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Category: Stock Market and Coupa
Date: 4 September 2019 Stock Price: $134.40 We take a look at the 2nd quarter earnings report of their 2020 fiscal year of Coupa the cloud platform provider for businesses.
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About Coupa software
Coupa Software is the cloud platform for business spend. We deliver “Value as a Service” by helping our customers maximize their spend under management, achieve significant cost savings and drive profitability. Coupa provides a unified, cloud-based spend management platform that connects hundreds of organizations representing the Americas, EMEA, and APAC with millions of suppliers globally. The Coupa platform provides greater visibility into and control over how companies spend money. Customers – small, medium and large – have used the Coupa platform to bring billions of dollars in cumulative spend under management.
Financial overview of Coupa's latest earnings report
The numbers we are interested in (for the quarter):
- Total revenues : $95.139 million (up from $61.651 million for the same quarter of the previous year)
- Total cost of revenues : $34.490 million (up from $18.640 million for the same quarter of the previous year)
- Total operating expenses : $83.453 (up from $53.635 million for the same quarter of the previous year)
- Net loss: -$19.994 million (an increased loss from -$13.845 million for the same quarter of the previous year)
- Net loss per share: -$0.32 ( net loss per share increased from -$0.24 for the same quarter of the previous year)
- Diluted number of shares in issue: 62.038 million (up from 56.966 for the same quarter of the previous year)
- So the net loss per share increased over the last 12 months and the number of shares in issue increased. So the total loss was shared among more shareholders yet the loss increased per share.
- So the net loss per share increased over the last 12 months and the number of shares in issue increased. So the total loss was shared among more shareholders yet the loss increased per share.
- Cash and cash equivalents : $613.906 million
- Cash and cash equivalents per share: $9.9
- Cash and cash equivalents makes up 7.36% of the group's current market capital
- Cash and cash equivalents per share: $9.9
- Accounts receivable, net of allowances : $83.949 million
- Accounts receivable makes up 5.7% of the group's total assets
- Accounts receivable makes up 5.7% of the group's total assets
- Total stockholders' equity: $454.072 million
- Stockholders equity per share: $7.32
- Stockholders equity per share: $7.32
- Cash generated from operations: $20.045 million
- Cash generated from operations per share: $0.32
Coupa's management commentary on the results and earnings guidance
SAN MATEO, Calif., Sept. 3, 2019 /PRNewswire/ -- Coupa Software (NASDAQ: COUP) today announced financial results for its second fiscal quarter ended July 31, 2019.
"We delivered a strong second quarter with record revenues of $95 million, up 54% year-over-year, and calculated billings of $108 million, up $57% year-over-year," said Rob Bernshteyn, chairman and chief executive officer at Coupa. "These results demonstrate our continued momentum in delivering measurable and repeatable value to our customers. By extending our leadership standing in Business Spend Management (BSM), we feel well positioned on our path to $1 billion in revenue."
Coupa defines calculated billings as the change in deferred revenue on the balance sheet for the period, plus revenue recognized during the period. 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.
Second Quarter Results
Business Outlook:
The following forward-looking statements reflect Coupa's expectations as of September 3, 2019.
Third quarter of fiscal 2020:
Full year fiscal 2020:
"We delivered a strong second quarter with record revenues of $95 million, up 54% year-over-year, and calculated billings of $108 million, up $57% year-over-year," said Rob Bernshteyn, chairman and chief executive officer at Coupa. "These results demonstrate our continued momentum in delivering measurable and repeatable value to our customers. By extending our leadership standing in Business Spend Management (BSM), we feel well positioned on our path to $1 billion in revenue."
Coupa defines calculated billings as the change in deferred revenue on the balance sheet for the period, plus revenue recognized during the period. 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.
Second Quarter Results
- Total revenues were $95.1 million, an increase of 54% compared to the same period last year. Subscription revenues were $83.5 million, an increase of 51% compared to the same period last year.
- GAAP operating loss was $22.8 million, compared to a loss of $10.6 million for the same period last year. Non-GAAP operating income was $4.8 million, compared to Non-GAAP operating income of $4.0 million for the same period last year.
- GAAP net loss was $20.0 million, compared to a net loss of $13.9 million for the same period last year. GAAP net loss per basic and diluted share was $0.32, compared to a net loss of $0.24 for the same period last year. Non-GAAP net income was $5.3 million, compared to Non-GAAP net income of $3.3 million for the same period last year. Non-GAAP net income per diluted share was $0.07, compared to Non-GAAP net income per diluted share of $0.05 for the same period last year.
- Operating cash flows and free cash flows were positive $1.3 million and negative $2.3 million, respectively, for the quarter ended July 31, 2019.
Business Outlook:
The following forward-looking statements reflect Coupa's expectations as of September 3, 2019.
Third quarter of fiscal 2020:
- Total revenues are expected to be between $95.5 and $96.5 million.
- Subscription revenues are expected to be between $86.0 and $87.0 million.
- Professional services and other revenues are expected to be approximately $9.5 million.
- Non-GAAP income from operations is expected to be between $3.5 and $5.5 million.
- Non-GAAP net income per diluted share is expected to be between $0.05 and $0.08 per share.
- Diluted weighted average share count is expected to be approximately 71.7 million shares.
Full year fiscal 2020:
- Total revenues are expected to be between $369.0 and $372.0 million.
- Non-GAAP income from operations is expected to be between $10.0 and $13.0 million.
- Non-GAAP net income per diluted share is expected to be between $0.11 and $0.16 per share.
- Diluted weighted average share count is expected to be approximately 70.0 million shares.
Coupa's (NASDAQ: COUP) stock price history
The image below shows the stock price history of cloud service provider Coupa over the last 12 months. And it shows a significant surge in its share price since December 2018 when it was trading at around $63 a share to the current price of $134.40 a share. That is over 100% return for stockholders in just over 9 months. The question is whether the stock has been running hot and is heading for a pull back?
Coupa (NASDAQ: COUP) latest stock valuation
So what are Coupa stock worth after the release of their latest earnings report? While it is extremely difficult to value a stock that makes a loss, or doesn't pay dividends, due to most valuation models requiring dividend payments and or positive earnings per share, we will use their cash generated per share as a proxy for future earnings (and we will assume strong growth in revenues over the next few years as the group pushes for the $1billion revenues). Based on our cash generation per share calculation and their strong revenue expectations we value the group's stock at $116.40 a share. And this is at the top end of our valuation. So our target price of $116.40 per Coupa stock is based on a few very broad and aggressive assumptions and even then the target price is less than their current price. We therefore believe Coupa's stock is overvalued and would expect a pull back from its current price