Coupa Software Reports Second Quarter Fiscal 2021 Financial Results
SAN MATEO, Calif., Sept. 8, 2020 /PRNewswire/ -- Coupa Software (NASDAQ: COUP) today announced financial results for its second fiscal quarter ended July 31, 2020.
"Our strong financial results for the second quarter underscore the importance our customers place on business resilience and the value that Coupa is delivering to their organizations, especially amid the everchanging macroeconomic environment," said Rob Bernshteyn, chairman and chief executive officer at Coupa. "We were proud to deliver record revenues and adjusted free cash flows during the quarter. We also reached a new financial milestone, generating $100 million in adjusted free cash flows over the trailing twelve months, while continuing to assertively invest in our long-term success."
Second Quarter Results:
-- Total revenues were $125.9 million, an increase of 32% compared to the
same period last year. Subscription revenues were $111.6 million, an
increase of 34% compared to the same period last year.
-- GAAP operating loss was $31.9 million, compared to a GAAP operating loss
of $22.8 million for the same period last year. Non-GAAP operating
income was $12.3 million, compared to a non-GAAP operating income of
$4.8 million for the same period last year.
-- GAAP net loss was $43.1 million, compared to a GAAP net loss of $20.0
million for the same period last year. GAAP net loss per basic and
diluted share was $0.64 which includes an unfavorable $0.12 impact from
the issuance of the 2026 Notes, compared to a GAAP net loss per basic
and diluted share of $0.32 for the same period last year. Non-GAAP net
income was $15.2 million, compared to a non-GAAP net income of $5.3
million for the same period last year. Non-GAAP net income per diluted
share was $0.21, compared to non-GAAP net income per diluted share of
$0.07 for the same period last year.
-- Operating cash flows and adjusted free cash flows were positive $23.4
million and $35.7 million, respectively.
See the section titled "Non-GAAP Financial Measures" and the reconciliation tables below for important information regarding the non-GAAP measures used by Coupa.
Business Outlook:
The following forward-looking statements reflect Coupa's expectations as of September 8, 2020.
Third quarter of fiscal 2021:
-- Total revenues are expected to be $123.0 to $124.0 million.
-- Subscription revenues are expected to be $112.0 to $113.0 million.
-- Professional services and other revenues are expected to be
approximately $11.0 million.
-- Non-GAAP income from operations is expected to be $4.5 to $5.0 million.
-- Non-GAAP net income per diluted share is expected to be $0.02 to $0.03
per share.
-- Diluted weighted average share count is expected to be approximately
74.0 million shares.
Full year fiscal 2021:
-- Total revenues are expected to be $496.5 to $498.5 million.
-- Non-GAAP income from operations is expected to be $33.5 to $35.5
million.
-- Non-GAAP net income per diluted share is expected to be $0.43 to $0.45
per share.
-- Diluted weighted average share count is expected to be approximately
73.0 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 stock-based compensation expenses, amortization of acquired intangible assets, the change in fair value of contingent consideration related to acquisition earnout payments, amortization of debt discount and issuance costs, gain or loss on conversion of convertible senior 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: 14 West, 2u, ACV Environmental Services, Benson Hill,
Canfor Corporation, CECO Environmental Corporation, Confluent Inc.,
Conseil 2.0, CSC ServiceWorks, Cycle and Carriage Industries, Delly's,
Engen Petroleum, Florida Home-Improvement Associates, GAF Materials,
HammondCare, M. Dias Branco S.A. Ind Com de Alimentos, OneMain Financial
Holdings, SalesLoft, Samancor Chrome, Schaeffler, Sekisui Chemical,
Shorelight Education, Strategic Education, Südwestdeutsche
Medienholding, Toyota Finance Australia, Welltok, and Westpac Banking.
-- Closed an offering of $1.38 billion in convertible senior notes due
2026.
-- Acquired Treasury Management leader, BELLIN Group.
-- Introduced product innovations that provide customers with increased
spend visibility, help them mitigate supply chain risk and increase
business agility to adapt to change.
-- Cited as a leader in the Forrester Wave: Supplier Risk and Performance
Management Platforms, Q3 2020, receiving the top score in the
performance management criterion and the highest score possible in the
corporate strategy criterion.
Conference Call Information:
Coupa will host a conference call and live webcast for analysts and investors at 4:30 p.m. Eastern time today.
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.
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, including non-GAAP operating profit, non-GAAP net profit and adjusted free cash flows. Coupa believes these non-GAAP measures are useful in evaluating its operating performance and regularly reviews these measures as it evaluates its business.
Non-GAAP operating profit and non-GAAP net profit exclude certain items, including stock-based compensation expenses, amortization of acquired intangible assets, the change in fair value of contingent consideration related to acquisition earnout payments, amortization of debt discount and issuance costs, gain on conversion of convertible senior 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. Adjusted free cash flows is defined as net cash provided by operating activities less purchases of property and equipment plus repayments of convertible senior notes attributable to debt discount. Coupa has the ability to settle obligations related to this excluded item through the use of cash, shares of its common stock, or a combination of both, at its election.
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 believes that adjusted free cash flows also provides a useful measure of the company's capital strength and liquidity, although it is not intended and should not be viewed as the amount of residual cash flow available for discretionary expenditures.
Coupa uses these non-GAAP measures in conjunction with GAAP measures as part of its overall assessment of its performance and liquidity, 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 and liquidity. 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 from those projected, including: Coupa has a limited operating history at its current scale, which makes it difficult to predict its future operating results; the uncertain impact of the COVID-19 pandemic; 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 June 8, 2020, 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 8, 2020. 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 empowers companies around the world with the visibility and control they need to spend smarter and safer. To learn more about how Coupa can help you spend smarter, visit 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,
2020 2019 2020 2019
Revenues:
Subscription $111,581 $83,482 $217,316 $156,439
Professional services and other 14,340 11,657 27,819 20,044
Total revenues 125,921 95,139 245,135 176,483
Cost of revenues:
Subscription 33,805 22,062 62,807 39,465
Professional services and other 14,634 12,428 28,470 22,354
Total cost of revenues 48,439 34,490 91,277 61,819
Gross profit 77,482 60,649 153,858 114,664
Operating expenses:
Research and development 30,212 23,364 56,931 44,378
Sales and marketing 50,488 39,820 96,627 73,430
General and administrative 28,705 20,269 37,849 37,467
Total operating expenses 109,405 83,453 191,407 155,275
Loss from operations (31,923) (22,804) (37,549) (40,611)
Interest expense (20,223) (8,511) (32,512) (11,686)
Interest income and other, net 4,759 1,479 8,087 2,403
Loss before benefit from income taxes (47,387) (29,836) (61,974) (49,894)
Benefit from income taxes (4,271) (9,842) (4,042) (9,432)
Net loss $(43,116) $(19,994) $(57,932) $(40,462)
Net loss per share attributable to common stockholders, basic $(0.64) $(0.32) $(0.87) $(0.66)
and diluted
Weighted-average number of shares used in computing net 67,597 62,038 66,545 61,422
loss per share attributable to common stockholders, basic a
nd diluted
COUPA SOFTWARE INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
(unaudited)
July 31,
January 31,
2020 2020
Assets
Current assets:
Cash and cash equivalents $905,612 $268,045
Marketable securities 436,463 499,160
Accounts receivable, net of allowances 101,120 118,508
Prepaid expenses and other current assets 26,573 31,636
Deferred commissions, current portion 12,639 11,982
Total current assets 1,482,407 929,331
Property and equipment, net 23,598 18,802
Deferred commissions, net of current portion 29,886 30,921
Goodwill 542,232 442,112
Intangible assets, net 156,279 128,660
Operating lease right-of-use assets 31,119 32,026
Other assets 15,423 12,221
Total assets $2,280,944 $1,594,073
Liabilities, Temporary Equity and Stockholders' Equity
Current liabilities:
Accounts payable $2,107 $3,517
Accrued expenses and other current liabilities 72,311 54,245
Deferred revenue, current portion 244,596 257,692
Current portion of convertible senior notes, net 595,007 187,115
Operating lease liabilities, current portion 8,808 8,199
Total current liabilities 922,829 510,768
Convertible senior notes, net 862,523 562,612
Deferred revenue, net of current portion 4,439 4,091
Operating lease liabilities, net of current portion 23,980 25,490
Other liabilities 40,124 28,620
Total liabilities 1,853,895 1,131,581
Temporary equity 133 16,835
Stockholders' equity:
Preferred stock, $0.0001 par value per share
Common stock, $0.0001 par value per share 7 7
Additional paid-in capital 822,197 790,468
Accumulated other comprehensive income 8,333 871
Accumulated deficit (403,621) (345,689)
Total stockholders' equity 426,916 445,657
Total liabilities, temporary equity and stockholders' equity $2,280,944 $1,594,073
COUPA SOFTWARE INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Six Months Ended
July 31,
2020 2019
Cash flows from operating activities
Net loss $(57,932) $(40,462)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 22,920 11,330
Accretion of discounts on marketable
securities, net 1,099 668
Amortization of deferred commissions 6,437 4,309
Amortization of debt discount and issuance
costs 31,357 10,998
Stock-based compensation 58,040 38,113
Gain on conversion of convertible senior
notes (3,202)
Repayments of convertible senior notes
attributable to debt discount (26,336)
Other 3,300 (95)
Changes in operating assets and
liabilities net of effects from
acquisitions:
Accounts receivable 19,583 20,450
Prepaid expenses and other current assets 7,053 (7,662)
Other assets 901 (770)
Deferred commissions (6,051) (9,939)
Accounts payable (1,741) (4,473)
Accrued expenses and other liabilities 1,289 (4,061)
Deferred revenue (17,920) 1,639
Net cash provided by operating activities 38,797 20,045
Cash flows from investing activities
Purchases of marketable securities (246,586) (258,991)
Maturities of marketable securities 284,090 44,796
Sale of marketable securities 25,013 199,314
Acquisitions, net of cash acquired (87,338) (210,468)
Purchases of property and equipment (7,028) (6,173)
Net cash used in investing activities (31,849) (231,522)
Cash flows from financing activities
Proceeds from issuance of convertible
senior notes, net of issuance costs 1,355,367 786,567
Purchase of capped calls (192,786) (118,738)
Repayments of convertible senior notes (549,278)
Proceeds from the exercise of common stock
options 9,609 10,909
Proceeds from issuance of common stock for
employee stock purchase plan 7,391 5,396
Net cash provided by financing activities 630,303 684,134
Effects of foreign currency exchange rates
on cash, cash equivalents, and restricted
cash 241
Net increase in cash, cash equivalents,
and restricted cash 637,492 472,657
Cash, cash equivalents, and restricted
cash at beginning of year 268,280 141,319
Cash, cash equivalents, and restricted
cash at end of period $905,772 $613,976
Reconciliation of cash, cash equivalents,
and restricted cash to the condensed
consolidated balance sheets
Cash and cash equivalents $905,612 $613,906
Restricted cash included in other assets 160 70
Total cash, cash equivalents, and
restricted cash $905,772 $613,976
COUPA SOFTWARE INCORPORATED
Reconciliation of GAAP to Non-GAAP Financial Measures
Three Months Ended July 31, 2020
(in thousands, except percentages and per share amounts)
(unaudited)
GAAP
Stock-Based
Amortization of
Change in Fair
Amortization of
Gain on Conversion
Other
Non-GAAP
Compensation Acquired Intangible Value of Debt Discount and of Convertible Expenses(2)
Expenses Assets Contingent Issuance Costs Senior Notes
Consideration
Liability
---
Costs and expenses:
Costs of subscription $33,805 $(2,647) $(7,548)
$ -
$ -
$ -
$ - $23,610
Costs of professional services and other 14,634 (2,952) (200) 11,482
Gross profit 61.5% 4.4% 6.2% 0.0% 0.0% 0.0% 0.0% 72.1%
Research and development 30,212 (7,316) 22,896
Sales and marketing 50,488 (9,255) (2,614) 38,619
General and administrative 28,705 (11,673) 17,032
Income (loss) from operations (31,923) 33,843 10,362 12,282
Operating margin -25.4% 26.9% 8.2% 0.0% 0.0% 0.0% 0.0% 9.8%
Interest expense (20,223) 19,407 (816)
Interest income and other, net 4,759 (631) 4,128
Income (loss) before provision for (benefit from) income taxes (47,387) 33,843 10,362 19,407 (631) 15,594
Provision for (benefit from) income taxes (4,271) 3,444 (103) 1,109 182 361
Net income (loss) (43,116) 30,399 10,465 18,298 (631) (182) 15,233
Net income (loss) per share attributable to common $(0.64) $0.23
stockholders, basic (1)
Net income (loss) per share attributable to common $(0.64) $0.21
stockholders, diluted (1)
(1) GAAP net loss per share is calculated based upon 67,597 basic and diluted weighted-average shares of common stock. Non-GAAP net income per share is calculated based upon 67,597 basic and 73,019 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 valuation allowances against deferred tax assets.
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
Stock-Based
Amortization of
Amortization of
Other
Non-GAAP
Compensation Acquired Debt Discount and Expenses (2)
Expenses Intangible Assets Issuance 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 (benefit from) 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 reversal of a valuation allowance against deferred tax assets.
COUPA SOFTWARE INCORPORATED
Reconciliation of GAAP to Non-GAAP Financial Measures
Six Months Ended July 31, 2020
(in thousands, except percentages and per share amounts)
(unaudited)
GAAP Stock-Based Compensation Expenses Amortization of Acquired Change in Fair Value of Contingent Amortization of Debt Discount and
Consideration Liability Issuance Costs
Gain on
Other
Non-GAAP
Intangible Assets Conversion of Expenses (2)
Convertible
Senior Notes
---
Costs and expenses:
Costs of subscription $62,807 $(4,805) $(14,158)
$ -
$ -
$ -
$ - $43,844
Costs of professional services and other 28,470 (5,364) (400) 22,706
Gross profit 62.8% 4.1% 5.9% 0.0% 0.0% 0.0% 0.0% 72.9%
Research and development 56,931 (13,440) 43,491
Sales and marketing 96,627 (16,768) (4,670) 75,189
General and administrative 37,849 (17,663) 12,500 32,686
Income (loss) from operations (37,549) 58,040 19,228 (12,500) 27,219
Operating margin -15.3% 23.7% 7.8% -5.1% 0.0% 0.0% 0.0% 11.1%
Interest expense (32,512) 31,357 (1,155)
Interest income and other, net 8,087 (3,202) 4,885
Income (loss) before provision for (benefit from) income taxes (61,974) 58,040 19,228 (12,500) 31,357 (3,202) 30,949
Provision for (benefit from) income taxes (4,042) 4,031 (152) 1,109 310 1,256
Net income (loss) (57,932) 54,009 19,380 (12,500) 30,248 (3,202) (310) 29,693
Net income (loss) per share attributable to common stockholders, basic (1) $(0.87) $0.45
Net income (loss) per share attributable to common stockholders, diluted (1) $(0.87) $0.41
(1) GAAP net loss per share is calculated based upon 66,545 basic and diluted weighted-average shares of common stock. Non-GAAP net income per share is calculated based upon 66,545 basic and 71,603 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 valuation allowances against deferred tax assets.
COUPA SOFTWARE INCORPORATED
Reconciliation of GAAP to Non-GAAP Financial Measures
Six Months Ended July 31, 2019
(in thousands, except percentages and per share amounts)
(unaudited)
GAAP Stock-Based Compensation Expenses
Amortization of
Amortization of
Other
Non-GAAP
Acquired Debt Discount Expenses (2)
Intangible Assets and Issuance 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 Cash Flows from Operations to Adjusted Free Cash Flows
(A Non-GAAP Financial Measure)
(in thousands)
(unaudited)
Three Months Ended Six Months Ended
July 31,
July 31,
2020 2019 2020 2019
Net cash provided by operating activities $23,389 $1,252 $38,797 $20,045
Less: purchases of property and equipment (3,429) (3,519) (7,028) (6,173)
Add: repayments of convertible senior notes 15,732 26,336
attributable to debt discount
Adjusted free cash flows $35,692 $(2,267) $58,105 $13,872
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SOURCE Coupa Software
