Coupa Software Reports Third Quarter Fiscal 2023 Financial Results
- Quarterly Subscription Revenues of $198 Million, 20% Year-Over-Year Growth
- Quarterly Revenues of $217 Million, 17% Year-Over-Year Growth
- Quarterly Subscription Calculated Billings of $206 Million, 20% Year-Over-Year Growth
- Quarterly Operating Cash Flows and Adjusted Free Cash Flows of $71 Million and $66 Million, Respectively
- Enters into Definitive Agreement to be Acquired by Thoma Bravo for $8.0 Billion
SAN MATEO, Calif., December 12, 2022 — Coupa Software (NASDAQ: COUP) today announced financial results for its third fiscal quarter ended October 31, 2022.
Third Quarter Results:
- Total revenues were $217.3 million, an increase of 17% compared to the same period last year. Subscription revenues were $198.4 million, an increase of 20% compared to the same period last year.
- GAAP operating loss was $77.4 million, compared to $56.1 million for the same period last year. Non-GAAP operating income was $16.5 million, compared to $27.9 million for the same period last year.
- GAAP net loss attributable to Coupa Software Incorporated was $84.7 million, compared to $91.2 million for the same period last year. GAAP net loss per basic and diluted share attributable to Coupa Software Incorporated was $1.11, compared to $1.23 for the same period last year. Non-GAAP net income attributable to Coupa Software Incorporated was $11.6 million, compared to $23.5 million for the same period last year. Non-GAAP net income per diluted share attributable to Coupa Software Incorporated was $0.15, compared to $0.31 for the same period last year.
- Operating cash flows and adjusted free cash flows were $71.3 million and $65.5 million, respectively.
See the section titled “Non-GAAP Financial Measures” and the reconciliation tables below for important information regarding the non-GAAP financial measures used by Coupa.
Recent Business Highlights:
- Welcomed many new customers into the Coupa community in Q3, including the following: Aareal Bank, Alltech Inc., Bahrain Tender Board, Banco Agromercantil de Guatemala, S. A., Central Romana Corporation Ltd., Ecolab Inc., First Watch, Fivetran Inc., Hargreaves Lansdown Asset Management Limited, Intercom Inc., Moto Honda da Amazonia Ltda, netgo group GmbH, Nissan Motor Co., Ltd., Noble Drilling Services Inc., RCL Foods, Scale AI, Inc, SoFi, Summit Materials Inc., Therm-O-Disc Inc., and West Dermatology
- Named a Leader in the 2022 Gartner Magic Quadrant for Procure-to-Pay Suites
- Named a Leader in The Forrester Wave: Collaborative Supply Networks, Q4 2022
- Received Gartner Peer Insights Customers’ Choice Distinction for Supply Chain Planning
- Recognized as a Leader for Third Party Risk Management in IDC's MarketScape Report
- Named a Leading Contender in the Aite Matrix Evaluation: Treasury Management Systems, EMEA, 2022
- Concluded its 2022 Executive Summit series, gathering 500+ executives across Australia, Singapore, Europe, London, and the U.S to collaborate, learn, and share BSM success stories
- Published the results of its annual Retail Holiday Supply Chain study
- Hosted Global Impact Week, uniting the Coupa community to drive impact in local communities
- Launched a new Employee Resource Group (ERG) to support the Asian and Pacific Islander (API) community
- Opened registration for Inspire 2023 in America and Europe, Coupa's annual Business Spend Management (BSM) community event
Transaction with Thoma Bravo
In a separate press release issued today, Coupa announced it has entered into a definitive agreement to be acquired by Thoma Bravo. A copy of the press release and supplemental materials, including an investor presentation, can be found on the investor relations page of Coupa’s website at investors.coupa.com. The additional details and information about the terms and conditions of the definitive agreement and the transactions contemplated today are available in the Current Report on Form 8-K filed by Coupa with the Securities and Exchange Commission (SEC).
Given the announced transaction, Coupa will not host an earnings conference call or provide financial guidance in conjunction with this earnings release. Coupa is also withdrawing its previous financial guidance for fiscal 2023 and has suspended any further updates as a result of the pending transaction. For further detail and discussion of Coupa’s financial performance please refer to Coupa’s Quarterly Report on Form 10-Q for the quarter ended October 31, 2022, which will be filed later today with the SEC.
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 income, non-GAAP net income attributable to Coupa Software Incorporated, non-GAAP net income per basic and diluted share attributable to Coupa Software Incorporated, adjusted free cash flows and adjusted free cash flows margin. Coupa believes these non-GAAP measures are useful in evaluating its operating performance and Coupa’s management regularly reviews and uses these measures for business planning and other purposes.
Non-GAAP operating income and non-GAAP net income attributable to Coupa Software Incorporated exclude certain items from the corresponding GAAP measures, including: stock-based compensation, amortization of acquired intangible assets, amortization of debt issuance costs, gain or loss on conversion of convertible senior notes, gain or loss on non-marketable investments, insurance proceeds for loss recoveries, the adjustment attributable to redeemable non-controlling interests, nonrecurring income tax adjustments, and income tax effects, and prior to the adoption of ASU 2020-06 on February 1, 2022, amortization of debt discount costs. In addition, the weighted average diluted shares figure used to calculate non-GAAP net income per share attributable to Coupa Software Incorporated reflects the anti-dilutive impact of the if-converted method
related to the convertible notes, if any.
Beginning in the three months ended April 30, 2022, we utilize a fixed long-term projected tax rate in our computation of the non-GAAP income tax provision to provide better consistency across the reporting periods. In projecting this long-term nonGAAP tax rate, we utilize a three-year financial projection that excludes the direct impact of stock-based compensation, amortization of acquired intangible assets, and amortization of debt issuance costs. The projected rate considers other factors such as our current operating structure, and existing tax positions in various jurisdictions. Additionally, due to historic profitability on a non-GAAP basis, there are no valuation allowances recorded against the non-GAAP deferred tax assets globally. We will periodically reevaluate the projected long-term tax rate, as necessary, for significant events, based on our ongoing analysis of relevant tax law changes, material changes in the forecasted geographic earnings mix, and any significant acquisitions.
Adjusted free cash flows is defined as net cash provided by operating activities, less purchases of property and equipment, and prior to the adoption of ASU 2020-06 on February 1, 2022, plus repayments of convertible senior notes attributable to debt discount, plus one-time payout of legacy unvested equity awards accelerated in conjunction with a business combination. Coupa has the ability to settle conversions related to its senior notes through the use of cash, shares of its common stock, or a combination of both, at its election. Adjusted free cash flow margin is defined as adjusted free cash flows divided by total revenues.
Coupa believes these non-GAAP measures are useful to investors and other users of its financial information because they provide a way to measure and evaluate Coupa’s underlying operating performance and the strength of its core business consistently across the periods presented. Coupa believes these non-GAAP measures are also useful for comparing its operating performance to that of other companies in its industry, because they eliminate the effects of certain items that may vary between companies for reasons unrelated to their 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 to represent 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. Coupa’s definitions of its non-GAAP measures may differ from those used by other companies for similarly-titled measures, 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, the company’s GAAP results.
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. In addition, Coupa compensates for the limitations of its non-GAAP financial measures by providing a reconciliation of each non-GAAP measure to the most directly comparable GAAP financial measure. These reconciliations are included in the tables attached to this release.
This release includes forward-looking statements. All statements other than statements of historical facts, including the proposed transaction with Thoma Bravo, are forward-looking statements. These forward-looking statements are based on Coupa’s current expectations about future events.
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, without limitation: Coupa is subject to macroeconomic uncertainties driven by inflation, rising interest rates, the Russia-Ukraine conflict, and the COVID-19 pandemic; Coupa has a limited operating history at its current scale, which makes it difficult to predict its future operating results; Coupa may not be able to manage its recent rapid growth effectively; risks related to past and future business acquisitions, including their integration with Coupa’s existing business model, operations and culture; 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; the markets in which Coupa participates are intensely competitive; Coupa’s business depends in part on its customers renewing their subscriptions and purchasing additional subscriptions; Coupa may not be successful in expanding its sales efforts or developing widespread brand awareness in a cost-effective manner; the loss of the services of Coupa’s chief executive officer or one or more of its key employees, or an inability to attract and retain highly skilled employees; Coupa’s international operations expose it to risks inherent in international sales; risks and liabilities related to breach of its security measures or unauthorized access to customer data; the impact of foreign currency exchange rates; failure to integrate Coupa’s platform with a variety of third-party technologies, making its platform less marketable; any failure to protect intellectual property rights; changes in privacy laws, regulations and standards may cause Coupa’s business to suffer; risks relating to servicing Coupa’s debt; the price, amount and timing of any share repurchases, Coupa’s failure to complete, or delays in completing, the potential merger with Thoma Bravo (the Merger) and disruptions in Coupa’s business caused by the potential Merger; whether or not the Merger will be completed; and lawsuits may be filed against Coupa and members of its board of directors as a result of the Merger.
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 SEC on September 7, 2022, 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 12, 2022. 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.