Coupa Software Reports Financial Results For the Second Quarter of Fiscal 2020

SAN MATEO, Calif., Sept. 3, 2019 /PRNewswire/ -- Coupa Software (NASDAQ: COUP) today announced financial results for its second fiscal quarter ended July 31, 2019.

"We delivered a strong second quarter with record revenues of $95 million, up 54% year-over-year, and calculated billings of $108 million, up $57% year-over-year," said Rob Bernshteyn, chairman and chief executive officer at Coupa. "These results demonstrate our continued momentum in delivering measurable and repeatable value to our customers. By extending our leadership standing in Business Spend Management (BSM), we feel well positioned on our path to $1 billion in revenue."

Coupa defines calculated billings as the change in deferred revenue on the balance sheet for the period, plus revenue recognized during the period. See the section titled "Non-GAAP Financial Measures" and the reconciliation tables below for important details regarding Coupa's non-GAAP measures. Coupa defines free cash flows as operating cash flows less purchases of property and equipment.

Second Quarter Results

    --  Total revenues were $95.1 million, an increase of 54% compared to the
        same period last year. Subscription revenues were $83.5 million, an
        increase of 51% compared to the same period last year.
    --  GAAP operating loss was $22.8 million, compared to a loss of $10.6
        million for the same period last year. Non-GAAP operating income was
        $4.8 million, compared to Non-GAAP operating income of $4.0 million for
        the same period last year.
    --  GAAP net loss was $20.0 million, compared to a net loss of $13.9 million
        for the same period last year. GAAP net loss per basic and diluted share
        was $0.32, compared to a net loss of $0.24 for the same period last
        year. Non-GAAP net income was $5.3 million, compared to Non-GAAP net
        income of $3.3 million for the same period last year. Non-GAAP net
        income per diluted share was $0.07, compared to Non-GAAP net income per
        diluted share of $0.05 for the same period last year.
    --  Operating cash flows and free cash flows were positive $1.3 million and
        negative $2.3 million, respectively, for the quarter ended July 31,
        2019.

Business Outlook:

The following forward-looking statements reflect Coupa's expectations as of September 3, 2019.

Third quarter of fiscal 2020:

    --  Total revenues are expected to be between $95.5 and $96.5 million.
    --  Subscription revenues are expected to be between $86.0 and $87.0
        million.
    --  Professional services and other revenues are expected to be
        approximately $9.5 million.
    --  Non-GAAP income from operations is expected to be between $3.5 and $5.5
        million.
    --  Non-GAAP net income per diluted share is expected to be between $0.05
        and $0.08 per share.
    --  Diluted weighted average share count is expected to be approximately
        71.7 million shares.

Full year fiscal 2020:

    --  Total revenues are expected to be between $369.0 and $372.0 million.
    --  Non-GAAP income from operations is expected to be between $10.0 and
        $13.0 million.
    --  Non-GAAP net income per diluted share is expected to be between $0.11
        and $0.16 per share.
    --  Diluted weighted average share count is expected to be approximately
        70.0 million shares.

Coupa has not reconciled its expectations for non-GAAP income from operations to GAAP loss from operations or non-GAAP net income per share to GAAP net loss per share because certain items excluded from non-GAAP income from operations and non-GAAP net income, such as charges related to share-based compensation expenses, amortization of acquired intangible assets, amortization of debt discount and issuance costs from our convertible notes, and related tax effects, including non-recurring income tax adjustments, cannot be reasonably calculated or predicted at this time. In addition, the effect of the anti-dilutive impact of the capped call transactions entered into in connection with the convertible notes cannot be reasonably calculated or predicted at this time. The effect of these items may be significant.

Recent Business Highlights:

    --  Welcomed many new customers into the Coupa community in Q2, including
        the following: Affirmed Networks, ASB Bank, Carousell, Comfortdelgro
        Corporation, Commonwealth Bank of Australia, Las Vegas Valley Water
        District, Lucid Software, Lucozade Ribena Suntory, Messer-US, Pochteca
        Materias Primas, PSSI Group, Rakuten, Redfin, Sainsbury's Supermarkets,
        SAUR Group, The Nebu Group, Tullow Oil, University of St. Augustine,
        Venafi, Volkswagen Group Australia, Waste Management, and Wawa.
    --  Named as a leader in the Gartner 2019 Magic Quadrant for Procure-to-Pay
        Suites for the fourth consecutive time, and for the first time, ranked
        highest on both axes - Completeness of Vision and Ability to Execute.
    --  At Inspire '19, unveiled new Community Intelligence innovations as well
        as Coupa Pay partnerships with Citi Commercial Cards (part of Citi's
        Treasury and Trades business), PayPal, Stripe, and Transfermate.

Conference Call Information:

Coupa will host a conference call and live webcast for analysts and investors at 5:00 p.m. Eastern time today.

    --  Parties in the U.S. and Canada can access the call by dialing (855)
        302-8830, using conference code 7538719.
    --  International parties can access the call by dialing +1 (330) 871-6073,
        using conference code 7538719.

A live webcast will be accessible on Coupa's investor relations website at http://investors.coupa.com. A replay will be available through the same link. A telephonic replay of the conference call will be available through Tuesday, September 10, 2019. To access the replay, parties in the U.S. and Canada should call (855) 859-2056 and enter conference code 7538719. International parties should call +1 (404) 537-3406 and enter conference code 7538719.

Non-GAAP Financial Measures:

In addition to disclosing financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), this press release and the accompanying tables contain certain non-GAAP financial measures that exclude certain items, including share-based compensation expenses, amortization of acquired intangible assets, amortization of debt discount and issuance costs from convertible notes, and related tax effects, including non-recurring income tax adjustments. In addition, the weighted average diluted shares used to calculate non-GAAP net income per share reflect the anti-dilutive impact of the capped call transactions entered into in connection with the convertible notes. Coupa believes these non-GAAP measures are useful in evaluating its operating performance and regularly reviews these measures as it evaluates its business.

Coupa believes these non-GAAP measures provide investors and other users of its financial information consistency and comparability with its past financial performance and facilitate period to period comparisons of operations. Coupa believes these non-GAAP measures are useful in evaluating its operating performance compared to that of other companies in its industry, as they generally eliminate the effects of certain items that may vary for different companies for reasons unrelated to overall operating performance.

Coupa uses these non-GAAP measures in conjunction with GAAP measures as part of its overall assessment of its performance, including the preparation of its annual operating budget and quarterly forecasts, to evaluate the effectiveness of its business strategies and to communicate with its board of directors concerning its financial performance. The definitions of its non-GAAP measures may differ from the definitions used by other companies and therefore comparability may be limited. In addition, other companies may not publish these or similar metrics. Thus, Coupa's non-GAAP measures should be considered in addition to, not as substitutes for, or in isolation from, measures prepared in accordance with GAAP.

Coupa compensates for these limitations by providing investors and other users of its financial information a reconciliation of non-GAAP measures to the related GAAP financial measures. Coupa encourages investors and others to review its financial information in its entirety, not to rely on any single financial measure and to view its non-GAAP measures in conjunction with GAAP financial measures. Please see the reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures attached to this release.

Coupa also uses key metrics such as cumulative spend under management, which represents the aggregate amount of money that has been transacted through its core platform for all of its customers collectively since it launched its platform. Coupa calculates this metric by aggregating the actual transaction data, for invoices, purchase orders and expenses, from customers on its core platform. While Coupa does not believe this metric is directly correlated to its financial results, it believes that the adoption of its core platform, as evidenced by growth in cumulative spend under management, drives additional value to its customers, which will enhance its ability to acquire new customers and to increase renewals and upsells to existing customers.

Forward-Looking Statements:

This release includes forward-looking statements. All statements other than statements of historical facts, including the statements of management and statements in "Business Outlook" are forward-looking statements. These forward-looking statements are based on Coupa's current expectations and projections about future events and trends that Coupa believes may affect its financial condition, results of operations, strategy, short- and long-term business operations and objectives, and financial needs.

These forward-looking statements are subject to a number of risks, uncertainties and assumptions that may cause actual results to differ materially, including Coupa has a limited operating history, which makes it difficult to predict its future operating results; if Coupa is unable to attract new customers, the growth of its revenues will be adversely affected; because its platform is sold to large enterprises with complex operating environments, Coupa encounters long and unpredictable sales cycles; risks and liabilities related to breach of its security measures or unauthorized access to customer data; the markets in which Coupa participates are intensely competitive; Coupa's business depends substantially on its customers renewing their subscriptions and purchasing additional subscriptions; if Coupa fails to develop widespread brand awareness cost-effectively, its business may suffer; if Coupa fails to manage its recent rapid growth effectively, Coupa may be unable to execute its business plan, maintain high levels of service, or adequately address competitive challenges; and the impact of foreign currency exchange rates and global economic conditions.

These and other risks and uncertainties that could affect Coupa's future results are included under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations," in Coupa's quarterly report on Form 10-Q filed with the Securities and Exchange Commission (SEC) on June 4, 2019, which is available at investors.coupa.com and on the SEC's website at www.sec.gov. Further information on potential risks that could affect actual results will be included in other periodic filings Coupa makes with the SEC.

The forward-looking statements in this release reflect Coupa's expectations as of September 3, 2019. Coupa undertakes no obligation to update publicly any forward-looking statements for any reason after the date of this release to conform these statements to actual results or to changes in its expectations.

About Coupa Software

Coupa Software (NASDAQ: COUP) is a leading provider of BSM solutions. We offer a comprehensive, cloud-based BSM platform that has connected hundreds of organizations with more than five million suppliers globally. The Coupa BSM platform provides greater visibility into and control over how companies spend money. Using the Coupa BSM platform, businesses are able to achieve real, measurable value and savings that drive their profitability. Learn more at www.coupa.com. Read more on the Coupa Blog or follow @Coupa on Twitter.


                             
            
              COUPA SOFTWARE INCORPORATED


                   
            
              CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


                            
            (in thousands, except per share amounts)


                                           
            (unaudited)




                                                             Three Months Ended                             Six Months Ended


                                                             July 31,                              July 31,

                                                                                         ---

                                                2019                      2018                2019                                   2018

                                                                                                                                   ---


     
              Revenues:



     Subscription                           $83,482                   $55,374            $156,439                               $105,340


      Professional services and
       other                                  11,657                     6,277              20,044                                 12,663

                                                                                                                                   ---


     Total revenues                          95,139                    61,651             176,483                                118,003



     
              Cost of revenues:



     Subscription                            22,062                    11,773              39,465                                 22,947


      Professional services and
       other                                  12,428                     6,867              22,354                                 13,818

                                                                                                                                   ---

      Total cost of revenues                  34,490                    18,640              61,819                                 36,765

                                                                                                                                   ---


     Gross profit                            60,649                    43,011             114,664                                 81,238

                                                                                                                                   ---


     
              Operating expenses:


      Research and development                23,364                    13,415              44,378                                 26,616


      Sales and marketing                     39,820                    26,580              73,430                                 51,240


      General and
       administrative                         20,269                    13,640              37,467                                 26,075

                                                                                                                                   ---

      Total operating expenses                83,453                    53,635             155,275                                103,931

                                                                                                                                   ---

      Loss from operations                  (22,804)                 (10,624)           (40,611)                              (22,693)



     Interest expense                       (8,511)                  (3,122)           (11,686)                               (6,095)


      Interest income and
       other, net                              1,479                       372               2,403                                    450

                                                                                                                                   ---

      Loss before provision for
       (benefit from) income
       taxes                                (29,836)                 (13,374)           (49,894)                              (28,338)


      Provision for (benefit
       from) income taxes                    (9,842)                      480             (9,432)                                   970

                                                                                                                                   ---

                 Net loss                  $(19,994)                $(13,854)          $(40,462)                             $(29,308)

                                                                                                                                   ===

      Net loss per share
       attributable to common
       stockholders, basic and
       diluted                               $(0.32)                  $(0.24)            $(0.66)                               $(0.52)



      Weighted-average number
       of shares used in
       computing net loss per
       share attributable to
       common stockholders,
       basic and diluted                      62,038                    56,966              61,422                                 56,429

                                                                                                                                   ===


                                 
              
                COUPA SOFTWARE INCORPORATED


                            
              
                CONDENSED CONSOLIDATED BALANCE SHEETS


                                 
              (in thousands, except per share amounts)


                                               
              (unaudited)




                                            
              
                July 31,              January 31,


                                                                        2019                      2019




     
                Assets



     Current assets:


      Cash and
       cash
       equivalents                                                  $613,906                  $141,250


      Marketable
       securities                                                    194,304                   180,169


      Accounts
       receivable,
       net of
       allowances                                                     83,949                    95,274


      Prepaid
       expenses
       and other
       current
       assets                                                         19,738                    10,343


      Deferred
       commissions,
       current
       portion                                                         9,101                     7,324



      Total
       current
       assets                                                        920,998                   434,360


      Property
       and
       equipment,
       net                                                            15,021                    10,549


      Deferred
       commissions,
       net of
       current
       portion                                                        22,757                    18,904


      Goodwill                                                       372,272                   209,560


      Intangible
       assets,
       net                                                           103,388                    55,925


      Operating
       lease
       right-of-
       use assets                                                     28,477                         -


      Other
       assets                                                         14,159                    10,766


      Total
       assets                                                     $1,477,072                  $740,064



                   Liabilities and Stockholders' Equity



     Current liabilities:


      Accounts
       payable                                                        $2,903                    $5,485


      Accrued
       expenses
       and other
       current
       liabilities                                                    55,239                    41,792


      Deferred
       revenue,
       current
       portion                                                       186,493                   179,967


      Operating
       lease
       liabilities,
       current
       portion                                                         6,613                         -


      Current
       portion of
       convertible
       senior
       notes, net                                                    180,696                   174,615



      Total
       current
       liabilities                                                   431,944                   401,859


      Convertible
       senior
       notes, net                                                    544,107                         -


      Deferred
       revenue,
       net of
       current
       portion                                                         2,426                     2,620


      Operating
       lease
       liabilities,
       net of
       current
       portion                                                        23,617                         -


      Other
       liabilities                                                    20,906                    22,304


      Total
       liabilities                                                 1,023,000                   426,783




     Stockholders' equity:


      Preferred
       stock,
       $0.0001
       par value
       per share                                                           -


      Common
       stock,
       $0.0001
       par value
       per share                                                           7                         6


      Additional
       paid-in
       capital                                                       750,617                   567,797


      Accumulated
       other
       comprehensive
       income
       (loss)                                                        (1,233)                      335


      Accumulated
       deficit                                                     (295,319)                (254,857)



      Total
       stockholders'
       equity                                                        454,072                   313,281


      Total
       liabilities
       and
       stockholders'
       equity                                                     $1,477,072                  $740,064


                                 
              
                COUPA SOFTWARE INCORPORATED


                       
              
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


                                              
              (in thousands)


                                               
              (unaudited)




                                                                                                            Six Months Ended


                                                                                                            July 31,



                                                                                                       2019                        2018

                                                                                                                                   ---


     
                Cash flows from operating activities



     Net loss                                                                                    $(40,462)                  $(29,308)



     Adjustments to reconcile net loss to net cash provided by operating activities:



     Depreciation and amortization                                                                  11,330                       3,997


      Accretion of discounts on marketable securities, net                                              668                       (295)



     Amortization of deferred commissions                                                            4,309                       2,660


      Amortization of debt discount and issuance costs                                               10,998                       5,642



     Stock-based compensation                                                                       38,113                      24,870



     Other                                                                                            (95)                      (541)



     Changes in operating assets and liabilities net of effects from acquisition:



     Accounts receivable                                                                            20,450                      11,583



     Prepaid expenses and other current assets                                                     (7,662)                        625



     Other assets                                                                                    (770)                        130



     Deferred commissions                                                                          (9,939)                    (5,285)



     Accounts payable                                                                              (4,473)                      1,955



     Accrued expenses and other liabilities                                                        (4,061)                      5,260



     Deferred revenue                                                                                1,639                       2,651


                   Net cash provided by operating activities                                         20,045                      23,944

                                                                                                                                   ---


     
                Cash flows from investing activities



     Purchases of marketable securities                                                          (258,991)                  (160,500)



     Maturities of marketable securities                                                            44,796



     Sales of marketable securities                                                                199,314



     Acquisition, net of cash acquired                                                           (210,468)                    (1,178)



     Purchases of property and equipment                                                           (6,173)                    (3,416)


                   Net cash used in investing activities                                          (231,522)                  (165,094)

                                                                                                                                   ---


     
                Cash flows from financing activities


      Proceeds from issuance of convertible senior notes, net
       of issuance costs                                                                            786,567                       (639)



     Purchase of capped calls                                                                    (118,738)


      Proceeds from the exercise of common stock options                                             10,909                       6,810


      Proceeds from issuance of common stock for employee stock
       purchase plan                                                                                  5,396                       4,137


                   Net cash provided by financing activities                                        684,134                      10,308

                                                                                                                                   ---

      Net increase (decrease) in cash, cash equivalents, and
       restricted cash                                                                              472,657                   (130,842)


      Cash, cash equivalents, and restricted cash at beginning
       of year                                                                                      141,319                     412,976


      Cash, cash equivalents, and restricted cash at end of
       period                                                                                      $613,976                    $282,134





                   Reconciliation of cash, cash equivalents, and restricted cash to the condensed
                    consolidated balance sheets



     Cash and cash equivalents                                                                     613,906                     282,061



     Restricted cash included in other assets                                                           70                          73


                   Total cash, cash equivalents, and restricted cash                               $613,976                    $282,134


                                                                               
            
                 COUPA SOFTWARE INCORPORATED


                                                                         
       
               Reconciliation of GAAP to Non-GAAP Financial Measures


                                                                             
            
                 Three Months Ended July 31, 2019


                                                                           
         (in thousands, except percentages and per share amounts)


                                                                                       
               (unaudited)




                               
     
        GAAP  
      
               Share-Based                                     Amortization                     
      
                 Amortization of    
          
            Other      Non-GAAP
                                              Compensation                                   of Acquired                                        Debt Discount                     Expenses (2)
                                                Expenses                                      Intangible                                         and Issuance
                                                                                                Assets                                              Costs

                                                                                                                                                                                                                ---


     Costs and expenses:


      Costs of subscription         $22,062                     $(1,771)                                        $(4,709)                                        
              $ -                
          $ -     $15,582


      Costs of professional
       services and other            12,428                      (2,023)                                                                                                                                      10,405



     Gross profit                    63.7%                        4.0%                                            4.9%                                                  0.0%                      0.0%       72.7%




      Research and development       23,364                      (5,075)                                                                                                                                      18,289


      Sales and marketing            39,820                      (6,060)                                         (1,650)                                                                                      32,110


      General and
       administrative                20,269                      (6,339)                                                                                                                                      13,930


      Income (loss) from
       operations                  (22,804)                      21,268                                            6,359                                                                                        4,823


      Operating margin               -24.0%                       22.4%                                            6.7%                                                  0.0%                      0.0%        5.1%




      Interest expense              (8,511)                                                                                                                             8,038                                  (473)


      Interest income and
       other, net                     1,479                                                                                                                                                                    1,479


      Income (loss) before
       provision for income
       taxes                       (29,836)                      21,268                                            6,359                                                  8,038                                  5,829


      Provision for (benefit
       from) income taxes           (9,842)                         815                                            (123)                                                                           9,671          521


      Net income (loss)            (19,994)                      20,453                                            6,482                                                  8,038                    (9,671)       5,308




      Net income (loss) per
       share attributable to
       common stockholders,
       basic (1)                    $(0.32)                                                                                                                                                                   $0.09


      Net income (loss) per
       share attributable to
       common stockholders,
       diluted (1)                  $(0.32)                                                                                                                                                                   $0.07



               (1) GAAP net loss per share is
                calculated based upon 62,038
                basic and diluted weighted-
                average shares of common
                stock. Non-GAAP net income
                per share is calculated based
                upon 62,038 basic and 70,852
                diluted weighted-average
                shares of common stock. The
                Company uses the treasury
                stock method to calculate the
                non-GAAP diluted shares
                related to the convertible
                notes which reflects any anti-
                dilutive impact of the capped
                call transactions entered into
                in connection with the
                convertible notes.




               (2) Other expenses consists of
                the release of a valuation
                allowance against deferred tax
                assets.


                                                              
              
                 COUPA SOFTWARE INCORPORATED


                                                   
            
                 Reconciliation of GAAP to Non-GAAP Financial Measures


                                                            
              
                 Three Months Ended July 31, 2018


                                                        
             (in thousands, except percentages and per share amounts)


                                                                         
               (unaudited)




                               
     
        GAAP  
      
               Share-Based                                               Amortization       
     
                 Amortization of       Non-GAAP
                                              Compensation                                             of Acquired                         Debt Discount
                                                Expenses                                                Intangible                          and Issuance
                                                                                                          Assets                               Costs

                                                                                                                                                                                   ---


     Costs and expenses:


      Costs of subscription         $11,773                     $(1,093)                                                    $(844)  
     $                                    $
        $9,836


      Costs of professional
       services and other             6,867                      (1,069)                                                                                                          5,798



     Gross profit                    69.8%                        3.5%                                                      1.4%                                   0.0%         74.6%




      Research and development       13,415                      (2,958)                                                                                                         10,457


      Sales and marketing            26,580                      (3,863)                                                     (251)                                               22,466


      General and
       administrative                13,640                      (4,575)                                                                                                          9,065


      Income (loss) from
       operations                  (10,624)                      13,558                                                      1,095                                                 4,029


      Operating margin               -17.2%                       22.0%                                                      1.8%                                   0.0%          6.5%




      Interest expense              (3,122)                                                                                                                        2,894          (228)


      Interest income and
       other, net                       372                                                                                                                                         372


      Income (loss) before
       provision for income
       taxes                       (13,374)                      13,558                                                      1,095                                   2,894          4,173


      Provision for income
       taxes                            480                          371                                                         25                                                   876


      Net income (loss)            (13,854)                      13,187                                                      1,070                                   2,894          3,297




      Net income (loss) per
       share attributable to
       common stockholders,
       basic (1)                    $(0.24)                                                                                                                                      $0.06


      Net income (loss) per
       share attributable to
       common stockholders,
       diluted (1)                  $(0.24)                                                                                                                                      $0.05



               (1) GAAP net loss per share
                is calculated based upon
                56,966 basic and diluted
                weighted-average shares
                of common stock. Non-GAAP
                net income per share is
                calculated based upon
                56,966 basic and 66,157
                diluted weighted-average
                shares of common stock.


                                                                             
       
                 COUPA SOFTWARE INCORPORATED


                                                                         
     
          Reconciliation of GAAP to Non-GAAP Financial Measures


                                                                           
       
                 Six Months Ended July 31, 2019


                                                                             
        (in thousands, except per share amounts)


                                                                               
               (unaudited)




                               
     
        GAAP  
      
               Share-Based                            Amortization                       
      
                 Amortization of        
          
           Other      Non-GAAP
                                              Compensation                          of Acquired                                          Debt Discount                         Expenses (2)
                                                Expenses                             Intangible                                           and Issuance
                                                                                       Assets                                                Costs

                                                                                                                                                                                                            ---


     Costs and expenses:


      Costs of subscription         $39,465                     $(3,159)                               $(6,881)        
              $                                      
     $                             $29,425


      Costs of professional
       services and other            22,354                      (3,468)                                                                                                                                  18,886



     Gross profit                    65.0%                        3.8%                                   3.9%                                                    0.0%                         0.0%       72.6%




      Research and development       44,378                      (9,123)                                                                                                                                  35,255


      Sales and marketing            73,430                     (10,899)                                (2,656)                                                                                           59,875


      General and
       administrative                37,467                     (11,464)                                                                                                                                  26,003


      Income (loss) from
       operations                  (40,611)                      38,113                                   9,537                                                                                             7,039


      Operating margin               -23.0%                       21.6%                                   5.4%                                                    0.0%                         0.0%        4.0%




      Interest expense             (11,686)                                                                                                                     10,998                                     (688)


      Interest income and
       other, net                     2,403                                                                                                                                                                2,403


      Income (loss) before
       provision for (benefit
       from) income taxes          (49,894)                      38,113                                   9,537                                                   10,998                                     8,754


      Provision for (benefit
       from) income taxes           (9,432)                       1,308                                   (246)                                                                                9,671        1,301


      Net income (loss)            (40,462)                      36,805                                   9,783                                                   10,998                       (9,671)       7,453




      Net income (loss) per
       share attributable to
       common stockholders,
       basic (1)                    $(0.66)                                                                                                                                                               $0.12


      Net income (loss) per
       share attributable to
       common stockholders,
       diluted (1)                  $(0.66)                                                                                                                                                               $0.11



               (1) GAAP net loss per share is
                calculated based upon 61,422
                basic and diluted weighted-
                average shares of common
                stock. Non-GAAP net income
                per share is calculated based
                upon 61,422 basic and 69,563
                diluted weighted-average
                shares of common stock. The
                Company uses the treasury
                stock method to calculate the
                non-GAAP diluted shares
                related to the convertible
                notes which reflects any anti-
                dilutive impact of the capped
                call transactions entered into
                in connection with the
                convertible notes.




               (2) Other expenses consists of
                the release of a valuation
                allowance against deferred tax
                assets.


                                                             
              
                 COUPA SOFTWARE INCORPORATED


                                                  
            
                 Reconciliation of GAAP to Non-GAAP Financial Measures


                                                           
              
                 Six Months Ended July 31, 2018


                                                             
               (in thousands, except per share amounts)


                                                                       
               (unaudited)




                               
     
        GAAP  
      
               Share-Based                                               Amortization   
     
                 Amortization of    Non-GAAP
                                              Compensation                                             of Acquired                     Debt Discount
                                                Expenses                                                Intangible                      and Issuance
                                                                                                          Assets                           Costs

                                                                                                                                                                            ---


     Costs and expenses:


      Costs of subscription         $22,947                     $(1,924)                                                  $(1,628)                                       $19,395


      Costs of professional
       services and other            13,818                      (2,015)                                                                                                  11,803



     Gross profit                    68.8%                        3.3%                                                      1.4%                               0.0%      73.6%




      Research and development       26,616                      (5,505)                                                                                                  21,111


      Sales and marketing            51,240                      (6,833)                                                     (541)                                        43,866


      General and
       administrative                26,075                      (8,593)                                                                                                  17,482


      Income (loss) from
       operations                  (22,693)                      24,870                                                      2,169                                          4,346


      Operating margin               -19.2%                       21.1%                                                      1.8%                               0.0%       3.7%




      Interest expense              (6,095)                                                                                                                    5,642       (453)


      Interest income and
       other, net                       450                                                                                                                                  450


      Income (loss) before
       provision for income
       taxes                       (28,338)                      24,870                                                      2,169                               5,642       4,343


      Provision for income
       taxes                            970                          540                                                         73                                          1,583


      Net income (loss)            (29,308)                      24,330                                                      2,096                               5,642       2,760




      Net income (loss) per
       share attributable to
       common stockholders,
       basic (1)                    $(0.52)                                                                                                                               $0.05


      Net income (loss) per
       share attributable to
       common stockholders,
       diluted (1)                  $(0.52)                                                                                                                               $0.04



               (1) GAAP net loss per share
                is calculated based upon
                56,429 basic and diluted
                weighted-average shares
                of common stock. Non-GAAP
                net income per share is
                calculated based upon
                56,429 basic and 64,623
                diluted weighted-average
                shares of common stock.


             
             
                 COUPA SOFTWARE INCORPORATED



     
                Reconciliation of GAAP Cash Flows from Operations to Free Cash Flows


            
             
                 (A Non-GAAP Financial Measure)


                         
               (in thousands)


                       
               (unaudited)




                                                 Three Months Ended                                Six Months Ended


                                                 July 31,                                 July 31,

                                                                      ---

                             2019                  2018                    2019               2018

                                                                                            ---

      Net cash
       provided by
       operating
       activities          $1,252               $11,308                 $20,045            $23,944


      Less:
       purchases
       of property
       and
       equipment          (3,519)              (2,292)                (6,173)           (3,416)

                                                                                            ---

      Free cash
       flows             $(2,267)               $9,016                 $13,872            $20,528

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