By iwano@_84Posted on December 7, 2021 – Record Quarterly Revenues of $186 Million, 40% Year-Over-Year Growth – Quarterly Calculated Billings of $193 Million, 38% Year-Over-Year Growth – Quarterly Operating Cash Flows and Adjusted Free Cash Flows of $31 Million and $28 Million, Respectively SAN MATEO, Calif., Dec. 6, 2021 /PRNewswire/ — Coupa Software (NASDAQ: COUP) today announced financial results for its third fiscal quarter ended October 31, 2021. Coupa Software (PRNewsfoto/Coupa Software) “We delivered another strong quarter with record revenue and profitability,” said Rob Bernshteyn, chairman and chief executive officer at Coupa. “As demonstrated by our third quarter results, we are seeing strong adoption of the Coupa platform as our customers continue to prioritize Business Spend Management as a fundamental aspect of their go-forward strategy. With the fourth quarter well under way, we continue to leverage our Value-as-a-Service approach to add strategic customers across many industries and of all sizes.” Third Quarter Results: Total revenues were $185.8 million, an increase of 40% compared to the same period last year. Subscription revenues were $164.7 million, an increase of 40% compared to the same period last year. GAAP operating loss was $56.1 million, compared to $33.6 million for the same period last year. Non-GAAP operating income was $27.9 million, compared to $14.3 million for the same period last year. GAAP net loss attributable to Coupa Software Incorporated was $91.2 million, compared to $60.8 million for the same period last year. GAAP net loss per basic and diluted share attributable to Coupa Software Incorporated was $1.23, compared to $0.88 for the same period last year. Non-GAAP net income attributable to Coupa Software Incorporated was $23.5 million, compared to $13.0 million for the same period last year. Non-GAAP net income per diluted share attributable to Coupa Software Incorporated was $0.31, compared to $0.18 for the same period last year. Operating cash flows and adjusted free cash flows were positive $31.0 million and $28.2 million, respectively. See the section titled “Non-GAAP Financial Measures” and the reconciliation tables below for important information regarding the non-GAAP financial measures used by Coupa. Story continues Business Outlook: The following forward-looking statements reflect Coupa’s expectations as of December 6, 2021. Fourth quarter of fiscal 2022: Total revenues are expected to be $185.0 to $186.0 million. Subscription revenues are expected to be $166.0 to $167.0 million. Professional services and other revenues are expected to be approximately $19.0 million. Non-GAAP income from operations is expected to be $8.0 to $10.0 million. Non-GAAP net income per diluted share attributable to Coupa Software Incorporated is expected to be $0.03 to $0.05 per share. Diluted weighted average share count is expected to be approximately 77.0 million shares. Full year fiscal 2022: Total revenues are expected to be $717.0 to $718.0 million. Non-GAAP income from operations is expected to be $70.0 to $72.0 million. Non-GAAP net income per diluted share attributable to Coupa Software Incorporated is expected to be $0.66 to $0.69 per share. Diluted weighted average share count is expected to be approximately 76.5 million shares. Coupa has not reconciled its expectations for non-GAAP income from operations to GAAP loss from operations, or non-GAAP net income per diluted share attributable to Coupa Software Incorporated to GAAP net loss per share attributable to Coupa Software Incorporated because certain items excluded from non-GAAP income from operations and non-GAAP net income per diluted share attributable to Coupa Software Incorporated, such as charges related to stock-based compensation expenses, amortization of acquired intangible assets, amortization of debt discount and issuance costs, gain or loss on conversion of convertible senior notes, the adjustment attributable to redeemable non-controlling interests, 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 company’s offerings of convertible notes in 2018, 2019 and 2020, respectively, cannot be reasonably calculated or predicted at this time. The effect of these items may be significant. Recent Business Highlights: Welcomed many new customers into the Coupa community in Q3, including the following: Angi, Aptim Holdings, Atr, Capsida Biotherapeutics, Compass Minerals International, Covetrus, DEVK Versicherungen, EDEKA Handelsgesellschaft Nord, Endeavor Group Limited, Orbia Advance Corporation, Softbank, and Yazaki North America. Named a Gartner® Magic Quadrant™ Leader for P2P Suites for the sixth consecutive time1 Named a leader in ten Spend Matters SolutionMaps, covering every area of Source-to-Pay2 Named a Best Led Workplace in 2021 by Inc3 Became a Globally Certified Great Place to Work across the US, UK, India, Germany, and Ireland for 2021-20224 Named to Fortune’s 2021 Future 50 list5 Awarded a Silver medal sustainability rating from EcoVadis Debuted its campaign, “Behold the Power of Spend” at the World Series, F-1, Premier League, and Bundesliga events Opened registration for its 2022 global Business Spend Management (BSM) community conference Inspire in North America and EMEA Hosted its annual Global Volunteer Day with well over 500 employees participating across 35 offices Hosted a virtual panel “Women of Impact: Own Your Career” put on by Coupa Empower Hosted a Supply Chain Symposium in London bringing together supply chain leaders from across the UK Welcomed supply chain risk management and operational resilience company Interos to its portfolio of Coupa Ventures investments Conference Call Information: Coupa will host a conference call and live webcast for analysts and investors at 4:30 p.m. Eastern time today. The 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. 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, including non-GAAP operating (loss) income, non-GAAP net (loss) income attributable to Coupa Software Incorporated, non-GAAP net (loss) income per basic and diluted share attributable to Coupa Software Incorporated, and adjusted free cash flows. Coupa believes these non-GAAP measures are useful in evaluating its operating performance and Coupa’s management regularly reviews and uses these measures for business planning and other purposes. Non-GAAP operating (loss) income and non-GAAP net (loss) income attributable to Coupa Software Incorporated exclude certain items from the corresponding GAAP measures, including: stock-based compensation expenses; amortization of acquired intangible assets; the change in fair value of contingent consideration related to an acquisition; amortization of debt discount and issuance costs; gain or loss on conversion of convertible senior notes; the adjustment attributable to redeemable non-controlling interests; and related tax effects, including non-recurring income tax adjustments. In addition, the weighted average diluted shares figure used to calculate non-GAAP net income per share attributable to Coupa Software Incorporated reflects the anti-dilutive impact of the capped call transactions entered into in connection with the company’s offerings of convertible notes. Adjusted free cash flows is defined as net cash provided by operating activities, less purchases of property and equipment, plus repayments of convertible senior notes attributable to debt discount, plus one-time payout of legacy unvested equity awards accelerated in conjunction with a business combination. Coupa has the ability to settle obligations related to its senior notes through the use of cash, shares of its common stock, or a combination of both, at its election. Coupa believes these non-GAAP measures are useful to investors and other users of its financial information because they provide a way to measure and evaluate Coupa’s underlying operating performance and the strength of its core business consistently across the periods presented. Coupa believes these non-GAAP measures are also useful for comparing its operating performance to that of other companies in its industry, because they eliminate the effects of certain items that may vary between companies for reasons unrelated to their operating performance. Coupa believes that adjusted free cash flows also provides a useful measure of the company’s capital strength and liquidity, although it is not intended to represent and should not be viewed as the amount of residual cash flow available for discretionary expenditures. Coupa uses these non-GAAP measures in conjunction with GAAP measures as part of its overall assessment of its performance and liquidity, 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 and liquidity. Coupa’s definitions of its non-GAAP measures may differ from those used by other companies for similarly-titled measures, 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, the company’s GAAP results. 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. In addition, Coupa compensates for the limitations of its non-GAAP financial measures by providing a reconciliation of each non-GAAP measure to the most directly comparable GAAP financial measure. These reconciliations are included in the tables attached to this release. 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, cash flows, liquidity 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 from those projected, including, without limitation: the uncertain impact of the COVID-19 pandemic, including new variants such as the Delta and Omicron variants; Coupa has a limited operating history at its current scale, which makes it difficult to predict its future operating results; Coupa may not be able to manage its recent rapid growth effectively; risks related to past and future business acquisitions, including their integration with Coupa’s existing business model, operations and culture; 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; the markets in which Coupa participates are intensely competitive; Coupa’s business depends in part on its customers renewing their subscriptions and purchasing additional subscriptions; Coupa may not be successful in expanding its sales efforts or developing widespread brand awareness in a cost-effective manner; risks and liabilities related to breach of its security measures or unauthorized access to customer data; the impact of foreign currency exchange rates and global economic conditions; and risks relating to analyst coverage of its stock. 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 September 8, 2021, 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 December 6, 2021. 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. 1Gartner, “2021 Magic Quadrant™ for Procure-to-Pay Suites”, October 27, 20212Spend Matters, “Spend Matters Almanac”, October 8, 20213Inc, “Introducing the Best Workplaces of 2021”, November 30, 20214Great Place to Work, “Certified™ Companies – Best Companies to Work for 2021”, July 20215Fortune, “The Future 50: Growth stocks to bet on in an unpredictable world”, December 2, 2021 About Coupa Software Coupa empowers companies around the world with the visibility and control they need to spend smarter and safer. To learn more about how Coupa can help you spend smarter, visit www.coupa.com. Read more on the Coupa Blog or follow @Coupa on Twitter. COUPA SOFTWARE INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) (unaudited) Three Months Ended October 31, Nine Months Ended October 31, 2021 2020 2021 2020 Revenues: Subscription $ 164,745 $ 118,083 $ 461,079 $ 335,399 Professional services and other 21,071 14,881 70,912 42,700 Total revenues 185,816 132,964 531,991 378,099 Cost of revenues: Subscription 52,279 36,528 154,701 99,335 Professional services and other 25,341 14,259 81,865 42,729 Total cost of revenues 77,620 50,787 236,566 142,064 Gross profit 108,196 82,177 295,425 236,035 Operating expenses: Research and development 39,990 30,528 125,625 87,459 Sales and marketing 83,779 53,204 237,902 149,831 General and administrative 40,513 32,092 116,139 69,941 Total operating expenses 164,282 115,824 479,666 307,231 Loss from operations (56,086) (33,647) (184,241) (71,196) Interest expense (31,130) (29,308) (90,854) (61,820) Other income (expense), net (1,298) 746 (2,746) 8,833 Loss before benefit from income taxes (88,514) (62,209) (277,841) (124,183) Benefit from income taxes (476) (1,411) (2,697) (5,453) Net loss (88,038) (60,798) (275,144) (118,730) Net loss attributable to redeemable non-controlling interests (273) — (790) — Adjustment attributable to redeemable non-controlling interests 3,438 — 8,673 — Net loss attributable to Coupa Software Incorporated $ (91,203) $ (60,798) $ (283,027) $ (118,730) Net loss per share, basic and diluted, attributable to Coupa Software Incorporated $ (1.23) $ (0.88) $ (3.85) $ (1.76) Weighted-average number of shares used in computing net loss per share, basic and diluted 74,133 68,941 73,514 67,349 COUPA SOFTWARE INCORPORATED CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except per share amounts) (unaudited) October 31, 2021 January 31, 2021 Assets Current assets: Cash and cash equivalents $ 458,195 $ 323,284 Marketable securities 209,660 283,036 Accounts receivable, net of allowances 179,278 196,009 Prepaid expenses and other current assets 32,283 36,381 Deferred commissions, current portion 18,848 15,541 Total current assets 898,264 854,251 Property and equipment, net 30,161 28,266 Deferred commissions, net of current portion 42,623 36,832 Goodwill 1,515,141 1,480,847 Intangible assets, net 543,628 632,173 Operating lease right-of-use assets 38,183 41,305 Other assets 35,853 31,491 Total assets $ 3,103,853 $ 3,105,165 Liabilities, Redeemable Non-Controlling Interests, Other Temporary Equity and Stockholders’ Equity Current liabilities: Accounts payable $ 5,279 $ 4,831 Accrued expenses and other current liabilities 96,716 80,271 Deferred revenue, current portion 352,198 356,115 Current portion of convertible senior notes, net 633,641 609,068 Operating lease liabilities, current portion 12,401 11,222 Total current liabilities 1,100,235 1,061,507 Convertible senior notes, net 952,285 897,525 Deferred revenue, net of current portion 14,058 5,773 Operating lease liabilities, net of current portion 27,174 31,845 Other liabilities 68,210 67,915 Total liabilities 2,161,962 2,064,565 Redeemable non-controlling interests 10,044 — Other temporary equity — 369 Stockholders’ equity: Preferred stock, $0.0001 par value per share — — Common stock, $0.0001 par value per share 7 7 Additional paid-in capital 1,724,042 1,556,865 Accumulated other comprehensive income 8,748 9,165 Accumulated deficit (800,950) (525,806) Total stockholders’ equity 931,847 1,040,231 Total liabilities, redeemable non-controlling interests, other temporary equity and stockholders’ equity $ 3,103,853 $ 3,105,165 COUPA SOFTWARE INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) Nine Months Ended October 31, 2021 2020 Cash flows from operating activities Net loss attributable to Coupa Software Incorporated $ (283,027) $ (118,730) Net loss and adjustment attributable to redeemable non-controlling interests 7,883 — Net loss (275,144) (118,730) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 109,900 36,529 Amortization of premium on marketable securities, net 625 869 Amortization of deferred commissions 13,335 10,102 Amortization of debt discount and issuance costs 85,716 58,727 Stock-based compensation 145,251 94,851 Loss (gain) on conversion of convertible senior notes 357 (3,166) Repayments of convertible senior notes attributable to debt discount (1,338) (27,208) Other (3,204) 3,923 Changes in operating assets and liabilities net of effects from acquisitions: Accounts receivable 21,433 22,519 Prepaid expenses and other current assets 4,529 1,591 Other assets 13,968 (2,730) Deferred commissions (22,445) (11,355) Accounts payable 500 (1,435) Accrued expenses and other liabilities 6,795 4,941 Deferred revenue 3,630 (11,630) Net cash provided by operating activities 103,908 57,798 Cash flows from investing activities Purchases of marketable securities (116,583) (788,047) Maturities of marketable securities 94,142 351,973 Sales of marketable securities 94,916 830,125 Acquisitions, net of cash acquired (46,719) (94,121) Purchases of other investments (10,000) — Purchases of property and equipment (10,256) (9,559) Net cash provided by (used in) investing activities 5,500 290,371 Cash flows from financing activities Investment from redeemable non-controlling interests 2,223 — Proceeds from issuance of convertible senior notes, net of issuance costs — 1,355,066 Purchase of capped calls — (192,786) Repayments of convertible senior notes (5,748) (554,244) Proceeds from the exercise of common stock options 7,444 14,425 Proceeds from issuance of common stock for employee stock purchase plan 21,626 15,631 Net cash provided by financing activities 25,545 638,092 Effects of foreign currency exchange rates on cash, cash equivalents, and restricted cash (178) 128 Net increase in cash, cash equivalents, and restricted cash 134,775 986,389 Cash, cash equivalents, and restricted cash at beginning of year 327,589 268,280 Cash, cash equivalents, and restricted cash at end of period $ 462,364 $ 1,254,669 Reconciliation of cash, cash equivalents, and restricted cash to the condensed consolidated balance sheets Cash and cash equivalents $ 458,195 $ 1,251,006 Restricted cash included in other assets 4,169 3,663 Total cash, cash equivalents, and restricted cash $ 462,364 $ 1,254,669 COUPA SOFTWARE INCORPORATED Reconciliation of GAAP to Non-GAAP Financial Measures Three Months Ended October 31, 2021 (in thousands, except percentages and per share amounts) (unaudited) GAAP Stock-Based Compensation Expenses Amortization of Acquired Intangible Assets Amortization of Debt Discount and Issuance Costs Loss on Conversion of Convertible Senior Notes Other (2) Non-GAAP Costs and expenses: Costs of subscription $ 52,279 $ (4,162) $ (16,736) $ — $ — $ — $ 31,381 Costs of professional services and other 25,341 (4,729) (3,642) — — — 16,970 Gross profit 58.2 % 4.8 % 11.0 % 0.0 % 0.0 % 0.0 % 74.0 % Research and development 39,990 (11,357) — — — — 28,633 Sales and marketing 83,779 (13,217) (13,140) — — — 57,422 General and administrative 40,513 (16,994) — — — — 23,519 Income (loss) from operations (56,086) 50,459 33,518 — — — 27,891 Operating margin (30.2) % 27.2 % 18.0 % 0.0 % 0.0 % 0.0 % 15.0 % Interest expense (31,130) — — 29,454 — — (1,676) Other income (expense), net (1,298) — — — 228 — (1,070) Income (loss) before provision for (benefit from) income taxes (88,514) 50,459 33,518 29,454 228 — 25,145 Provision for (benefit from) income taxes (476) 733 1,629 — — — 1,886 Net income (loss) (88,038) 49,726 31,889 29,454 228 — 23,259 Net loss attributable to non-controlling interests (273) — — — — — (273) Adjustment attributable to non-controlling interests 3,438 — — — — 3,438 — Net income (loss) attributable to Coupa Software Incorporated (91,203) 49,726 31,889 29,454 228 3,438 23,532 Net income (loss) per share, basic, attributable to Coupa Software Incorporated (1) $ (1.23) $ 0.32 Net income (loss) per share, diluted, attributable to Coupa Software Incorporated (1) $ (1.23) $ 0.31 GAAP net loss per share attributable to Coupa Software Incorporated is calculated based upon 74,133 basic and diluted weighted-average shares of common stock. Non-GAAP net income per share attributable to Coupa Software Incorporated is calculated based upon 74,133 basic and 76,754 diluted weighted-average shares of common stock. The company uses the treasury stock method to calculate the non-GAAP diluted shares related to the convertible notes which reflects any anti-dilutive impact of the capped call transactions entered into in connection with the convertible notes. (2) Other consists of an adjustment attributable to redeemable non-controlling interests to its redemption amount. COUPA SOFTWARE INCORPORATED Reconciliation of GAAP to Non-GAAP Financial Measures Three Months Ended October 31, 2020 … SOFTWARE