Coupa Software Soars on Topping Q2 Expectations, Gives Guidance

Coupa Software (COUP) has delivered strong second-quarter results on the back of record revenue, robust billings growth and the third year of consecutive quarterly non-GAAP profitability. Following the news, shares of the cloud-based business spending management platform soared 5.8% in extended trade on Tuesday.

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Coupa reported quarterly earnings of $0.26 per share, up 23.8% year-over-year, significantly outpacing analysts’ estimated loss of $0.06 per share.

Its total revenue climbed 42% year-over-year to $179.25 million, beating the Street’s estimate of $162.97 million. (See Coupa Software stock charts on TipRanks)

The revenue growth was aided by solid subscription revenue of $156.23 million, up 40% year-over-year. Also, calculated billings for the quarter grew 49% to $195 million.

Commenting on Coupa’s solid performance, The Chairman and CEO of Rob Bernshteyn, said, “Digitizing and optimizing back-office operations is being prioritized as a key strategic initiative for our customers, and the Coupa platform is critical for their ability to develop agility and adaptability in these rapidly changing times.”

Based on the continued business momentum, Coupa guided third-quarter revenue and earnings to be in the range of $177 million to $178 million and $0.01 to $0.03 per share, respectively. The consensus estimate for Q3 revenue is $168.8 million and the consensus estimated loss is pegged at $0.08 per share.

For Fiscal 2022, the company projects revenue to fall in the range of $706 million to $708 million, compared to the consensus estimate of $687.2 million. Additionally, annual earnings are expected to be in the range of $0.27 to $0.29 per share versus the consensus estimated loss of $0.15 per share.

Impressed by Coupa’s strong beat and raise quarterly results, Oppenheimer analyst Brian Schwartz assigned a Buy rating to the stock and raised the price target to $300 from $260 (upside potential of 13.9%).

Schwartz said, “We see the combination of an expanded product portfolio and strong execution driving continued share gains for Coupa in spend management as end-market demand in the back-office accelerates.”

The analyst noted that Coupa posted strong Q2 results with new businesses more than doubling and driving the growth. Also, he was encouraged by the management commentary suggesting enterprise momentum with strength in seven-figure deals.

Overall, Schwartz believes that Coupa’s pure-play, multi-tenant Software-as-a-Service (SaaS) platform is a “lower-cost alternative to on-premise and/or legacy spend management applications,” which positions the company well for continued growth in the long run.

The Wall Street community is cautiously optimistic about the stock and has a Moderate Buy consensus rating based on 8 Buys and 4 Holds. The average Coupa Software price target of $288 implies 9.4% upside potential to current levels. Shares have lost 4.8% over the past year.