COUP Q4 reports

So COUP just reported a great Q4,

Total revenues were $111.5 million, an increase of 49% compared to the same period last year.

Subscription revenues were $98.6 million, an increase of 46% compared to the same period last year.

Non-GAAP operating income was $13.3 million, compared to income of $2.4 million for the same period last year.
Non-GAAP net income was $15.0 million, compared to $3.4 million for the same period last year.

Non-GAAP net income per diluted share was $0.21, compared to $0.05 for the same period last year.

Operating cash flows and free cash flows were positive $22.3 million and $20.2 million, respectively, for the quarter ended January 31, 2020.

Guidance

112 middle point for Q1 which is about a 38% YOY increase in Rev. With a normal 9% beat consistent with last yr that would be about %50 YOY growth.

Going to be interesting to hear the call but as far as guidance go’s it does’t look like a slow down.

Here is the question…?

When should our companies start to see some drop off in growth?? Is this too early or should we take this as a great sign??

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cgall,

Agreed this was a fantastic report. COUP is was my first ever SaaS stock to buy as I got in March of 17 (mostly luck). FY20 was the most impressive year I have seen from this company. I just wanted to share something I have noticed when looking at the margins that I am hoping others might find insightful. (I apologize I could not figure out how to format the table properly).

Historical Margins '16 '17 '18 '19 '20
Gross Margins 64% 67% 72% 73% 73%
R&D 26% 21% 20% 19% 19%
S&M 64% 49% 43% 34% 32%
G&A 13% 16% 16% 15% 13%
Op Margin -39% -19% -7% 5% 8%
FCF Margin -31% -19% 8% 11% 14%
Rev Growth 60% 40% 39% 50%

What I have found most impressive, is the sharp decrease in S&M spend, while revenue growth increased significantly this year up over 10% from the previous two. This indicates to me that the product is beginning to sell itself and we are beginning to see the business scale. They have already reached their mid-term targets from late 2017, and I see no reason to believe that they will not reach their long-term target of 25-30% Op Margins and 30-35% FCF Margin. It appears the market is noticing these trends as well, as the stock is currently up 20% as I write this.

As for guidance, I am encouraged by the 38% growth for Q1. As you mentioned, with their normal beat factored in this puts growth continuing closer to the 50% range. For the full year, they guided for growth of only 26% according to my math. I think this indicates how cautious management is trying to be with regards to all the uncertainty due to COVID-19. In order for them to decelerate all the way down to 26%, that would require a terrible Q2-4 and I do not see this happening.

When asked about the impacts of the virus on the business and on sale cycles, Rob Bernshteyn (CEO) said “There is a greater focus in on controlling spend having the agility and the controls you need at this difficult time. Unfortunately, many of them are being done over phones and video conferences, but that’s proving to be fairly effective for everyone. At the moment our demos are being done the same way and all of our correspondence is being done in the same way. But I’m feeling pretty good about that and as the weeks and quarter continues, we’ll see if that - how that evolves.”

It appears as if things are not too terribly impacted as of now due to the inability of sales staff to travel. I also liked Rob’s comment on the focus on controlling spend. I work for a large multinational O&G company and can attest to the added focus on reducing spend during these times (also due to oil prices, of course). I expect another very strong year from Coupa in FY21.

Lastly, I wanted to end by saying this is my first ever post on this board. I feel extremely blessed to have stumbled upon it many months ago and have been following it daily since. As an investor in their mid-twenties, I feel extremely lucky to have come across this board at such an early age. I have learned a great deal and wanted to say a massive THANK YOU to Saul and all who contribute here. Stay safe.

RW

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