Coupa Software (COUP) Q1 Earnings: What to Expect


Coupa Software (COUP) is set to report first quarter fiscal 2022 earnings results after Monday’s closing bell. Boasting 100,000-plus potential global customers, Coupa counts companies as large as Walmart (WMT), Salesforce (CRM), Procter & Gamble (PG), among others, as clients. With its total addressable market measured at $56 billion and growing, Coupa’s platform helps customers with actionable insights that can lead to improved inventory management, smarter purchasing decisions, while lowering expenditures.

Aiming to become a BSM (Business Spend Management) leader, Coupa makes money by analyzing large quantities of corporate transactional expense data, looking for spending patterns and areas of inefficiency. The company’s three core segments are aimed at controlling how companies spend money, optimize supply chains, and manage finances. Each segment is growing rapidly. However, Coupa has been dragged down by the recent punishment in tech stocks on fears of rising interest rates and inflation. On Monday, a double beat, along with confident guidance could reverse this trend.

In the three months that ended April, the San Mateo, CA-based company is expected to earn 5 cents per share on revenue of $190.69 million. This compares to the year-ago quarter when it earned 7 cents per share on revenue of $166.93 million. For the full year, ending January, earnings are expected to be 20 cents per share, down from earnings of 83 cents per share a year ago, while full-year revenue of the $840.27 million would rise 15.9% year over year.

Sporting a comprehensive suite of procurement solutions, Coupa’s platform helps businesses assess expenditures from things such as sourcing, invoicing as well as travel/expense management. These tools enable customers to realize stronger and more targeted working capital by de-segmenting organizational silos to better assess risks across the organization. With more than 2000 clients on its platform, Coupa’s has also become an asset for data that is generating key business insights.

Client components, such as supply chain finance operations, has made Coupa an indispensable partner to its customers. However, the company must convince a now-skeptical market that it can continue to deliver the breathtaking growth numbers investors have come to expect. In the fourth quarter, although it delivered a double beat, its guidance for the year ahead disappointed investors. Notably, its billings growth, which are a leading indicator for the business, are expected to rise just 17% year over year, compared to Q4 Billings which grew at 25%.

What’s more, the company ended fiscal 2022 by increasing its billings at 33%. That said, despite the bearish view towards the stock, the company’s business fundamentals remain strong as evidenced by its rising operating margin in the fourth quarter which came in at 14.3%, compared with 11.0% a year ago. What’s more, Coupa’s annual operating cash flow and adjusted free cash flows reached a company record of $168 million and $156 million, respectively. Fiscal year revenue of $725 million, which grew 34% year over year, was also a new benchmark.

All told, the stock’s reaction has not reflected how the company has operated. Despite the bearish view, Coupa’s business fundamentals remain strong. Assuming a top and bottom line beat on Monday, along with confident guidance, Coupa’s stock can still perform for long-term investors.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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