Back to top

Image: Bigstock

Factors to Consider Ahead of Coupa's (COUP) Q1 Earnings

Read MoreHide Full Article

Coupa Software Inc. (COUP - Free Report) is set to release first-quarter fiscal 2020 results on Jun 3. The company beat the Zacks Consensus Estimate in three of the trailing four quarters, with an average positive surprise of 204.4%.

Past-Quarter Performance

Coupa Software reported fourth-quarter fiscal 2019 non-GAAP earnings of 5 cents per share, surpassing the Zacks Consensus Estimate of breakeven. Further, the bottom line improved from 2 cents reported in the year-ago quarter.

Revenues surged 39% from the year-ago quarter to $74.9 million, driven by growth of 45% in subscription services which totaled $67.5 million. Further, the figure outpaced the consensus estimate of $68 million.

What to Expect in Q1

For first-quarter fiscal 2020, revenues are anticipated between $73.5 million and $74 million.  Non-GAAP net income is expected to be 4-10 cents per share.

The Zacks Consensus Estimate for revenues is pegged at $73.8 Million, indicating an improvement of approximately 30.9% from the year-ago quarter.

We note that the Zacks Consensus Estimate for loss has remained unchanged in the past week. The Zacks Consensus Estimate for the quarter under review is pegged at a loss of 4 cents per share, suggesting a decline of 300% from the year-ago reported figure.

Notably, Coupa Software stock has returned 110.4% in the past year, outperforming the industry’s rally of 15%.

Let’s see how things are shaping up for this announcement.

Factors to Consider

Coupa Software is benefiting from expanding customer base on the back of growing adoption of spend management platform. This is likely to help drive subscription services revenues and gross margin.

The company’s expanding relationship with Amazon Web Services (AWS) bodes well. The deal will enable customers to easily configure their AWS account to send invoices into Coupa Software's platform for touchless digital processing. This move provides greater visibility and efficiency in IT cloud spending. 

Further, Coupa Software is benefiting from expanding customer base on the back of growing adoption of spend management platform. Moreover, an improving partner base is anticipated to drive the top line.

Notably, the company added many new customers namely Air Methods, Bank of Hope, BDP International, BJ Services, Botanic-Serres Du Saleve, Canadian Tire, Copa Holdings, Elekta, Erco Worldwide, Evelo Biosciences, Freshworks and Guardian Industries. Other new customers added in the fiscal fourth quarter include InvestRes, InVisionApp, Kin Group, to name a few.

The company also launched R20 that leverages Community Intelligence to reduce global supply chain risk and provides customers with new capabilities to optimize spending.

Further, the company has acquired DCR Workforce, a SaaS application provider. The buyout is aimed at strengthening Coupa Software’s strategy of aiding organizations in managing business spend within a widespread BSM platform.

The company has also acquired Aquiire, a real-time supplier catalog search. The buyout extends Coupa Software’s ability to deliver a comprehensive business-to-business (B2B) shopping know-how across real-time, cached and localized catalog search.

All these factors are expected to positively impact the upcoming quarterly results.

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. Zacks Rank #4 (Sell) or 5 (Strong Sell) stocks are best avoided. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Coupa Softwarehas an Earnings ESP of +5.88% and a Zacks Rank #3.

Stocks to Consider

Here are some other stocks which you may consider as our model shows that these too have the right combination of elements to post an earnings beat in its upcoming release:

Dollar General Corporation (DG - Free Report) has an Earnings ESP of +2.13% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Intuit Inc. (INTU - Free Report) has an Earnings ESP of +26.44% and a Zacks Rank #3.

Costco Wholesale Corporation (COST - Free Report) has an Earnings ESP of +2.10% and a Zacks Rank #3.

The Hottest Tech Mega-Trend of All

Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.

See Zacks' 3 Best Stocks to Play This Trend >>