Coupa's (NASDAQ:COUP) Q4 Sales Top Estimates But Stock Drops 19.8%

Radek Strnad /
2022/03/14 4:12 pm EDT

Spend management software maker Coupa Software (COUP) beat analyst expectations in Q4 FY2022 quarter, with revenue up 18.1% year on year to $193.2 million. However, guidance for the next quarter was less impressive, coming in at $190 million at the midpoint, being 3.12% below analyst estimates. Coupa made a GAAP loss of $93.9 million, down on its loss of $61.3 million, in the same quarter last year.

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Coupa (COUP) Q4 FY2022 Highlights:

  • Revenue: $193.2 million vs analyst estimates of $186.1 million (3.82% beat)
  • EPS (non-GAAP): $0.17 vs analyst estimates of $0.05 ($0.12 beat)
  • Revenue guidance for Q1 2023 is $190 million at the midpoint, below analyst estimates of $196.1 million
  • Management's revenue guidance for upcoming financial year 2023 is $838 million at the midpoint, missing analyst estimates by 4.65% and predicting 15.5% growth (vs 35% in FY2022)
  • Free cash flow of $60.5 million, up 114% from previous quarter
  • Gross Margin (GAAP): 60.3%, up from 51.3% same quarter last year

"We finished the fiscal year strong, delivering record revenue and free cash flow results in the fourth quarter," said Rob Bernshteyn, chairman and chief executive officer at Coupa.

Founded in 2006 by former Oracle executives, Coupa Software (COUP) is a software as a service platform that helps enterprises manage their spending across procurement, billing and business expenses and get a better visibility into how the money is spent.

The adoption of financial technology software is propelled by an ongoing drive to reduce costs. The combination of rising transactions volumes and global supply chain complexity is driving demand for cloud based spend management platforms able to integrate the two.

Sales Growth

As you can see below, Coupa's revenue growth has been very strong over the last year, growing from quarterly revenue of $163.5 million, to $193.2 million.

Coupa Total Revenue

This quarter, Coupa's quarterly revenue was once again up 18.1% year on year. We can see that revenue increased by $7.48 million in Q4, up on $6.57 million in Q3 2022. While we've no doubt some investors are looking for higher growth, it's good to see that quarterly revenue growth is accelerating.

Guidance for the next quarter indicates Coupa is expecting revenue to grow 13.8% year on year to $190 million, slowing down from the 40% year-over-year increase in revenue the company had recorded in the same quarter last year. For the upcoming financial year management expects revenue to be $838 million at the midpoint, growing 15.5% compared to 35% increase in FY2022.

There are others doing even better than Coupa. Founded by ex-Google engineers, a small company making software for banks has been growing revenue 90% year on year and is already up more than 150% since the IPO last December. You can find it on our platform for free.


What makes the software as a service business so attractive is that once the software is developed, it typically shouldn't cost much to provide it as an ongoing service to customers. Coupa's gross profit margin, an important metric measuring how much money there is left after paying for servers, licenses, technical support and other necessary running expenses was at 60.3% in Q4.

Coupa Gross Margin (GAAP)

That means that for every $1 in revenue the company had $0.60 left to spend on developing new products, marketing & sales and the general administrative overhead. While it improved significantly from the previous quarter this would still be considered a low gross margin for a SaaS company and we would like to see the improvements continue.

Key Takeaways from Coupa's Q4 Results

With a market capitalization of $7.42 billion Coupa is among smaller companies, but its more than $729.4 million in cash and positive free cash flow over the last twelve months give us confidence that Coupa has the resources it needs to pursue a high growth business strategy.

We enjoyed seeing Coupa’s improve their gross margin materially this quarter. And we were also excited to see that it outperformed analysts' revenue expectations. On the other hand, it was unfortunate to see that Coupa's revenue guidance for the full year miss analyst's expectations and the revenue guidance for next year indicates quite a significant slowdown in growth. Overall, this quarter's results were not the best we've seen from Coupa. The company is down 19.8% on the results and currently trades at $72.01 per share.

Coupa may have had a tough quarter, but does that actually create an opportunity to invest right now? It is important that you take into account its valuation and business qualities, as well as what happened in the latest quarter. We look at that in our actionable report which you can read here, it's free.

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The author has no position in any of the stocks mentioned.