Coupa Software Reports Financial Results for the Third Quarter of Fiscal 2020
SAN MATEO, Calif., Dec. 2, 2019 /PRNewswire/ -- Coupa Software (NASDAQ: COUP) today announced financial results for its third fiscal quarter ended October 31, 2019.
"We delivered strong business and financial results for the third quarter, as we continue executing on our vision and extending our leadership position in Business Spend Management (BSM). We reported $102 million of total revenues, up 51% year-over-year, and were profitable on a non-GAAP basis for the sixth consecutive quarter," said Rob Bernshteyn, chairman and chief executive officer at Coupa. "We're excited about the continued development of the BSM category, our Coupa community, and Coupa as a global brand."
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.
Third Quarter Results
-- Total revenues were $101.8 million, an increase of 51% compared to the
same period last year. Subscription revenues were $90.2 million, an
increase of 49% compared to the same period last year.
-- GAAP operating loss was $16.9 million, compared to a loss of $9.9
million for the same period last year. Non-GAAP operating income was
$11.6 million, compared to non-GAAP operating income of $5.8 million for
the same period last year.
-- GAAP net loss was $26.3 million, compared to a net loss of $9.6 million
for the same period last year. GAAP net loss per basic and diluted share
was $0.42, compared to a net loss of $0.17 for the same period last
year. Non-GAAP net income was $14.2 million, compared to non-GAAP net
income of $5.5 million for the same period last year. Non-GAAP net
income per diluted share was $0.20, compared to non-GAAP net income per
diluted share of $0.08 for the same period last year.
-- Operating cash flows and free cash flows were positive $25.8 million and
$22.1 million, respectively, for the quarter ended October 31, 2019.
Business Outlook:
The following forward-looking statements reflect Coupa's expectations as of December 2, 2019.
Fourth quarter of fiscal 2020:
-- Total revenues are expected to be between $101.5 and $102.5 million.
-- Subscription revenues are expected to be between $91.5 and $92.5
million.
-- Professional services and other revenues are expected to be
approximately $10.0 million.
-- Non-GAAP income from operations is expected to be between $3.0 and $4.5
million.
-- Non-GAAP net income per diluted share is expected to be between $0.03
and $0.06 per share.
-- Diluted weighted average share count is expected to be 72.0 million
shares.
Full year fiscal 2020:
-- Total revenues are expected to be between $379.8 and $380.8 million.
-- Non-GAAP income from operations is expected to be between $21.6 and
$23.1 million.
-- Non-GAAP net income per diluted share is expected to be between $0.34
and $0.37 per share.
-- Diluted weighted average share count is expected to be 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 Q3, including
the following: Affinity Education Group, Alexion Pharmaceuticals, Care
Vet Health, Cloudflare, ContextLogic, Crawford & Company, CVC Capital
Partners, Deloitte Services, DFS Venture Singapore, Dimension Data,
Distell, Enterprise Holdings, Esperion, Falconi, Ferrovial Services
U.S., Fieldwood Energy, Fortitude Group Services, Grupo NC, Heritage
Crystal Clean, Immunomedics, Indigo Agriculture, International Flavors &
Fragrances, Lowell Financial Services, Luminus, Maersk Drilling, Molex,
OSOTSPA Company, Pivot Bio, Priority Ambulance, Relay Therapeutics,
Saga, SambaNova Systems, Segment, Stonemor Partners, T3 Expo, TSVC,
Virgin Hyperloop One, Wilson Sons, and Wirecard.
-- Recognized as a Gartner 2019 Peer Insights Customers' Choice for
Procure-to-Pay Suites and listed in the Deloitte Fast 500 for the
seventh consecutive year.
-- At Inspire'19 EMEA in London, unveiled new community-powered
capabilities for Coupa Source Together and Coupa Supplier Insights, as
well as expanded capabilities for Coupa Pay, including support for
Expense Payments.
-- Announced the availability of Coupa CLM Advanced following the rapid
integration of Exari's technology with the Coupa BSM platform.
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 2858988.
-- International parties can access the call by dialing +1 (330) 871-6073,
using conference code 2858988.
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 Monday, December 9, 2019. To access the replay, parties in the U.S. and Canada should call (855) 859-2056 and enter conference code 2858988. International parties should call +1 (404) 537-3406 and enter conference code 2858988.
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.
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 at its current scale, 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; the impact of acquisitions on its business, such as integration issues, assumption of unknown or unforeseen liabilities and ability to retain customers; 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 September 5, 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 December 2, 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 Nine Months Ended
October 31, October 31,
---
2019 2018 2019 2018
---
Revenues:
Subscription $90,175 $60,559 $246,614 $165,899
Professional services and
other 11,609 6,896 31,653 19,559
---
Total revenues 101,784 67,455 278,267 185,458
Cost of revenues:
Subscription 23,752 13,990 63,217 36,937
Professional services and
other 13,542 7,674 35,896 21,492
---
Total cost of revenues 37,294 21,664 99,113 58,429
---
Gross profit 64,490 45,791 179,154 127,029
---
Operating expenses:
Research and development 23,460 16,077 67,838 42,693
Sales and marketing 39,145 25,622 112,575 76,862
General and
administrative 18,830 14,010 56,297 40,085
---
Total operating expenses 81,435 55,709 236,710 159,640
---
Loss from operations (16,945) (9,918) (57,556) (32,611)
Interest expense (13,188) (3,181) (24,874) (9,276)
Interest income and
other, net 4,076 1,112 6,479 1,562
---
Loss before provision for
(benefit from) income
taxes (26,057) (11,987) (75,951) (40,325)
Provision for (benefit
from) income taxes 260 (2,342) (9,172) (1,372)
---
Net loss $(26,317) $(9,645) $(66,779) $(38,953)
===
Net loss per share
attributable to common
stockholders, basic and
diluted $(0.42) $(0.17) $(1.08) $(0.68)
Weighted-average number
of shares used in
computing net loss per
share attributable to
common stockholders,
basic and diluted 63,057 58,212 61,973 57,030
===
COUPA SOFTWARE INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
(unaudited)
October 31, January 31,
2019 2019
Assets
Current assets:
Cash and
cash
equivalents $587,029 $141,250
Marketable
securities 255,327 180,169
Accounts
receivable,
net of
allowances 79,658 95,274
Prepaid
expenses
and other
current
assets 24,017 10,343
Deferred
commissions,
current
portion 10,043 7,324
Total
current
assets 956,074 434,360
Property
and
equipment,
net 17,807 10,549
Deferred
commissions,
net of
current
portion 25,001 18,904
Goodwill 370,869 209,560
Intangible
assets,
net 96,848 55,925
Operating
lease
right-of-
use assets 31,657 -
Other
assets 13,325 10,766
Total
assets $1,511,581 $740,064
Liabilities and Stockholders' Equity
Current liabilities:
Accounts
payable $3,008 $5,485
Accrued
expenses
and other
current
liabilities 68,432 41,792
Deferred
revenue,
current
portion 189,490 179,967
Operating
lease
liabilities,
current
portion 7,395 -
Current
portion of
convertible
senior
notes, net 183,875 174,615
Total
current
liabilities 452,200 401,859
Convertible
senior
notes, net 553,280 -
Deferred
revenue,
net of
current
portion 3,026 2,620
Operating
lease
liabilities,
net of
current
portion 26,024 -
Other
liabilities 17,555 22,304
Total
liabilities 1,052,085 426,783
Stockholders' equity:
Preferred
stock,
$0.0001
par value
per share -
Common
stock,
$0.0001
par value
per share 7 6
Additional
paid-in
capital 782,043 567,797
Accumulated
other
comprehensive
income
(loss) (918) 335
Accumulated
deficit (321,636) (254,857)
Total
stockholders'
equity 459,496 313,281
Total
liabilities
and
stockholders'
equity $1,511,581 $740,064
COUPA SOFTWARE INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Nine Months Ended
October 31,
2019 2018
---
Cash flows from operating activities
Net loss $(66,779) $(38,953)
Adjustments to reconcile net loss to net cash provided by operating
activities:
Depreciation and amortization 19,165 6,720
Accretion of discounts on marketable
securities, net 374 (956)
Amortization of deferred commissions 6,675 4,127
Amortization of debt discount and issuance
costs 23,350 8,595
Stock-based compensation 60,068 38,690
Other (637) (374)
Changes in operating assets and liabilities net of effects from
acquisitions:
Accounts receivable 23,855 12,391
Prepaid expenses and other current assets (9,839) (3,304)
Other assets (2,998) (542)
Deferred commissions (15,491) (8,467)
Accounts payable (4,126) 2,458
Accrued expenses and other liabilities 6,895 6,362
Deferred revenue 5,365 1,216
Net cash provided by operating activities 45,877 27,963
---
Cash flows from investing activities
Purchases of marketable securities (318,759) (209,331)
Maturities of marketable securities 44,796 31,834
Sales of marketable securities 199,314
Acquisitions, net of cash acquired (208,505) (49,211)
Purchases of property and equipment (9,862) (4,870)
Net cash used in investing activities (293,016) (231,578)
---
Cash flows from financing activities
Proceeds from issuance of convertible senior
notes, net of issuance costs 786,157 (639)
Purchase of capped calls (118,738)
Proceeds from the exercise of common stock
options 14,095 10,174
Proceeds from issuance of common stock for
employee stock purchase plan 11,455 8,778
Net cash provided by financing activities 692,969 18,313
---
Net increase (decrease) in cash, cash
equivalents, and restricted cash 445,830 (185,302)
Cash, cash equivalents, and restricted cash
at beginning of year 141,319 412,976
Cash, cash equivalents, and restricted cash
at end of period $587,149 $227,674
===
Reconciliation of cash, cash equivalents, and restricted cash to the
condensed consolidated balance sheets
Cash and cash equivalents 587,029 227,606
Restricted cash included in other assets 120 68
Total cash, cash equivalents, and restricted
cash $587,149 $227,674
===
COUPA SOFTWARE INCORPORATED
Reconciliation of GAAP to Non-GAAP Financial Measures
Three Months Ended October 31, 2019
(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 $23,752 $(1,886) $(4,654)
$ - $17,212
Costs of professional
services and other 13,542 (2,113) (200) 11,229
Gross profit 63.4% 3.9% 4.8% 0.0% 72.1%
Research and development 23,460 (5,517) 17,943
Sales and marketing 39,145 (6,135) (1,686) 31,324
General and
administrative 18,830 (6,304) 12,526
Income (loss) from
operations (16,945) 21,955 6,540 11,550
Operating margin -16.6% 21.6% 6.4% 0.0% 11.3%
Interest expense (13,188) 12,352 (836)
Interest income and
other, net 4,076 4,076
Income (loss) before
provision for (benefit
from) income taxes (26,057) 21,955 6,540 12,352 14,790
Provision for (benefit
from) income taxes 260 489 (123) 626
Net income (loss) (26,317) 21,466 6,663 12,352 14,164
Net income (loss) per
share attributable to
common stockholders,
basic (1) $(0.42) $0.22
Net income (loss) per
share attributable to
common stockholders,
diluted (1) $(0.42) $0.20
(1) GAAP net loss per share is
calculated based upon 63,057
basic and diluted weighted-
average shares of common
stock. Non-GAAP net income
per share is calculated based
upon 63,057 basic and 71,687
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.
COUPA SOFTWARE INCORPORATED
Reconciliation of GAAP to Non-GAAP Financial Measures
Three Months Ended October 31, 2018
(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 $13,990 $(1,152) $(1,408)
$ -
$ - $11,430
Costs of professional
services and other 7,674 (1,071) 6,603
Gross profit 67.9% 3.3% 2.1% 0.0% 0.0% 73.3%
Research and development 16,077 (3,046) 13,031
Sales and marketing 25,622 (3,899) (453) 21,270
General and
administrative 14,010 (4,652) 9,358
Income (loss) from
operations (9,918) 13,820 1,861 5,763
Operating margin -14.7% 20.5% 2.8% 0.0% 0.0% 8.5%
Interest expense (3,181) 2,953 (228)
Interest income and
other, net 1,112 1,112
Income (loss) before
provision for (benefit
from) income taxes (11,987) 13,820 1,861 2,953 6,647
Provision for (benefit
from) income taxes (2,342) 382 20 3,126 1,186
Net income (loss) (9,645) 13,438 1,841 2,953 (3,126) 5,461
Net income (loss) per
share attributable to
common stockholders,
basic (1) $(0.17) $0.09
Net income (loss) per
share attributable to
common stockholders,
diluted (1) $(0.17) $0.08
(1) GAAP net loss per share
is calculated based upon
58,212 basic and diluted
weighted-average shares of
common stock. Non-GAAP net
income per share is
calculated based upon
58,212 basic and 67,933
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.
(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
Nine Months Ended October 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 $63,217 $(5,045) $(11,535)
$ -
$ - $46,637
Costs of professional
services and other 35,896 (5,581) (200) 30,115
Gross profit 64.4% 3.8% 4.2% 0.0% 0.0% 72.4%
Research and development 67,838 (14,640) 53,198
Sales and marketing 112,575 (17,034) (4,342) 91,199
General and
administrative 56,297 (17,768) 38,529
Income (loss) from
operations (57,556) 60,068 16,077 18,589
Operating margin -20.7% 21.6% 5.8% 0.0% 0.0% 6.7%
Interest expense (24,874) 23,350 (1,524)
Interest income and
other, net 6,479 6,479
Income (loss) before
provision for (benefit
from) income taxes (75,951) 60,068 16,077 23,350 23,544
Provision for (benefit
from) income taxes (9,172) 1,797 (369) 9,671 1,927
Net income (loss) (66,779) 58,271 16,446 23,350 (9,671) 21,617
Net income (loss) per
share attributable to
common stockholders,
basic (1) $(1.08) $0.35
Net income (loss) per
share attributable to
common stockholders,
diluted (1) $(1.08) $0.31
(1) GAAP net loss per share is
calculated based upon 61,973
basic and diluted weighted-
average shares of common
stock. Non-GAAP net income
per share is calculated based
upon 61,973 basic and 69,856
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
Nine Months Ended October 31, 2018
(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 $36,937 $(3,076) $(3,036)
$ -
$ - $30,825
Costs of professional
services and other 21,492 (3,086) 18,406
Gross profit 68.5% 3.3% 1.6% 0.0% 0.0% 73.5%
Research and development 42,693 (8,551) 34,142
Sales and marketing 76,862 (10,732) (994) 65,136
General and
administrative 40,085 (13,245) 26,840
Income (loss) from
operations (32,611) 38,690 4,030 10,109
Operating margin -17.6% 20.9% 2.2% 0.0% 0.0% 5.5%
Interest expense (9,276) 8,595 (681)
Interest income and
other, net 1,562 1,562
Income (loss) before
provision for (benefit
from) income taxes (40,325) 38,690 4,030 8,595 10,990
Provision for (benefit
from) income taxes (1,372) 922 93 3,126 2,769
Net income (loss) (38,953) 37,768 3,937 8,595 (3,126) 8,221
Net income (loss) per
share attributable to
common stockholders,
basic (1) $(0.68) $0.14
Net income (loss) per
share attributable to
common stockholders,
diluted (1) $(0.68) $0.13
(1) GAAP net loss per share
is calculated based upon
57,030 basic and diluted
weighted-average shares of
common stock. Non-GAAP net
income per share is
calculated based upon
57,030 basic and 65,529
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.
(2) Other expenses consists
of the release of a
valuation allowance against
deferred tax assets.
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 Nine Months Ended
October 31, October 31,
---
2019 2018 2019 2018
---
Net cash provided by operating activities $25,832 $4,019 $45,877 $27,963
Less: purchases of property and equipment (3,689) (1,454) (9,862) (4,870)
---
Free cash flows $22,143 $2,565 $36,015 $23,093
===
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SOURCE Coupa Software
