Coupa Software Reports Fourth Quarter & Full Year Fiscal 2019 Financial Results

SAN MATEO, Calif., March 11, 2019 /PRNewswire/ -- Coupa Software (NASDAQ: COUP) today announced financial results for the fourth quarter and fiscal year ended January 31, 2019.

"The fourth quarter of fiscal 2019 was the strongest quarter yet in our company's history, as marked by a number of significant milestones," said Rob Bernshteyn, chief executive officer at Coupa. "We achieved 42% year-over-year subscription revenue growth and 11.5% annual free cash flow margins. We were also profitable for the year on a non-GAAP basis, delivering non-GAAP earnings per share of 18 cents, with a net loss per share of 96 cents on a GAAP basis. In addition, we surpassed $1 trillion in cumulative spend under management demonstrating the breadth and depth of our growing customer base. Heading into fiscal 2020, our powerful combination of innovation, execution, and core values that are centered around ensuring customer success, will enable us to extend our leadership position in Business Spend Management (BSM)."

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 and free cash flow margins as free cash flows divided by total revenues.

Fourth Quarter Results

• Total revenues were $74.9 million, an increase of 39% compared to the same period last year. Subscription revenues were $67.5 million, an increase of 45% compared to the same period last year.
• GAAP operating loss was $14.7 million, compared to a loss of $9.1 million for the same period last year. Non-GAAP operating income was $2.4 million, compared to income of $0.9 million for the same period last year.
• GAAP net loss was $16.6 million, compared to a loss of $8.7 million for the same period last year. GAAP net loss per basic and diluted share was $0.28, compared to a loss of $0.16 for the same period last year. Non-GAAP net income was $3.4 million, compared to $1.4 million for the same period last year. Non-GAAP net income per diluted share was $0.05, compared to $0.02 for the same period last year.
• Operating cash flows and free cash flows for the quarter ended January 31, 2019, were $9.5 million and $6.8 million, respectively.

Fiscal Year 2019 Results

• Total revenues were $260.4 million, an increase of 39% from the previous year. Subscription revenues were $233.4 million, an increase of 42% from the previous year.
• GAAP operating loss was $47.4 million, compared to a loss of $45.0 million for the previous year. Non-GAAP operating income was $12.5 million, compared to a loss of $11.8 million for the previous year.
• GAAP net loss was $55.5 million, compared to a loss of $43.8 million for the previous year. GAAP net loss per basic and diluted share was $0.96, compared to a loss of $0.83 for the previous year. Non-GAAP net income was $11.6 million, compared to a loss of $11.3 million for the previous year. Non-GAAP net income per diluted share was $0.18, compared to a loss of $0.21 per diluted share for the previous year.
• Operating cash flows and free cash flows for the year ended January 31, 2019, were $37.4 million and $29.9 million, respectively.

Business Outlook:

The following forward-looking statements reflect Coupa's expectations as of March 11, 2019.

First quarter of fiscal 2020:

• Total revenues are expected to be between $73.5 and $74.0 million.
• Subscription revenues are expected to be between $67.5 and $68.0 million. This includes a negative impact of approximately $2.0 million due to three fewer calendar days for revenue recognition in Q1 compared to Q4.
• Professional services and other revenues are expected to be approximately $6.0 million.
• Non-GAAP loss from operations is expected to be between $2.0 and $3.5 million.
• Non-GAAP net loss per basic and diluted share is expected to be between $0.03 loss and $0.06 loss per share.
• Basic weighted average share count is expected to be approximately 61.0 million shares.
• Free cash flows are expected to be approximately $15.0 million.

Full year fiscal 2020:

• Total revenues are expected to be between $325.0 and $327.0 million.
• Non-GAAP income from operations is expected to be between $3.0 and $7.0 million.
• Non-GAAP net income per diluted share is expected to be between $0.04 and $0.10 per share.
• Diluted weighted average share count is expected to be approximately 70.0 million shares.

Recent Business Highlights:

• Coupa added new customers in Q4, including but not limited to:  Air Methods, Bank of Hope, BDP International, BJ Services, Botanic-Serres Du Saleve, Canadian Tire, Copa Holdings, Elekta, Erco Worldwide, Evelo Biosciences, Freshworks, Guardian Industries, InvestRes, InVisionApp, Kin Group, KPMG Australia, Looker, Munich Re, North Queensland Airport Group, Novo Nordisk, Pacific Life Insurance, Peloton Interactive, Randstad US, Settlement Services International, Shopify, Sibanye-Stillwater, TearFund, Telia Company, Uniting Vic Tas, Vanquis Bank (Provident), WeddingWire, and WP Engine.
• Coupa announced its latest release of product innovations for the BSM Platform. New industry-first capabilities were unveiled as part of this release which leverages community intelligence, powered by artificial intelligence, and enhanced global compliance capabilities to empower businesses to manage their spend in a simpler, safer, and smarter way.
• Following the announcement of Coupa Pay, the company's B2B payments solution, Coupa announced a new strategic partnership with J.P. Morgan, which joins a growing list of virtual card issuers that are enabling businesses to manage payments in a fast, secure, and convenient way.
• Coupa announced that it acquired Hiperos, a leading third-party risk management provider and division of Opus. This acquisition provides businesses with the advanced technology they need to extensively evaluate the risk of their supplier base to further protect their brand and bottom line.
• Coupa was named a Leader in two new reports: the IDC MarketScape: Worldwide SaaS and Cloud-Enabled Accounts Payable Applications 2019 Vendor Assessment and the Forrester Wave: Source-to-Contract CLM, Q1 2019 for Contract Lifecycle Management.

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 (888) 204-4368, using conference code 2289487.
• International parties can access the call by dialing +1 (323) 794-2423, using conference code 2289487.

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, March 18, 2019. To access the replay, parties in the U.S. and Canada should call (888) 203-1112 and enter conference code 2289487. International parties should call +1 (719) 457-0820 and enter conference code 2289487.

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.

With respect to Coupa's guidance as provided under "Business Outlook" above, Coupa has not reconciled its expectations for non-GAAP income (loss) from operations to GAAP loss from operations or non-GAAP net income (loss) per share to GAAP net loss per share because certain items excluded from non-GAAP operating income (loss) and net income (loss), 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.

Coupa also uses key metrics such as cumulative spend under management, which represents the aggregate amount of money that has been transacted through its core platform for all of its customers collectively since it launched its platform. Coupa calculates this metric by aggregating the actual transaction data, for invoices, purchase orders and expenses, from customers on its core platform. While Coupa does not believe this metric is directly correlated to its financial results, it believes that the adoption of its core platform, as evidenced by growth in cumulative spend under management, drives additional value to its customers, which will enhance its ability to acquire new customers and to increase renewals and upsells to existing customers.

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, 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; and 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.

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 December 10, 2018, 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 March 11, 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 the leading provider of BSM solutions. We offer a comprehensive, cloud-based BSM platform that has connected hundreds of organizations with more than four million suppliers globally. Our platform provides greater visibility into and control over how companies spend money. Using our 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.

SOURCE Coupa Software