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
- named a leader in Forrester Wave Q419 for eProcurement: https://www.coupa.com/resources/analyst-reports/Forrester201…
- acq Yapta for travel spend optimization (renamed as Coupa Travel Saver) https://www.coupa.com/newsworthy/press-releases/coupa-acquir…
- in response to current crisis, is offering Coupa Pay Digital Checks feature (a secure e-check via email) for free to all customers thru end of April https://www.coupa.com/payments/
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%