pos drove the fiscal second-quarter top line. The company has extended these solutions to partners like American Express, Citibank, Transfermate, Stripe, PayPal, and BNP Paribas, which is expected to bolster clientele.

Year-to-Date Price Performance

 

An expanding clientele is instilling optimism in the company’s stock. Notably, shares of Coupa Software have returned 89.2% year to date, compared with the industry’s rally of 59.8%. It currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

We believe that innovation and product enhancements will enable Coupa Software to strengthen its position in the BSM market amid ongoing digital transformation triggered by coronavirus crisis.

Margin Details

Non-GAAP gross margin contracted 70 basis points (bps) from the prior-year quarter level to 72.1%.

Non-GAAP Research and development expenses climbed 25.2% year over year to $22.9 million.

Non-GAAP Sales and marketing expenses surged 20.3% year over year to $38.6 million.

Non-GAAP General and administrative expenses increased 22.3% year over year to $17 million.

Non-GAAP operating income soared 154.7% year over year to $12.3 million. Non-GAAP operating margin expanded 470 bps on a year-over-year basis to 9.8%.

Balance Sheet & Cash Flow

As of Jul 31, 2020, Coupa Software had cash and cash equivalents and marketable securities of $1.342 billion compared with $705.8 million as of Apr 30, 2020.
 

Coupa Software, Inc. Price, Consensus and EPS Surprise

Coupa Software, Inc. Price, Consensus and EPS Surprise

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

Cash flow from operations came in at $23.4 million compared with $15.4 million in the last reported quarter. Adjusted free cash flow totaled $35.7 million during the fiscal second quarter compared with free cash flow of $22.4 million in the last reported quarter.

Guidance

For third-quarter fiscal 2021, revenues are anticipated in the range of $123-$124 million. The Zacks Consensus Estimate for revenues is currently pegged at $122.7 million. While Subscription revenues are expected between $112 million and $113 million, professional services revenues are anticipated to be approximately $11 million.

Non-GAAP income from operations is estimated in the range of $4.5-$5 million. Non-GAAP net income is projected in the band of 2-3 cents per share. The Zacks Consensus Estimate for earnings is currently pegged at 6 cents per share.

For fiscal 2021, Coupa Software now anticipates total revenues between $496.5 million and $498.5 million compared with previous range of $489-$491 million. The Zacks Consensus Estimate for revenues is currently pegged at $491.2 million.

Non-GAAP income from operations is anticipated in the range of $33.5-$35.5 million compared with the previous range of $28-$30 million. Non-GAAP net income is now expected in the band of 43-45 cents per share compared with prior guided range 36-38 cents per share. The Zacks Consensus Estimate for earnings is currently pegged at 38 cents per share.

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