Coupa Q420

I started a position in Coupa earlier this year. It’s tier 2 for me, rising into tier 1 hypergrowth, with margins & profitability exploding. But then we all ran head-long into a pandemic. However, given how enterprises are sure to reign in spending, Coupa becomes an even more important tool in their tool chest, in order to gain full visibility as they start getting defensive.

Even if you aren’t invested in Coupa, I think every investor in today’s market should look at their published BSI report, which analyzes the trends they are seeing within enterprise spend on their platform.

Coupa Q120 Business Spend Index (BSI)
Summary: https://investors.coupa.com/news-releases/news-release-detai…
Report & interactive charts: https://www.coupa.com/thecoupaBSI/

COUP - Q420

PR: https://investors.coupa.com/news-releases/news-release-detai…
MajorFool take on margins: https://discussion.fool.com/cgall-agreed-this-was-a-fantastic-re…
CC transcript: https://www.fool.com/earnings/call-transcripts/2020/03/16/co…

Revenue 111.5M +49%

  • Sub Rev 98.6M +46%
    Adj Op Inc 13.3M +454%
    … margin 11.9% (vs 3.2%) !! +870bps
    Adj Inc 15.0M +341% !!
    Adj EPS 0.21 (vs 0.05)
    Adj Gross Margin 73%
  • Adj Sub GM 81.2%
    CFFO 22.3M +134%
    FCF 20.2M +197%
    … margin 18.1% (vs 9.1%) !! +903bps
    Opex 87.2M +35%

FY20:
Revenue 389.7M +50%
-Sub Rev 345.3M +48%
Adj Op Inc 31.9M
… margin 8.2%
Adj Inc 36.6M
CFFO 68.2M
FCF 56.2M

My platform dive: https://discussion.fool.com/coupa-coup-platform-dive-34442085.as…
BroadwayDan company background: https://discussion.fool.com/coupa-our-board39s-hidden-gem-344430…

Coupa Q120 Business Spend Index (BSI)
Summary: https://investors.coupa.com/news-releases/news-release-detai…
Report & interactive charts: https://www.coupa.com/thecoupaBSI/

My stance: I started a position earlier this year from Smartsheets proceeds, as a “safer play” compared to some of the other hypergrowth names around here. I liked what my tech dive ultimately showed me… that Coupa has positioned itself nicely as not only an enterprise tool for business ops (spend mgmt), but also as an invaluable CONNECTIVE NETWORK of suppliers and partners for its customers. I believe they are going to leverage this network in more directions from here. The pandemic seems a bit of neutral to slightly positive - it may make new customer growth slow to a trickle, but existing customers will continue to leverage Coupa into more savings as it helps them focus on containing their expenses and watching their operations continuously. Ultimately, though, it’s a biz ops tool (however vital it seems to be), so I do keep this position smaller than other holdings – especially during this crisis.

I need to get a better feel for how Coupa prices its services, but I know it’s not consumption based (on amount of spend). This was a interesting tidbit from CEO during Q&A: “Our theory for the entire time has been to sit on try to – try to sit on the exact same side of the table with our customers. We don’t charge a transactional fee for the amount of spend that they’re running through the system. Sometimes, we’ve been criticized for that, but at the same rate the value proposition is much more than a percentage of spend, it is the ability to control that spend, its the ability to route that spend to preferential suppliers, it is the ability to route that spent to non-risky suppliers, its ability to stop that spend from happening on a mobile phone by clicking reject with the click of a button. So we think that a cloud-based platform like ours that is offered in a values-as-a-service subscription approach for customers is a very, very thoughtful way for them to get this visibility, control, and agility that many of them didn’t even know they needed until they are faced with times where they realized they don’t have it. And because of that it’s our belief that given uncertain times these areas become a greater priority.

-muji
long COUP 5%

41 Likes

BONUS - Prior earnings

COUP - Q318

PR: https://investors.coupa.com/news-releases/news-release-detai…
10-Q: https://investors.coupa.com/static-files/742ca671-ce1e-4851-…
CC transcript: https://www.fool.com/earnings/call-transcripts/2017/12/05/co…

Revenue 47.3M +34%

  • Sub Rev 42.8M +39%
  • Pro Svcs 4.5M
    Adj Op Loss -2.4M
    … margin -5.1% (vs -7.4%) +230bps
    Adj Loss -2.8M (vs -4.1M)
    Adj EPS -0.05 (vs -0.22)
    Adj GM 72.6% +320bps
  • Sub 81%
    CFFO 21.5M (vs -10.5M) !! swung pos
    Opex 43.5M +47%

COUP - Q418

PR: https://investors.coupa.com/news-releases/news-release-detai…
10-K: https://investors.coupa.com/static-files/8bf5ac6f-19cf-4376-…
CC transcript: https://www.fool.com/earnings/call-transcripts/2018/03/12/co…

Revenue 53.8M +41%

  • Sub Rev 46.6M +38%
  • Pro Svcs 7.1M
    Adj Op Inc 0.9M (vs -2.3M) swung pos
    … margin +1.7% (vs -6.0%) +770bps ^^
    Adj Inc 1.4M (vs -2.5M)
    Adj EPS 0.02 (vs -0.05)
    CFFO -1.7M
    FCF -2.6M
    Adj GM 73%
  • Sub 82%
    CFFO -1.7M
    FCF -2.6M (excludes 6.5M for acq)

COUP - Q119

PR: https://investors.coupa.com/news-releases/news-release-detai…
10-Q: https://investors.coupa.com/static-files/1a860ffa-7342-4827-…
CC transcript: https://www.fool.com/earnings/call-transcripts/2018/06/04/co…

Revenue 56.4M +37%

  • Subs 50.0M +40%
  • Pro Svcs 6.4M
    Adj Op Inc 0.3M (vs -4.6M) swung pos
    … margin 0.5% (vs -11.2%) +1170bps ^^
    Adj Loss -0.5M (vs -4.5M)
    Adj EPS -0.01 (vs -0.09)
    Adj GM 72% +100bps
  • Adj Sub GM 81%
    CFFO 12.6M +82%
    FCF 11.5M +93%
    Opex 50.3M +32%

COUP - Q219

PR: https://investors.coupa.com/news-releases/news-release-detai…
10-Q: https://investors.coupa.com/static-files/3ccbc720-a4a6-4445-…
CC transcript: https://www.fool.com/earnings/call-transcripts/2018/09/04/co…

Revenue 61.7M +38%

  • Subs 55.4M +39%
  • Pro Svcs 6.3M
    Adj Op Inc 4.0M (vs -5.7M)
    … margin 6.5% (vs -12.8%) +1930bps ^^
    Adj Inc 3.3M (vs -5.5M)
    Adj EPS 0.05 (vs -0.10)
    Adj GM 74.6% +360bps
  • Adj Sub GM 82%
    CFFO 23.9M +49%
    FCF 9.0M +12%
    Opex 53.6M +22%

COUP - Q319

PR: https://investors.coupa.com/news-releases/news-release-detai…
10-Q: https://investors.coupa.com/static-files/be76b26a-0673-4f4a-…
CC transcript: https://www.fool.com/earnings/call-transcripts/2018/12/04/co…

Revenue 67.5M +42%

  • Subs 60.6M +42%
  • Pro Svcs 6.9M
    Adj Op Inc 5.8M (vs -2.4M)
    … margin 8.6% (vs -2.5%) +1110bps !!
    Adj Inc 5.5M (vs -2.8M)
    Adj EPS 0.08 (vs -0.05)
    CFFO 4.0M
    FCF 2.6M

COUP - Q419

PR: https://investors.coupa.com/news-releases/news-release-detai…
10-K: https://investors.coupa.com/static-files/15e58fd6-a935-4646-…
CC transcript:

Revenue 74.9M +39%

  • Subs 67.5M +45%
    Adj Op Inc 2.4M (vs 0.9M)
    … margin 3.2% (vs 1.7%) +153bps
    Adj Inc 3.4M (vs 1.4M)
    Adj EPS 0.05 (vs 0.02)
    CFFO 9.5M
    FCF 6.8M

COUP - Q120

PR: https://investors.coupa.com/news-releases/news-release-detai…
10-Q: https://investors.coupa.com/sec-filings/sec-filing/10-q/0001…
CC transcript:

Revenue 81.3M +44% !!

  • Sub Rev 73.0M +46%
    Adj Op Inc 2.2M (vs 0.3M)
    … margin 2.7% (vs 0.5%)
    Adj Inc 2.1M (vs -0.05)
    Adj EPS 0.03 (vs -0.01)
    CFFO 18.8M
    FCF 16.1M

COUP - Q220

PR: https://investors.coupa.com/news-releases/news-release-detai…
10-Q: https://investors.coupa.com/sec-filings/sec-filing/10-q/0001…
CC transcript:

Revenue 95.1M +54% ^^

  • Subs 83.5M +51% !!
    Adj Op Inc 4.8M (vs 4.0M)
    … margin 5% (vs 6.5%) -147bps
    Adj Inc 5.3M (vs 3.3M)
    Adj EPS 0.07 (vs 0.05)
    CFFO 1.3M
    FCF -2.3M swung neg

COUP - Q320

PR: https://investors.coupa.com/news-releases/news-release-detai…
10-Q: https://investors.coupa.com/sec-filings/sec-filing/10-q/0001…
CC transcript:

Revenue 101.8M +51%

  • Subs 90.2M +49%
    Adj Op Inc 11.6M (vs 5.8M)
    … margin 11.4% (vs 8.6%) +280bps
    Adj Inc 14.2M (vs 5.5M)
    Adj EPS 0.20 (vs 0.08)
    CFFO 25.8M +545%
    FCF 22.1M +750%

-muji
long COUP 5%

11 Likes

Even if you aren’t invested in Coupa, I think every investor in today’s market should look at their published BSI report, which analyzes the trends they are seeing within enterprise spend on their platform.

muji

Once again let me express appreciation both for your detailed reports and general observations of which the above is just one example. And admiration for the manner in which you have educated yourself and shared the outcomes with all of us.

For what its worth I merely wish to endorse your recommendation above. I made an initial investment in COUP about 3 months ago, and have been adding to it on the way down. I intend to add more to it and 4-5 others like it over the coming week. I think everyone here who can, should.

Concurrently I am paring my other holdings, and have cut the number by more than 50% in part because of earlier suggestions you provided. I intend to push it further.

Long COUP 7%

3 Likes

Very nice work Muji–

The pandemic seems a bit of neutral to slightly positive - it may make new customer growth slow to a trickle, but existing customers will continue to leverage Coupa into more savings …

I have a question wrt post-pandemic performance. I was thinking that Coup would be a critical part of helping companies reestablish and reevaluate supply chains that are likely to undergo a massive disruption. Seems like a major opportunity for Coup, and I was hoping to get others thoughts on this possibility.
Thanks again,
Oli

BTW my post about Bert Hochhfeld’s post pandemic picks was deleted, not sure why. But here is a link (that does NOT require a subscription)for all those interested:

https://seekingalpha.com/article/4333288-struggling-present-…

2 Likes

Muji,
Thanks for the write-up. I am researching this now. One thing that stood out is that this company has been making a lot of acquisitions. How much of it’s growth is organic? If the organic portion is <40% we could see a sharp slow down in growth once the acquisition is in the previous year base. This may not be good for this stock. We saw that playout with TWLO and to some extent MDB which had a growth boost a year ago with their acquisitions and have since dropped of in growth.

1 Like