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Coupa Software (COUP) Q3 Earnings & Revenues Surpass Estimates

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Coupa Software Inc. (COUP - Free Report) reported third-quarter fiscal 2021 non-GAAP earnings of 18 cents per share that topped the Zacks Consensus Estimate by 350%. However, earnings deteriorated 10% from the year-ago quarter’s reported figure.

Revenues of $133 million outpaced the Zacks Consensus Estimate by 7.4%. Further, the top line increased 30.6% from the prior-year quarter’s figure.

Subscription revenues (88.8% of total revenues) surged 31% year over year to $118.1 million. Meanwhile, Professional services & other revenues (11.2%) climbed 28.2% year over year to $14.9 million.

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

 

The top line benefitted from strong uptake of the company’s Business Spend Management (BSM) and Coupa Pay offerings. The company is witnessing robust adoption of spend management offerings amid coronavirus crisis-triggered macroeconomic weakness and work-from-home wave.

Apart from United States and Europe, Coupa Software witnessed improvement in emerging markets. The company added that sales doubled in the last 12 months across Asia-Pacific, Japan, Latin America, the Middle East and Africa.

Major Highlights

Coupa Software continued to add new clients to its customer base in the reported quarter. Some of the notable new deal wins in the quarter include Casey's General Stores (CASY - Free Report) , Immunovant (IMVT - Free Report) , GIS International, GlobalLogic, Downer EDI Services, Elevate Textiles, Flender, Ibstock Brick, LKAB, miR Scientific, Mayne Pharma, OES Equipment, Ovid Therapeutics, SafetyCulture, Sam's Mart, Welbilt and ZoomInfo.

To help customers with deployments, Coupa Software has been organizing Smarter Together webinar virtual events to engage the entire customer community.

Increasing customer base is expected to boost investors’ optimism in the company’s stock. Notably, shares of Coupa Software have returned 121.5% year to date, compared with the industry’s rally of 102.6%.

The company also extended collaboration with American Express to enable clients in the United States to use American Express virtual card payment option with Coupa Pay.

In the current quarter, Coupa Software’s Coupa Source to Pay solution was leveraged by Walmart (WMT - Free Report) to modernize its source-to-pay operations. Also, Coupa solutions are being deployed by United States House of Representatives to upgrade its administrative systems.

We believe that innovation and product enhancements will enable Coupa Software to capitalize on the opportunity in the BSM market presented by ongoing digital transformation triggered by coronavirus crisis.

However, stiff competition in Peer to Peer Lending (P2P) market along with weak adoption of Coupa Travel Sabre due to Covid-19 crisis induced lower spend on travel remain concerns for Coupa Software, which carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Margin Details

Non-GAAP gross margin expanded 40 basis points (bps) from the prior-year quarter’s level to 72.5%.

Non-GAAP Research and development expenses climbed 27.3% year over year to $22.8 million.

Non-GAAP Sales and marketing expenses surged 30% year over year to $40.7 million

Non-GAAP General and administrative expenses increased 48% year over year to $18.5 million.

Non-GAAP operating income soared 23.6% year over year to $14.3 million.

Non-GAAP operating margin contracted 60 bps on a year-over-year basis to 10.7%.

Balance Sheet & Cash Flow

Coupa Software had cash and cash equivalents and marketable securities of $1.354 billion as of Oct 31, 2020, compared with $1.342 billion as of Jul 31, 2020.

Cash flow from operations came in at $19 million compared with $23.4 million in the last reported quarter. Adjusted free cash flow totaled $17.3 million during fiscal third quarter compared with adjusted free cash flow of $35.7 million in the last reported quarter.

Guidance

The revenue guidance for fourth-quarter fiscal 2021 includes impact of the LLamasoft buyout as well as assumption of no revenue contribution from Coupa Travel Sabre formerly known as Yapta. In November 2020, the company acquired LLamasoft for $1.5 billion. LLamasoft offers AI-based supply chain solutions and lists Boeing and Nestle, among others, as its clients.

For fourth-quarter fiscal 2021, revenues are anticipated in the range of $145-$146 million. The Zacks Consensus Estimate for revenues is currently pegged at $129.3 million.

While Subscription revenues are expected between $124.5 million and $125.5 million, professional services revenues are anticipated to be approximately $20.5 million.

Non-GAAP loss from operations is estimated in the range of $6-$8 million

Non-GAAP net loss is projected in the band of 11-13 cents per share. The Zacks Consensus Estimate for earnings is currently pegged at 2 cents per share.

For fiscal 2021, Coupa Software projects revenues between $523 million and $524 million compared with previous range of $496.5-$498.5 million. The Zacks Consensus Estimate for revenues is currently pegged at $498.3 million.

Non-GAAP income from operations is anticipated in the range of $34-$36 million compared with the previous range of $33.5-$35.5 million.

Non-GAAP net income is now expected in the band of 47-49 cents per share compared with prior guidance of 43-45 cents per share. The Zacks Consensus Estimate for earnings is currently pegged at 46 cents per share.

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